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The right to make motions to recommit in the contemporary House of Representatives is the prerogative of the minority party. The motion is in order in the House, but not in the Committee of the Whole (formally, Committee of the Whole House on the State of the Union). A motion to recommit must be offered after the previous question is ordered on a measure, but before the vote on final passage takes place. When a measure is called up under a "special rule" that orders the previous question in advance through final passage, the rule expressly protects the right to move to recommit. In practice, a recommittal motion typically is offered after engrossment and third reading of the measure. Only one valid motion can be offered, and it can take one of two forms: a simple (or "straight") motion, or a motion with instructions . Both forms have equal privilege on the House floor, but differ in how they affect the underlying measure. This report discusses the two forms of recommittal motion, relevant rules of the House, the minority's prerogative to offer the motion, and procedures for disposing of motions to recommit. The report emphasizes motions to recommit bills and conference reports because they represent the overwhelming majority of all recommittal motions each Congress. Data on motions to recommit made from the 101 st Congress through the 109 th Congress are presented in tables throughout the report. Motions that were offered and then ruled out of order are not counted in these data. The appendix provides information about the recommittal motions that the House adopted between 1989 and 2006. In general, motions to recommit can be offered during initial House floor consideration of bills and most resolutions, and sometimes conference reports as well. The motion is out of order, however, when measures are called up under the "suspension of the rules" procedure. Table 1 below shows data on the different types of measures that to which motions to recommit were offered from the 101 st Congress through the 109 th Congress. The largest number of recommittal motions were offered to bills and conference reports, respectively. While the remainder of this report concentrates on motions to recommit bills and conference reports , there are some restrictions on moving to recommit other types of measures: Simple resolutions: It is not in order to move to recommit a resolution on the order of business (usually called a "rule" or "special rule") reported by the House Rules Committee. Concurrent resolutions: Section 305(a) of the Congressional Budget and Impoundment Control Act of 1974, as amended, forbids motions to recommit from being offered to concurrent budget resolutions or conference reports on them. Joint resolutions: The House sometimes acts on joint resolutions to disapprove or approve of specific executive actions under the terms of special expedited or "fast-track" procedures that may prohibit the offering of recommittal motions to those resolutions. Both forms of the motion to recommit --simple and with instructions--propose to send a bill (or other measure) back to a House committee, typically the committee that originally reported the measure (the "reporting committee"). A simple motion to recommit a bill gives the minority a final opportunity to reject that measure. The motion proposes only to return the bill to the committee that had reported it. When the House adopts a simple recommittal motion, the underlying bill goes back to committee and is considered to have been rejected by the House. The simple motion gives the House an indirect way to "kill" a bill instead of voting directly on its final passage. By contrast, a motion to recommit with instructions provides the minority a last chance to amend a bill. A recommittal motion in this form proposes to send the bill back to committee and also to instruct the committee as to what additional action on the bill it should take. Most often, these instructions direct the committee contain an additional amendment to the bill. Thus, the mover of a recommittal motion with instructions seeks not to "kill" the underlying bill, but to change it to conform more fully with his or her policy views. These policy views are generally those advocated by the minority party. Most recommittal motions with instructions order the committee to report the bill back to the House "forthwith" with an amendment. These "amendatory instructions" contain the text of the proposed amendment. In this form, a recommittal motion gives the committee no discretion and no time in which to act. The committee must return the bill to the House with the amendment immediately. Consequently, when the House adopts a recommittal motion with amendatory instructions , the underlying bill is not actually sent back to committee. Instead, the chairman of the committee specified in the motion takes the floor and, on behalf of the committee, immediately reports the measure back to the House with the amendment set forth in the instructions. At this point, the bill is before the House once again, and the amendment contained in the instructions is the pending question for the House to decide. So the House proceeds to vote on the amendment. If the amendment is adopted, the House then votes on whether to pass the bill as it now has been amended. (See the " Recommittal of a Bill: A Case Study " section for an illustration of these procedures in practice.) Table 2 below presents data on motions to recommit bills from the 101 st Congress through the 109 th Congress. The overwhelming majority (88%) of the motions offered contained instructions, as did all the motions that the House adopted . Motions to recommit bills with amendatory instructions cannot propose an amendment that would not have been in order if it had been offered directly as an amendment to the bill. For instance, amendatory instructions must be germane to the underlying measure. To cite one example from the 103 rd Congress, a motion to recommit H.R. 3221 (Iraq Claims Act) with amendatory instructions was ruled out of order because the amendment contained in the instructions was not germane to the underlying bill. The chair explained that the instructions proposed adding language that would change immigration law, a subject that was not addressed in the underlying bill. Amendatory instructions also cannot propose to strike out an amendment that the House already has adopted; this is consistent with the principle that an amendment cannot be amended after having been adopted. By the same token, the instructions cannot propose to amend a portion of the bill that the House already has amended in its entirety; this reflects the principle that it is not in order to propose to amend only amended text. The amendment in a recommittal motion can, however, propose (and often has proposed) an amendment that was earlier rejected by the Committee of the Whole or the House. When the House adopts an amendment in the nature of a substitute reported by the Committee of the Whole (i.e., a completely new version of the bill), this action could preclude a recommittal motion from including amendatory instructions because any amendment would propose to reamend some portion of the bill that the House already has amended. For this reason, whenever a special rule anticipates that the House will consider an amendment in the nature of a substitute, the special rule almost always provides explicitly for a motion to recommit "with or without instructions." If the House considers a bill under a special rule, amendatory instructions in the recommittal motion must conform with any other relevant provisions of that resolution. For example, if the special rule prohibits amendments to Title II of the bill in both the Committee of the Whole and the House, it would be out of order to move to recommit the bill with instructions to amend Title II. Amendatory instructions also must abide by certain rule-making provisions of law, such as certain provisions in the Congressional Budget and Impoundment Control Act of 1974 ( P.L. 93-344 , 88 Stat. 297-339, as amended). When the underlying measure is a general appropriations bill , a motion to recommit with amendatory instructions must comply with other applicable House rules. Most important, the instructions cannot violate House Rule XXI, clause 2 which prohibits amendments to general appropriations bills from containing legislative language or making unauthorized appropriations. While most instructions are amendatory, some recommittal motions contain non-amendatory instructions, such as directing a committee to hold a hearing or to conduct a study. If the House recommits a bill with non-amendatory instructions, the measure is returned to the designated committee for action as specified in the instructions. The committee's work is confined to the scope of the instructions. In the 104 th Congress, Representative Edward Markey moved to recommit H.R. 1555 (Communications Act of 1995) with amendatory instructions directing the Committee on Commerce to report the bill back to the House "forthwith" with an amendment. The House adopted this recommittal motion by a vote of 224-199. The amendatory instructions in Representative Markey's motion proposed adding a new section to H.R. 1555 . This new section required, among other things, that television sets manufactured in or imported to the United States be equipped with a program-blocking technology called the "v-chip" (formally, the "violence chip"). Earlier, Representative Markey had offered this identical section as an amendment in the Committee of the Whole. The Committee of the Whole, however, adopted a substitute for the Markey amendment. The substitute amendment, offered by Representative Tom Coburn proposed a policy alternative that did not include the "v-chip" requirement. The Committee of the Whole then adopted the Markey amendment as amended by the Coburn substitute. As a result, there was no direct vote during the amending process in Committee of the Whole on the "v-chip" mandate proposed in the original Markey amendment (i.e., the amendment as offered by Representative Markey, not the version as amended by the Coburn substitute). Representative Markey secured this "up-or-down" vote in the House by offering a motion to recommit H.R. 1555 to the Committee on Commerce with instructions that the bill be reported back forthwith with an amendment containing the text of the original Markey amendment. After the House adopted this motion to recommit, Chairman Bliley reported the bill back to the House on behalf of the Commerce Committee with the amendment contained in the motion's instructions. The House then approved the amendment. Finally, the House then passed H.R. 1555 , which at that point contained both the text of the Coburn substitute as well as the text of the original Markey amendment. This example illustrates how the minority party can use the motion to recommit with instructions to secure a House vote on its policy alternative. It also shows the effect of a rules change made at the beginning of the 104 th Congress (and discussed in detail later in this report) that guarantees the minority's right to offer a motion to recommit with instructions to a bill or joint resolution. Before this rules change, the special rule governing a bill such as H.R. 1555 could have prohibited or limited the instructions that could be contained in a motion to recommit. The following excerpts from the Congressional Record of August 4, 1995, show the parliamentary language used, and the procedural steps that occurred, during and immediately after the House's consideration of Representative Markey's motion to recommit with instructions: THE SPEAKER pro tempore. Under the rule, the previous question is ordered. Under the order of the House of the legislative day of August 3, 1995, the amendment reported from the Committee of the Whole is adopted. No separate vote is in order. The question is on the engrossment and third reading of the bill. The bill was ordered to be engrossed and read a third time, and was read the third time. Mr. MARKEY. Mr Speaker, I offer a motion to recommit with instructions. The SPEAKER pro tempore. Is the gentleman opposed to the bill? Mr. MARKEY. I am opposed to the bill Mr. Speaker. The SPEAKER pro tempore. The Clerk will report the motion to recommit. [After the Clerk reported the motion, Representative Markey was recognized for five minutes of debate. A Member opposed to the motion was then recognized for the same amount of time. At the conclusion of debate, the previous question on the recommittal motion was ordered. After putting the motion to a voice vote, the Speaker pro tempore announced that the noes appeared to have it, so Representative Markey demanded a record vote. The House then adopted the motion to recommit, 224 to 199, after which the Speaker pro tempore recognized Representative Bliley, chairman of the Committee on Commerce.] Mr. BLILEY. Mr. Speaker, pursuant to the instructions of the House, I report the bill, H.R. 1555 , back to the House with an amendment. The SPEAKER PRO TEMPORE. The Clerk will report the amendment. [The Clerk began reading the amendment (i.e., the amendment proposed in Representative Markey's motion to recommit with instructions). At Representative Bliley's request, and without objection, the amendment was considered as read and printed in the Congressional Record .] The SPEAKER PRO TEMPORE. The question is on the amendment. The amendment was agreed to. [Third reading and engrossment of the bill then took place, followed by a record vote on the bill's final passage. H.R. 1555 , amended as a result of the motion to recommit with instructions, was passed, 305-117.] Motions to recommit conference reports also can be either simple motions or motions containing instructions. However, motions to recommit conference reports do not have the same purpose or effect as motions to recommit measures during their initial House floor consideration. A simple motion to recommit a conference report proposes only to send the report back to conference for further negotiation; adopting this motion does not necessarily "kill" the bill. A motion to recommit a conference report with instructions also seeks to return a report to conference for further negotiation, but it also proposes to instruct the House conferees (also referred to as "managers") as to what they should try to achieve during these negotiations. Most commonly, the instructions enjoin the House conferees to insist on the House position on a certain issue or to disagree to a certain Senate position. The instructions are advisory in nature; they are not binding on the House conferees. A Representative cannot make a point of order against a conference report on the ground that it is inconsistent with instructions that the House had given to its conferees. Also, the instructions must stay within the scope of differences between the House and Senate positions in the conference. For example, in the 102 nd Congress, a motion to recommit the conference report on S. 3 (campaign finance reform legislation) was ruled out of order because its instructions directed the House conferees to include in the conference report three provisions that went beyond the scope of the differences between the House and Senate versions of the bill. A new recommittal motion then was proposed with instructions that remained within the scope of differences. This second motion was defeated. Instructions in motions to recommit conference reports never direct conferees to report back to the House "forthwith," as motions to recommit bills with amendatory instructions almost always do. The reason lies in the fact that the House cannot instruct a committee comprising Representatives as well as Senators. A conference report can come to the House floor only after a majority of the House conferees and a majority of the Senate conferees have signed it and the accompanying joint explanatory statement. When the House adopts a motion to recommit a conference report (simple or with instructions), the House conferees "carry the original papers back to conference" and the "same conferees remain appointed." If a new conference report is later filed, it receives a new number and can be subjected to another motion to recommit. A motion to recommit a conference report is in order on the House floor only if the Senate has not acted on the report. Once the Senate acts on a conference report, the Senate conferees are discharged so there is no conference committee to which the report can be recommitted. At this point, the House can vote only to accept or reject the conference report. Also, a motion to recommit a conference report can be offered only after the previous question has been ordered on the report. In some cases, the House has recommitted a conference report by unanimous consent. Table 3 provides data on motions to recommit conference reports from the 101 st Congress through the 109 th Congress. The overwhelming majority (85%) of motions offered to recommit conference reports contained instructions. The House adopted only one simple motion to recommit a conference report during the 17-year period. There were instructions included in all the other recommittal motions that the House adopted. In the 104 th Congress, the House recommitted with instructions the first two conference reports on H.R. 1977 (the interior appropriations bill for FY1996). The House later approved the third conference report on this bill . The first motion to recommit instructed the House conferees to insist on the House position on Senate amendment 158. This amendment ended a one-year freeze on the transfer of federal lands to mining companies. The House-passed version of H.R. 1977 extended this one-year freeze for an additional year. When the House agreed to the Senate's request for a conference on H.R. 1977 , it instructed the House conferees by voice vote to insist on the House's "pro-freeze" position. However, the House managers, however, did not uphold the House position in conference; the first conference report on the bill ( H.Rept. 104-259 ) came to the House floor with the Senate language intact. Representative Sidney Yates, ranking minority member of the Interior Appropriations subcommittee, moved to recommit the conference report with the instructions mentioned above. The motion was adopted, 277 to147, with the support of 91 majority Members, including the bill's majority floor manager. One month later, the conferees approved a second conference report on H.R. 1977 ( H.Rept. 104-300 ). While this report included the House's "pro-freeze" position, it added the condition that this freeze would end if Congress approved legislation revising the Mining Law of 1872. (This mining legislation was in the conference report on the budget reconciliation bill that was scheduled to receive House floor consideration in several days.) When the new conference report on H.R. 1977 came to the House floor, Representative Yates moved to recommit the report with instructions. These instructions directed the House conferees to insist not only on the House position on Senate amendment 158 (i.e., with no conditions) but also on Senate amendment 108. This second Senate amendment allowed the Forest Service to sell more timber land in the Tongass National Forest. The House adopted the motion to recommit, 230 to199, with the support of 48 majority Members. The conference committee reconvened for a third time and filed a new conference report ( H.Rept. 104-402 ) nearly one month later. This third conference report extended the one-year freeze without conditions and contained a compromise on the Tongass National Forest issue. In explaining the third conference report, Representative Ralph Regula (majority floor manager for the report) told the House: "[t]he important thing I want to emphasize...is that we responded to the motion to recommit." After the previous question was ordered on the conference report, Representative Yates once again moved to recommit the report with instructions. This time, he proposed instructions that the House conferees insist on the House position regarding the Tongass National Forest. The House rejected this motion, 187-241, and then adopted the conference report, 244-181. These examples of recommitting a conference report in the House illustrates how motions to recommit with instructions can affect conference committee negotiations. The House recommitted the first two conference reports on H.R. 1977 for the same reason--the conference's rejection of the House position on Senate amendment 178. In doing so, the House sent the message that its adoption of the conference report required conference approval of the House position on that Senate amendment. While the instructions in the successful recommittal motions applied only to House conferees, they influenced the work of the conference committee as a whole. Motions to recommit are governed by both Rule XIX, clause 2, and Rule XIII, clause 6(c)(2). Rule XIX, clause 2(a), provides that "[a]fter the previous question has been ordered on the passage or adoption of a measure, or pending a motion to that end, it shall be in order to move that the House recommit (or commit, as the case may be, the measure, with or without instructions, to a standing or select committee. For such a motion to recommit, the Speaker shall give preference in recognition to a Member, Delegate, or Resident Commissioner who is opposed to the measure." (Paragraphs (b) and (c) of the same clause govern debate on motions to recommit; see the discussion of " Debate on the Motion ".) Rule XIII, clause 6(c)(2), as amended in 1995, states that the Committee on Rules shall not "report a rule or order which would prevent the motion to recommit a bill or joint resolution from being made as provided in clause 2(b) of rule XIX, including a motion to recommit with instructions to report back an amendment otherwise in order, if offered by the Minority Leader or a designee, except with respect to a Senate bill or resolution for which the text of a House-passed measure has been substituted." The next section of this report discusses the changes made to this rule at the start of the 104 th Congress. In modern House practice, offering the motion to recommit is the prerogative of a member of the minority party. This has not always been the case, however. Before 1909, the recommittal motion was typically reserved for a Representative "friendly" to a measure (typically the majority floor manager) "for the purpose of giving one more chance to perfect it, as perchance there might be some error that the House desired to correct." In 1909, the House amended what is now Rule XIX, clause 2(a), to add the language directing the Speaker to give preferential recognition for offering the motion to recommit "to a Member, Delegate, or Resident Commissioner who is opposed to the measure." By 1932, House precedents interpreting this rule firmly established that preferential recognition should be given to a minority party Member opposed to the underlying measure. From 1934 to the start of the 104 th Congress, however, separate precedents held that the minority was only guaranteed the right to offer a simple motion to recommit. These precedents interpreted clause 6 of Rule XIII as allowing the Rules Committee to report a special rule that prevented or limited the inclusion of instructions in a motion to recommit a bill or joint resolution. Because there were no recorded votes in the Committee of the Whole until 1971, a recommittal motion with amendatory instructions provided the only certain means for the minority to obtain a recorded House vote on its policy alternative. Before 1971, a special rule restricting amendatory instructions took away this minority tool for obtaining recorded votes, or limited the minority's ability to use that tool as it saw fit. In the late 1980s and early 1990s, the Rules Committee increasingly issued special rules that limited the offering of floor amendments in the Committee of the Whole (so-called "restrictive rules"). In some of these situations, the Republican minority's only opportunity to propose an amendment was through offering a motion to recommit with amendatory instructions. When a restrictive special rule also prohibited instructions in the recommittal motion, the minority sometimes was effectively blocked from offering its most important amendments. During the 101 st through the 103 rd Congresses, the Republican minority began to challenge the House precedents allowing the Rules Committee to report special rules that only permitted a simple motion to recommit. Each challenge, however, resulted in the earlier precedents being sustained. When the Republican party took control of the House in the 104 th Congress, the House amended its rules to preclude the Rules Committee from reporting a special rule that prevents or limits the minority from offering a recommittal motion with instructions to a bill or joint resolution. This rules change added the following new language to the last sentence of Rule XIII, clause 6(c)(2), concerning motions to recommit bills and joint resolutions: ... including a motion to recommit with instructions to report back an amendment otherwise in order, if offered by the Minority Leader or a designee, except with respect to a Senate bill or resolution for which the text of a House-passed measure has been substituted With the addition of this language, the House's rules explicitly recognize the minority's prerogative to offer a motion to recommit, with or without instructions, to bills and joint resolutions . To summarize the situation in today's House, the following principles govern preferential recognition for offering recommittal motions: The Speaker first looks to the Minority Leader or his designee. Thereafter, under House precedents, the Speaker gives preferential recognition "to minority members of the committee reporting the bill in their order of seniority on the committee, then to other members of the minority, and finally to majority members opposed to the bill." The Speaker gives preferential recognition to a Member who is opposed to the underlying measure. When a Member seeks recognition to offer a recommittal motion, the Speaker asks: "Is the gentlewoman (gentleman) opposed to the measure?" Once the Representative answers affirmatively, the Speaker neither examines "the degree of that Member's opposition" nor does he distinguish between opposition "to the bill in its present form" and a more fundamental opposition. Debate is not allowed on a simple motion to recommit, except by unanimous consent. For motions to recommit with instructions , House Rule XIX, clause 2(b), allows ten minutes of debate if the motion is offered to a bill or joint resolution (no debate is permitted on recommittal motions with instructions that are offered to other types of measures). Under clause 2(c) of the same rule, the ten minutes of debate can be extended to one hour upon the demand of the majority floor manager. When this demand is anticipated, the special rule governing the measure's floor consideration may specify that the recommittal motion with instructions shall be debatable for one hour. Debate time, whether ten minutes or one hour, is equally divided between the mover of the motion and a Member opposed to the motion (usually the majority floor manager). The chair rules on whether a motion to recommit is in order only in response to a point of order that the motion violates a House rule or precedent or a provision of a rule-making statute or a special rule. A Member may make or reserve such a point of order immediately after the recommittal motion is read (or after the reading has been dispensed with by unanimous consent). In situations where debate on the recommittal motion is permitted, the point of order must also be made before debate on the motion begins. In nearly all situations, the chair decides whether to sustain or to overrule the point of order (an exception is discussed below). If the chair overrules the point of order, the House proceeds to consider the recommittal motion. If the point of order is sustained, a new motion to recommit can be offered if it is offered in a timely fashion. The same principles also apply to points of order raised against amendments to motions to recommit (as discussed in the next section). A special procedure is used for points of order raised under the Unfunded Mandates Reform Act of 1995 ( P.L. 104-4 , 109 Stat. 48). The chair does not rule on these points of order. Instead, the House votes on whether to consider the matter against which a point of order has been made. This vote takes place after twenty minutes of debate that is equally divided between the Member making the point of order and an opponent. The first unfunded mandates point of order was raised against a motion to recommit with instructions offered to H.R. 3136 (Contract With America Advancement Act) in the 104 th Congress. This point of order claimed the motion's instructions contained an unfunded governmental mandate. The House voted not to consider the recommittal motion. A valid motion to recommit with instructions was subsequently offered and defeated. Members do not often offer amendments to recommittal motions, either to add or to amend instructions. Such an amendment is in order only before the House votes to order the previous question on the motion. This generally leaves only three opportunities for offering an amendment, none of which arises frequently. First, for debatable recommittal motions only, an amendment is in order once debate is completed (if the previous question has not been ordered on the motion). The mover of the recommittal motion controls the floor at this time, and only that Member can offer an amendment or yield to another Representative to do so. A Member seeking to amend a motion to recommit would, therefore, have to ask the motion's mover to yield for an amendment. While the Member offering the motion has little incentive to yield for that purpose, it has happened on occasion. Second, for both debatable and non-debatable motions to recommit, an amendment can be offered if the Member who offered the motion does not move the previous question. This is an unlikely scenario, however. The previous question motion has precedence over the motion to amend. This means that if the previous question on the recommittal motion is not moved and a Member seeks to offer an amendment to the motion, the motion's sponsor could still move the previous question and prevent House consideration of the amendment. Last, for both debatable and non-debatable motions to recommit, an amendment can be offered if the previous question on the recommittal motion is defeated. The previous question on the recommittal motion is typically ordered without objection and without a formal vote taking place. However, a Member trying to offer an amendment could demand the yeas and nays on the motion to order the previous question. If the House rejects that motion, House precedents provide that "a Member who in the Speaker's determination led the opposition to the previous question on the motion to recommit, such as the chairman of the committee reporting the bill, is entitled to offer an amendment to the motion regardless of party affiliation." In addition, the Member proposing the amendment "would not necessarily have to qualify as being opposed to the bill." Debate is not permitted on an amendment to a recommittal motion, regardless of whether the underlying motion was debatable. The amendment's supporters may explain it and urge its adoption before they actually offer the amendment--for example, during whatever time may be available for debating the recommittal motion itself. Especially because the House normally must vote against ordering the previous question on the motion before any amendment to it can be offered, the amendment's proponents typically make their case in favor of the amendment in the process of urging Members to vote against the previous question. An amendment to a recommittal motion must be germane to the underlying measure, not necessarily to the instructions contained in the recommittal motion itself. A point of order against the amendment is timely if raised immediately after the amendment is read (or after the reading has been dispensed with by unanimous consent). If the chair sustains the point of order, another amendment to the motion can be offered unless the House then votes to order the previous question. A simple motion to recommit a bill or joint resolution can be amended to change the committee(s) specified in the motion, or to add instructions to the motion. When the underlying measure is a conference report, the simple motion can be amended to insert instructions to the House conferees. A recommittal motion with instructions, whether offered to a bill or a conference report, can be amended to delete the instructions (thereby making the recommittal motion a simple one), or to change the instructions in part or in whole. A substitute amendment striking out all the instructions and substituting new instructions "cannot be ruled out as interfering with the right of the minority to move recommitment," even if it is a majority party Member who offers the substitute. The House must approve an amendment to a recommittal motion by a simple majority vote. First, the House normally votes to order the previous question on the motion and the amendment that has been offered to it. After the previous question is ordered, the House first votes on the amendment. If that amendment is approved, the House then votes on adopting the recommittal motion, as amended. Adopting a recommittal motion requires only a simple majority vote of the House. When a motion to recommit is defeated , another one cannot be offered; only one valid motion to recommit is in order. Table 4 below provides data on all the motions to recommit that Members offered from the 101 st Congress through the 109 th Congress. The data include both motions to recommit measures before initial House passage and motions to recommit conference reports. In each successive Congress except for the last one, the number of offered motions increased but the adoption rate did not. The Appendix provides information about the 39 motions to recommit that the House adopted (bill number, title, date adopted, vote results, description of instructions, and unique aspects of the motion's disposition).

Recommittal motions can take one of two forms: a simple (or "straight") motion to recommit or a motion to recommit with instructions. Bills and conference reports can be recommitted, but the motion to recommit does not have the same effect on measures at both stages of the legislative process. A simple motion to recommit a bill gives the minority party a final opportunity to "kill" a measure before the House votes on whether to pass it. When the House adopts a simple motion, the underlying bill goes back to committee and is considered to have been rejected by the House. A simple motion to recommit a conference report proposes to return the report to conference, but does not necessarily "kill" the bill in question. A motion to recommit a bill with instructions provides the minority a last chance to amend a bill before the House votes on its passage. When the House recommits a bill with instructions, the measure goes back to committee, but typically with binding directions that the committee report the bill back to the House instantaneously with an amendment that is included in the instructions. The recommittal of a conference report with instructions returns the report to conference with non-binding directions to the House conferees only (e.g., to insist on disagreeing to a specific Senate amendment). Most motions to recommit bills and conference reports contain instructions. The motion to recommit is in order in the House, but not in the Committee of the Whole. The motion must be offered after the previous question has been ordered, but before the vote on passing a bill or agreeing to a conference report. Debate is allowed only on motions to recommit with instructions that are offered to bills and joint resolutions. Debate is not permitted on simple motions or on any motions to recommit conference reports, except by unanimous consent. The House must approve the motion by a simple majority vote. From the 101st Congress through the 109th Congress, the House adopted 7.6% of all motions to recommit. In modern House practice, the right to offer the motion to recommit is the prerogative of a minority party Representative who is opposed to the underlying measure. Until the 104th Congress, however, House precedents only guaranteed the minority's right to offer a simple motion to recommit. The House Rules Committee was allowed to report "special rules" that limited or prohibited instructions in motions to recommit. Since the beginning of the 104th Congress, the Rules Committee has been prohibited from reporting any special rules that restrict or preclude instructions in motions to recommit offered to bills and joint resolutions, provided the motion is "offered by the minority leader or his designee." This report will be updated at the end of each Congress.

The federal government has a long history of involvement in water resource development and management to facilitate water-borne transportation, expand irrigated agriculture, reduce flood losses, and, more recently, restore aquatic ecosystems. Increasing pressures on the quality and quantity of available water supplies--due to growing population, environmental regulation, in-stream species and ecosystem needs, water source contamination, agricultural water demand, climate variability, and changing public interests--have resulted in heightened water use conflicts throughout the country, particularly in the West. Federal water resource construction waned during the last decades of the 20 th century in response to fiscal constraints, interest in more local control of water and land resources, and requirements to assess environmental impacts of federal actions and to protect fish and wildlife. This marked the end of expansionist federal policies of the early 20 th century that had led to widespread federal investment in dams, navigation locks, irrigation diversions, and levees and basin-wide planning and development efforts. The 110 th Congress is faced with numerous water resource issues regarding the federal role in the planning, construction, maintenance, inspection, and financing of water resource projects and federal investment in water resources research and data collection. Congress makes these 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. Although most water resource legislation typically addresses site-specific needs, certain themes and issues appear in many local and regional water resources conflicts. For example, demand for new project services (e.g., improved navigation, new water supply, improved or new flood control facilities), protection of threatened and endangered species, and water quality concerns are common to many conflicts. Even so, most water resource legislation deals with specific sites. The 110 th Congress is considering site-specific restoration legislation for coastal Louisiana, the Upper Mississippi River-Illinois Waterway System, the Great Lakes, the San Joaquin River, and the Platte River. However, the more typical site-specific measures, on a smaller scale, are the hundreds of individual water resources projects authorized through Water Resources Development Acts (WRDAs) and stand-alone bills addressing new water supply technologies and augmentation of existing water supplies, rural water supply development, and Indian water rights settlements. Oversight of existing laws and projects (e.g., Central Valley Project, flood protection in New Orleans and Sacramento) and project operations is also expected, especially where court decisions, agency actions, or other circumstances (such as drought) may affect project operations (e.g., federal projects on the Colorado, Columbia, Klamath, Missouri, Rio Grande, and San Joaquin rivers and pumps in the California Bay-Delta). In the West, naturally scarce water supplies and increasing urban populations have spawned new debates over water allocation--particularly over water for threatened or endangered species--and have increased federal-state tensions, since the federal government has generally deferred to state primacy in intrastate water allocation. Observed changes in the timing of snowmelt and runoff and the potential for further climate variability due to climate change has increased concerns about the reliability of developed water supplies and the flexibility of existing management mechanisms. Western water legislation during the 110 th Congress centers on project management and program issues, such as San Joaquin River settlement legislation, the Bureau of Reclamation's Title 16 water reclamation and recycling program, and sustainability of the West's water supplies. Oversight of the Bureau's Central Valley Project (CVPIA, Trinity River, and CALFED and other San Francisco Bay-San Joaquin/Sacramento Rivers Delta [Bay-Delta] management issues), Klamath project, and Colorado River operations also may continue. Nationally, congressional attention during the 110 th Congress may focus on the federal role in levee construction, maintenance, and evaluation, and water resources management generally. Hurricane Katrina oversight issues--such as how to better coordinate federal activities and how to respond or rebuild in the wake of catastrophic damages--may be of particular focus, as might the examination of other areas of the country that may also be vulnerable. Also of concern nationwide is the status of threatened and endangered species and the health of the nation's rivers and riparian areas. Federal obligations to protect threatened and endangered species and other environmental quality requirements have resulted in increased attention to river and watershed restoration efforts. The federal government is involved in several significant restoration initiatives ranging from the Florida Everglades to the California Bay-Delta (CALFED). At the same time, the demand for traditional or new water supply projects, navigational improvements, flood control projects, and beach and shoreline protection continues. In fact, both the Everglades and Bay-Delta restoration efforts include significant water supply components. Controversy over how much water should be divided among recovering (threatened and endangered) species, protecting water quality, and supplying farms, cities, and other uses has been ongoing. Further, widespread drought throughout different parts of the country over the past several years has spurred new requests for developing and ensuring dwindling water supplies, and new security threats to water infrastructure have placed added pressures on budgetary resources. The 109 th Congress left pending several national water policy proposals, ranging from new water study commissions and assessments to global sanitation and drinking water aid, some of which have been reintroduced in the 110 th Congress. The 110 th Congress also has addressed water resource issues during consideration of individual project authorizations, as well as during debate on WRDA legislation ( H.R. 1495 ) and on FY2008 appropriations for the Bureau and the Corps. Specific issues that are being or may be discussed during the 110 th Congress are treated below. Other general issues also being discussed include federal reserved water rights in relation to federal lands, transfer of water across federal lands and through federal facilities, Indian water rights settlements, licensing of nonfederal hydropower facilities (i.e., private dams regulated by the Federal Energy Regulatory Commission (FERC)), and whether to establish a national water commission to address federal water policy and coordination. Most of the large dams and water diversion structures in the United States were built by, or with the assistance of, the Bureau of Reclamation in the Department of the Interior (Bureau) or the U.S. Army Corps of Engineers in the Department of Defense (Corps). Traditionally, Bureau projects were designed principally to provide reliable supplies of water for irrigation and some municipal and industrial uses; Corps projects were designed principally for flood control, navigation, and power generation. The Bureau currently manages hundreds of storage reservoirs and diversion dams in 17 western states, providing water to approximately 9 million acres of farmland and 31 million people. The Corps' operations are much more widespread and diverse, and include several thousand flood control and navigation projects throughout the country, including 25,000 miles of waterways (with 238 navigation locks), nearly 1,000 harbors, and 400 dam and reservoir projects (with 75 hydroelectric plants). Since the early 1900s, the Bureau has constructed and operated many large, multi-purpose water projects. Water supplies from these projects have been primarily for irrigation. Construction authorizations slowed during the 1970s and 1980s due to several factors. In 1987, the Bureau announced a new mission: environmentally sensitive water resources management. In the following decade, increased population, prolonged drought, fiscal constraints, and increased water demands for fish and wildlife, recreation, and scenic enjoyment resulted in increased pressure to alter operation of many Bureau projects. Such changes have been controversial, however, as water rights, contractual obligations, and the potential economic effects of altering project operations complicate any change in water allocation or project operations. In contrast to the Corps, there is no regularly scheduled authorization vehicle for Bureau projects. Instead, Bureau projects are generally considered individually. Bureau-related water project and management issues that are being or may be considered during the 110 th Congress include: San Joaquin River restoration settlement legislation; examination of the Bureau's Title 16 (recycling and reuse) program; oversight of CVPIA and CVP operations; oversight of, and appropriations for, CALFED (and other Bay-Delta issues, such as Delta Smelt population declines); San Joaquin/San Luis Unit drainage issues and potential title transfer; authorization of individual water recycling and desalination projects; response to drought, and effects of climate variability on federal reservoirs; and Colorado River water management issues. A broader issue that often receives attention from Congress is oversight of the Bureau's mission and its future role in western water supply and water resource management generally. As public demands and concerns have changed, so has legislation affecting the Bureau. Further, many in Congress have questioned the Bureau's shift in focus from a water resources development agency to a water resource management agency. Some have also questioned the increasing number of proposals to fund new rural water supply projects with high federal cost-share ratios and grants for reclaiming and reusing water. Critical questions Congress may address include: What should be the future federal role in water resources development and management? What do western water managers need from the Bureau and how can the Bureau help with western water management? Should (or to what extent should) the federal government develop or augment new supply systems designed primarily to serve communities/municipalities, or is this a local/regional responsibility? Who should pay, and how much? Should the Bureau be involved in environmental mitigation or is this best handled through new institutional arrangements (e.g., CALFED) or other existing agencies (e.g., Fish and Wildlife Service and/or the Environmental Protection Agency)? Should existing projects be revamped or "re-operated" to accommodate changing demands, and, if so, do new policies and institutions (state-federal roles) need to be addressed, and again, who should pay? Relatedly, the issue of whether there should be a National Water Commission or periodic water resource assessments received some attention in the 109 th Congress, and at least one bill has been reintroduced in the 110 th Congress. Congress authorizes Corps water resources activities and makes changes to the agency's policies generally in Water Resources Development Acts, and at times in the annual Energy and Water Development Appropriations acts. Contents of a WRDA are cumulative and new acts do not supersede or replace previous acts. From the late 1980s until 2002, WRDAs followed a loosely biennial cycle; the last WRDA was enacted in 2000. WRDA bills were introduced or considered in 2002, 2003, 2004, 2005, and 2006, but were not enacted. Their enactment was complicated by differences over whether to authorize controversial projects, and whether to reform or change the way the Corps plans and evaluates projects. Consideration of WRDA 2007 bills by the 110 th Congress has included debates on changes to state and local roles in projects, potential changes in Corps policies and practices (such as changes to Corps permitting and regulatory practices), and authorization of high-profile projects. Prior to Hurricane Katrina, the project authorizations receiving the most attention were coastal Louisiana wetlands restoration, lock expansion and ecosystem restoration for the Upper Mississippi River-Illinois Waterway, and Everglades-related projects. The 2005 hurricane season added other authorizations to the debate, including authorizations for near-term and long-term hurricane protection measures for Louisiana and other Gulf Coast states and flood control activities in other areas of the nation vulnerable to flooding. Hurricane Katrina increased interest in flood control and Louisiana projects in the bill, while also increasing interest in streamlining federal spending, which has some observers concerned about authorizing more Corps projects. For more information on current WRDA issues, see CRS Report RL33504, Water Resources Development Act (WRDA) of 2007: Corps of Engineers Project Authorization Issues , by [author name scrubbed] et al. The 110 th Congress continues to address issues related to the Administration's adoption of a performance-based budgeting approach for the agency, as well as safety and security of Corps facilities and implementation of Florida Everglades ecosystem restoration. Recent Congresses have expressed dissatisfaction with the Corps' financial management, particularly the reprogramming of funds across projects and the use of multiyear continuing contracts for projects. Corps flood control and hurricane protection projects, in particular, are receiving congressional and public scrutiny following Hurricane Katrina. This scrutiny is added to the attention already on the Corps' river and reservoir management; in many cases, Corps facilities and their operation are central to debates over multi-purpose river management. For example, water resources management by the Corps, particularly on the Mississippi, Missouri, and Columbia and Snake Rivers system, remains controversial and is frequently challenged in the courts. The Corps' projects and role in emergency response also may be the subject of congressional oversight, legislative direction, authorizing legislation, and appropriations. Water resources debates in the 110 th Congress likely will be dominated by different opinions of the desirability and need for changing the water resource agencies' policies, practices, and accountability, and for authorizing multi-billion dollar investments in ecosystem restoration, navigation, and flood and storm damage reduction measures. A broad water resource issue significant to the water resources agencies and the nation is the changing federal role in water resources planning, development, and management. Hurricane Katrina raised questions about this role; in particular, the disaster brought attention to the trade-offs in benefits, costs, and risks of the current division of responsibilities among local, state, and federal entities for flood mitigation, preparedness, response, and recovery. The question of the federal role also is raised by the increasing competition over water supplies, not only in the West but also for urban centers in the East (e.g., Atlanta), which has resulted in a growing number of communities seeking financial and other federal assistance, actions, and permits related to water supply development (e.g., desalination and water reuse projects, reservoir expansions and reoperations). Congress rarely chooses to pursue broad legislation on federal water resources policies for many reasons, including the challenge of enacting changes that affect such a wide breadth of constituencies. Another practical challenge is the fractured nature of congressional committee jurisdictions over water resources and water quality issues and activities. Consequently, Congress traditionally has pursued incremental changes through WRDA bills for the Corps and project-specific legislation for the Bureau, and this pattern seems likely to continue.

Water resources management often involves trade-offs among user groups, environmental interests, and local, regional, and national interests. Water resources development is particularly controversial because of budgetary constraints, conflicting policy objectives, environmental impacts, and demands for local control. Hurricane Katrina brought to the forefront long-simmering policy disputes involving local control, federal financing, environmental and social tradeoffs, and multi-level accountability and responsibility for water infrastructure projects, such as levees. Construction, improvement, and management of other federal water resource projects (e.g., locks, dams, and diversion facilities) face similar challenges. The 110th Congress faces numerous issues and trade-offs as it considers water resource development, technology, water supply, and climate change legislation. These issues are likely to arise as Congress considers authorizations and appropriations for Bureau of Reclamation and Army Corps of Engineers projects (e.g., Water Resources Development Act of 2007, H.R. 1495), and agency policy and program changes (e.g., water reuse, federal project operations, and oversight of ecosystem restoration programs such as CALFED and Everglades). Oversight issues related to Hurricane Katrina and the federal role in hurricane and flood protection, and levee construction and management, also are ongoing.

Israel's energy sector is set to undergo significant changes that could transform the country into an exporter of natural gas. Development of three recently discovered natural gas fields--Tamar, Dalit, and Leviathan (see Figure 1 )--is projected to begin at the end of 2012 and be completed by the end of the decade. The estimated supplies from these fields (see Table 1 ) would enable Israel to decrease its natural gas and coal imports and possibly its oil imports. Coal imports would likely be most affected as coal is currently the primary fuel for electric generation, and can be displaced by natural gas. Israel's trade balance would likely improve and its carbon dioxide emissions would likely decline as a result. The discovery of natural gas resources has also led Israel to reevaluate the nation's energy tax policy. Israel's Ministry of Finance has recommended tax policy changes that would increase tax revenues, but decrease potential after-tax profits for developers. Regionally, Israel's success thus far has sparked interest from its neighbors to explore their boundaries for energy resources and has raised concerns from Lebanon about sovereignty over the discoveries. Israel is poised to became an energy producer and perhaps even a natural gas exporter provided its recent discoveries come to fruition. At the end of last year, Noble Energy, a U.S. independent energy company, reconfirmed its estimates for its third and largest natural gas discovery off the northern coast of Israel. The Leviathan field has an estimated resource base of 16 trillion cubic feet (tcf) of natural gas, but will require at least two more appraisal wells to be drilled before the size of the resource base is better defined. Noble Energy's other natural gas discoveries (Tamar and Dalit) coupled with the success of other companies puts Israel in a position to be self sufficient in natural gas and possibly become a natural gas exporter, thus improving the country's energy and economic security. Since January 2009, Noble Energy has made three natural gas discoveries--Tamar, Dalit, and Leviathan--with an estimated 25 tcf of resources. Israel's natural gas reserves--natural gas that has been discovered and can be expected to be economically produced--prior to the Noble Energy discoveries were estimated at 1.5 tcf or about 16 years worth at current production levels. If only half the natural gas from the new discoveries is produced at today's production levels, Israel would have well over a 100-year supply of natural gas. It is too early to know the rate of natural gas recovery from the three new fields or if other discoveries will arise, but it is highly likely that Israel's energy mix will move towards natural gas by the end of the decade. Tamar's first production is expected at the end of 2012, with Dalit one or two years after that, and Leviathan between 2016 and 2018. According to Noble Energy, Tamar alone is expected to reach a maximum capacity of one billion cubic feet per day (bcf/d) by 2013 or 2014, or over three times the rate of Israeli consumption in 2009 of 0.31 bcf/d. Until 2008, Israel's demand for natural gas was met by domestic production. An import pipeline from Egypt began deliveries in 2008 and despite public discontent against the sales in Egypt, the pipeline remains operational today ( Figure 2 illustrates Israel's natural gas consumption and highlights the effect of Egyptian imports). Natural gas from the new fields could displace the Egyptian imports, which has benefits and disadvantages for both countries. Israel pays below market prices for the natural gas it imports from Egypt. Continuing the imports and using additional production to begin exports, most likely to Europe or Jordan, could further improve Israel's energy and economic security. Eliminating the imports could improve Israel's trade balance and provide greater supply security. For Egypt, stopping the exports to Israel would have political advantages as the natural gas sales to Israel were unpopular with Egyptians and were taken into court. The impact of the current unrest in Egypt on its natural gas exports to Israel is unclear. Maintaining the exports to Israel could help Egypt's trade balance. At the end of April, the natural gas terminal near El-Arish in Egypt (see Figure 1 above) was attacked for the second time since protests erupted in that country in January. Natural gas from the terminal supplies the Arab Gas Pipeline to Jordan, Syria, and Lebanon, and a separate pipeline to Israel. There is no estimate for how long natural gas will not be exported. The pipeline was also attacked and disabled in February causing natural gas supplies to be stopped for about a month. The terminal has been a target for Bedouins who feel neglected and oppressed by Cairo. Israel's consumption of natural gas has been growing since 2003, but remains a relatively small portion of its current energy mix at 11%. Oil accounts for almost half of Israel's primary energy consumption, while coal is 35%. (See Figure 3 .) However, the recent natural gas discoveries have the potential to substantially change the share of natural gas use in Israel. Industry forecasts project that by 2015, Israel could be consuming 1 bcf of natural gas per day, an almost threefold increase from today's consumption. The three new natural gas fields represent potentially 26 times the total amount of energy currently consumed annually by Israel from all fuel sources. Israel's electricity generation sector will most likely utilize the new resources more than other sectors (see section below) and could even facilitate Israel moving towards electrification of its car fleet, a goal the government has set. Current energy infrastructure is equipped primarily for oil and coal; substituting natural gas would require major changes and investment to the electricity and transportation sectors. Israel's electricity generation sector will most likely undergo the greatest change because of the development of Israel's natural gas resources. Currently, natural gas fuels about 26% of Israel's electric generation. (See Figure 4 .) Coal supplies almost two-thirds of the generation capacity. If Israel were to convert all of its existing electric power generation to natural gas, it would require approximately an additional 0.8 bcf/d of natural gas, the estimated maximum output from the Tamar natural gas field alone. Replacing only its coal units would require approximately 0.67 bcf/d of natural gas. If these conversions were to occur, carbon dioxide emissions from the electricity generation sector would decrease 52% and 50%, respectively. However, this would be a major investment and likely require many years to achieve. Switching to a natural gas-based electrical sector would allow Israel to increase the domestic share of energy production. Currently, Israel imports all of its coal and most of its oil. In April 2010, Israel's Minister of Finance appointed a committee to examine fiscal policy related to oil and gas resources in Israel, prompted by the recent natural gas discoveries. The committee was directed by Israel's Minister of Finance to (1) evaluate Israel's fiscal system as it relates to oil and gas reserves and compare Israel's system to countries in similar economic circumstances; (2) propose an updated fiscal system; and (3) examine the potential effects current and future natural gas discoveries would have on the Israeli economy. The committee's draft conclusions were released by Finance Ministry on November 10, 2010. The committee found that "the current system does not properly reflect the public's ownership of its natural resources." The committee's draft conclusions recommended two major changes to Israel's tax treatment of the oil and gas industry. First, the draft conclusions suggested eliminating the existing depletion deduction. Second, a progressive tax on oil and gas profits was proposed. In the proposal, profits were determined using the ratio of total revenues to total exploration and development costs. The committee's draft conclusions did not recommend a change in Israel's royalty rate, which is set at 12.5%. The committee's final report was released on January 3, 2011, and fully accepted by Prime Minister Netanyahu and the cabinet. Overall, the committee's recommendations would increase the government's share on oil and gas revenues to between 52% and 62%, up from the current 30%. Like the draft conclusions, the committee's final recommendations suggest eliminating the depletion allowances and imposing a tax on oil and gas profits. The tax on profits would start after the project had earned cumulative net income equal to 150% of its exploration and development costs. The rate of tax would start at 20%, increasing to maximum rate of 50%. This tax increase would be phased in over time. Fields that start production prior to 2014--which would likely include Tamar and possibly Dalit, but not Leviathan--would be partially exempt from the tax increase. For reserves in which extraction begins by January 1, 2014, the profits tax will not apply until cumulative net income reaches 200% of exploration and development costs and will not be fully phased in until reaching 280%. The tax increase recommended in the final report was less than was initially presented in the draft proposal. The proposed tax increases will be enacted only if approved by the Israeli government. Israeli and U.S. companies oppose any tax increase, and argue that changing the tax regime will deter future energy resource development. Oil and gas producers in the United States pay the U.S. corporate income tax. The corporate tax is levied on taxable income, which is calculated as gross income less deductions. The statutory corporate income tax rate is generally 35%. There are a number of deductions specific to the oil and gas industry, such as the ability to expense intangible drilling costs (IDCs) and to claim percentage depletion instead of cost depletion. Oil and gas producers are also eligible for the Section 199 production activity deduction. The United States has generally not imposed a specific profits tax above and beyond the corporate income tax on the oil and gas industry. However, from 1980 through 1988, the United States levied a windfall profits tax (WPT) on the U.S. oil industry. In practice, the WPT was an excise tax. The tax was determined according to the price of oil rather than on profits. The WPT was enacted to address increased oil industry profits following the decontrolling of oil prices. The announcements by Israel and Noble Energy of significant natural gas discoveries have prompted Lebanese leaders to raise concerns that the natural gas fields are at least partially in Lebanese waters and that Israel will "steal" Lebanon's resources if the Lebanese government does not act. Lebanon and Israel have never defined their maritime border as the two countries are still technically at war. The Lebanese government has appealed to the United Nations, particularly the UN Interim Force in Lebanon, to intervene in defining the maritime border, but the UN has declined thus far to delineate the maritime border. Some trade press for the natural gas industry is depicting all the Noble Energy discoveries within Israeli borders. There has been rhetoric from both the Lebanese and Israeli governments about using all means necessary, including military action, to defend their national resources, according to regional press reports. Whether Israel will become an exporter of natural gas is yet to be determined. If the resource estimates are correct, the new fields would give Israel the resources to become an exporter. A number of factors raise doubts about the viability of exports: Growing domestic demand--and potential new uses for gas, energy security issues, the expense of liquefying the natural gas for transport, an existing global glut of natural gas, and the politics of pipeline exports. Noble Energy is exploring the possibility of building a liquefaction facility, possibly in Cyprus to utilize any natural gas discovered there, for exports to Europe and Asia, but it is too early to determine the feasibility of such a project. Hoping to replicate Israel's success in finding new energy resources, Cyprus, Lebanon, and Syria have announced timetables for holding auctions for licenses to explore for oil and gas. Cyprus and Syria plan to hold their license auctions this year, while Lebanon has theirs scheduled for 2012. It is unclear how the ongoing political deadlock might affect the Lebanese government's plans to move forward with its energy development. In December 2010, Cyprus and Israel signed an agreement defining their sea border. In March 2010, The U.S. Geological Survey (USGS) released a report on the Levant Basin province that stretches from the Sinai peninsula to the northern border of Syria and from the coast into the Mediterranean Sea to the western side of Cyprus. The report stated that the Levant Basin may hold 1.7 billion barrels of recoverable oil and 122 trillion cubic feet of recoverable natural gas. In light of the USGS report, Noble Energy and its partners have raised the prospect of drilling deeper, below the natural gas bearing formations in the Leviathan field in search of oil. Noble Energy estimates that there is a 17% probability that it could find 3 billion barrels of oil. The probability and estimate will likely change as additional information and data is gathered. The U.S. government is not directly involved in Israel's oil and gas policies. However, in the near-term, consultations regarding the energy policy and regulations would be one area that government to government interaction might take place. Israel has never been a major energy producer and must balance its normal economic and security concerns with development of this new resource. The United States has experience related to regulatory oversight, tax policy, and environmental concerns that could benefit Israel. The regional interest from other countries to develop energy resources creates an opportunity for discussions between Israel and its neighbors, bilaterally or multilaterally and directly or indirectly. Additionally, resolving the maritime demarcation issue between Israel and Lebanon would alleviate industry uncertainty.

Israel has been dependent on energy imports since it became a nation in 1948, but the recent offshore natural gas discoveries could change that and possibly make Israel an exporter of natural gas. Development of the recently discovered natural gas fields--Tamar, Dalit, and Leviathan--likely will decrease Israel's needs for imported natural gas, imported coal, and possibly imported oil. A switch to natural gas would most likely affect electric generation, but could also improve Israel's trade balance and lessen carbon dioxide emissions. Regionally, Israel's success thus far has sparked interest from its neighbors to explore their boundaries for energy resources and has raised concerns from Lebanon about sovereignty over the discoveries. Development of these new resources, and possibly other discoveries, would enhance Israel's economic and energy security. Israel is in the early stages of formulating the regulatory framework to oversee the development of these resources and may seek assistance from the United States or other natural gas producing countries in weighing its options. Key Points: The new discoveries--depending upon the actual production--could represent over 200 years' worth of Israel's current natural gas consumption. Israel's electrical generation sector will likely be the beneficiary of the new natural gas resources. Additional natural gas and possibly oil resources may exist.

The federal government requires the U.S. fleet of heavy-duty engines and vehicles--including commercial long-haul tractor-trailers--to meet various requirements, including those for safety, fuel economy, and air pollution emissions. The first federal emissions standards for heavy-duty engines and vehicles were introduced in 1974 and were gradually tightened in a number of steps. On January 18, 2001, the U.S. Environmental Protection Agency (EPA) set current emission standards for criteria air pollutants and their precursors, including nitrogen oxide (NO x ) and particulate matter (PM). Further, on October 25, 2016, EPA and the National Highway Traffic Safety Administration (NHTSA) jointly published the second (current) phase of greenhouse gas (GHG) emissions and fuel efficiency standards for medium- and heavy-duty engines and vehicles (Phase 2). The Phase 2 requirements set emission standards for commercial long-haul tractor-trailers, vocational vehicles, and heavy-duty pickup trucks and vans , and they phase in between model year (MY) 2018 and MY 2027. The rule expands on the Phase 1 standards (promulgated on September 15, 2011, for MYs 2014 through 2018) and introduces first-ever controls on trailers (i.e., the part of the vehicle pulled by the tractor) and glider kits and vehicles (i.e., a new chassis combined with a remanufactured engine). This report examines EPA's and selected other federal agencies' requirements on glider kits and glider vehicles and outlines the congressional response. A glider kit is a tractor chassis with a frame, front axle, interior and exterior cab, and brakes (see Figure 1 ). It becomes a glider vehicle when an engine, transmission, and rear axle are added. Engines are often salvaged from earlier model year vehicles, remanufactured, and installed in glider kits. The final manufacturer of the glider vehicle (i.e., the entity that assembles the parts) is typically a different entity than the original manufacturer of the glider kit. Glider kits and glider vehicles are produced arguably for purposes such as allowing the reuse of relatively new powertrains from damaged vehicles. Four original equipment manufacturers (OEMs) currently produce glider kits in the United States: Peterbilt, Kenworth, Freightliner, and Western Star. Numerous companies of varying sizes unassociated with the OEMs serve as the final manufacturers or assemblers of glider vehicles. These companies specialize in installing remanufactured main components from donor trucks (commonly Detroit, Cummins, and Caterpillar engine options) into new glider kits purchased from the OEMs. Representatives of the glider assembler industry assert that the benefit of a glider vehicle over a new truck is a more reliable and fuel efficient vehicle that requires less maintenance, yields less downtime, and yet offers a range of currently available safety features and amenities. Further, they report that a glider vehicle is approximately 25% less expensive than a new truck at purchase, which makes it popular with small businesses and owner-operators. The Phase 2 standards require, among other provisions, that all glider vehicles be covered by both vehicle and engine certificates. The vehicle certificate requires compliance with the GHG vehicle standards of 40 C.F.R. Part 1037. The engine certificate requires compliance with the GHG engine standards of 40 C.F.R. Part 1036, plus the criteria pollutant (i.e., NO x and PM) standards of 40 C.F.R. Part 86. Under the Phase 2 rule, used or rebuilt engines may be installed in glider vehicles, provided that they meet all standards applicable to the year in which the assembly of the glider vehicle is completed, or they meet all standards applicable to the year in which the engine was originally manufactured and also meet one of the following criteria: the engine is still within its original useful life in terms of both miles and years, the engine has less than 100,000 miles of engine operation, or the engine is less than three years old. Thus, the standards allow for installation of relatively newer engines in glider kits for purposes EPA deemed consistent with their original intended use--the salvaging of relatively new powertrains from vehicle chassis that have been damaged or have otherwise failed prematurely. The Phase 2 rule has a transitional program for glider manufacturers. For calendar year 2017, each manufacturer's combined production of glider kits and glider vehicles is capped at the manufacturer's highest annual production of glider kits and glider vehicles for any year from 2010 to 2014. Any glider kits or glider vehicles produced beyond this allowance are subject to all requirements applicable to new engines and new vehicles for MY 2017. Effective January 1, 2018, the permissible number of glider vehicles that may be produced without meeting the Phase 2 long-term requirements is limited as follows: Small businesses may produce a limited number of glider vehicles without meeting the long-term engine or vehicle requirements (or larger vehicle manufacturers may provide glider kits to these small businesses without the assembled vehicles meeting the long-term vehicle requirements) capped at the small vehicle manufacturer's highest annual production volume in 2010 through 2014 or 300, whichever is less. The 2018 allowances mostly continue after 2020, but effective January 1, 2021, all glider vehicles are required to meet the Phase 2 GHG vehicle standards. EPA cited its authority to regulate glider vehicles as Clean Air Act (CAA), Section 202(a), which authorizes standards for emissions of pollutants from new motor vehicles that cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. Regarding its statutory authority to regulate criteria pollutants under the CAA, EPA noted that it has broad authority to control all pollutant emissions from "any" rebuilt heavy duty engines (including engines beyond their statutory useful life) under CAA Section 202(a)(3)(D): Rebuilding practices.--The Administrator shall study the practice of rebuilding heavy-duty engines and the impact rebuilding has on engine emissions. On the basis of that study and other information available to the Administrator, the Administrator may prescribe requirements to control rebuilding practices, including standards applicable to emissions from any rebuilt heavy-duty engines (whether or not the engine is past its statutory useful life), which in the Administrator's judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare taking costs into account. Regarding its statutory authority to regulate vehicle-based GHG emissions, the Phase 2 rule defines the completed glider vehicle as a "motor vehicle" under CAA Sections 216(2 and 3): (2) The term "motor vehicle" means any self-propelled vehicle designed for transporting persons or property on a street or highway. (3) Except with respect to vehicles or engines imported or offered for importation, the term "new motor vehicle" means a motor vehicle the equitable or legal title to which has never been transferred to an ultimate purchaser; and the term "new motor vehicle engine" means an engine in a new motor vehicle or a motor vehicle engine the equitable or legal title to which has never been transferred to the ultimate purchaser. Thus, according to the Phase 2 rule, if a used engine is placed in a new glider vehicle, the engine is considered a "new motor vehicle engine" under CAA Section 216(3), because it is being used in a "new motor vehicle." In short, EPA argued that "it is reasonable to require engines placed in newly-assembled vehicles to meet the same standards as all other engines in new motor vehicles." Additionally, CAA Section 202(a)(1) not only authorizes EPA to set standards "applicable to the emission of any air pollutant from any ... new motor vehicles" but states further that these standards are applicable whether such vehicles "are designed as complete systems or incorporate devices to prevent or control such pollution." Thus, according to the Phase 2 rule, the CAA not only contemplates but in some instances directs that EPA establish standards for "incomplete vehicles" and vehicle components for purposes of controlling emissions from the completed vehicle. With this interpretation, EPA adopted provisions in the Phase 2 rule stating that a glider kit becomes a vehicle when "it includes a passenger compartment attached to a frame with one or more axles." The Phase 2 rule contains no emission standards for glider kits in isolation, but the standards for glider vehicles reflect the contribution of the glider kit. However, manufacturers of glider kits are subject to production caps as discussed above and would be required to obtain certificates of conformity before shipping any glider kits based on EPA's interpretation that the kits are considered "incomplete motor vehicles." The production and use of glider vehicles has the potential to increase emissions of criteria pollutants--specifically NO x and PM--from heavy-duty vehicles. Current EPA emission standards for NO x and PM (which began in 2007 and took full effect in 2010) are at least 90% lower than previous standards (see Table 1 ). Thus, EPA estimated in the Phase 2 rulemaking that NO x and PM emissions of any glider vehicles using pre-2007 engines could be 10 times higher than emissions from equivalent vehicles being produced with new engines. Additionally, based on prior standards, EPA estimated that NO x and PM emissions of any glider vehicles using pre-2002 engines (i.e., before exhaust aftertreatment requirements) could be 20-40 times higher than those of current engines. These emission impacts are compounded by the recent increase in sales of glider vehicles. Estimates provided to EPA during the Phase 2 rulemaking indicate that production of glider vehicles increased by an order of magnitude since 2006--from a few hundred each year to several thousands. EPA noted during the rulemaking While the few hundred glider vehicles produced annually in the 2004-2006 timeframe may have been produced for arguably legitimate purposes, such as salvaging powertrains from vehicles otherwise destroyed in crashes, EPA believes (as did many commenters) that the more than tenfold increase in glider kit production since the MY 2007 criteria pollutant emission standards took effect reflects an attempt to avoid these more stringent standards and (ultimately) the Clean Air Act. The agency's regulatory analysis of the environmental impacts of glider vehicles assumes annual sales of 10,000 for 2015 and later, which is consistent with the comments received on the Phase 2 proposed rule. The modeling also assumes that glider vehicles emit at the level equivalent to the engines meeting the MY 1998-2001 standards, since most glider vehicles currently being produced reportedly use remanufactured engines of this vintage. The analysis shows that without the new restrictions, glider vehicles on the road in 2025 could emit nearly 300,000 tons of NO x and nearly 8,000 tons of PM annually. Thus, glider vehicles could represent 5% of heavy-duty tractors on the road, and their emissions could represent about one-third of all NO x and PM from the sector. Under the Phase 2 rule, EPA argued that by restricting the number of glider vehicles with high polluting engines on the road, excess NO x and PM emissions could decrease dramatically, leading to substantial public health benefits. Put into monetary terms (using PM-related benefit-per-ton values), EPA estimated that the removal of all unrestricted glider vehicle emissions from the atmosphere could yield between $6 billion and $14 billion in health benefits annually (in 2013 dollars). Subsequent to the rulemaking, EPA's National Vehicle and Fuel Emissions Laboratory (NVFEL) conducted dynamometric emissions tests comparing selected glider vehicles (with remanufactured engines originally certified in a MY between 1998 and 2002) to selected conventionally manufactured MY 2014 and MY 2015 tractors (with engines compliant with 2010 standards). The analysis finds that "under highway cruise conditions, NO x emissions from the [selected] glider vehicles were approximately 43 times as high, and PM emissions were approximately 55 times as high as the [selected] conventionally manufactured 2014 and 2015 MY tractors." Under transient operations, NO x emissions were four to five times higher, and PM emissions were 50-450 times higher in these selected cases. However, the production and use of glider vehicles currently has a positive impact on fuel efficiency and GHG emissions in the U.S. fleet of heavy-duty vehicles. Several studies, including the NVFEL 2017 study, find that GHG emissions from selected glider vehicles are actually "lower [by 10%-20%] than the conventionally manufactured vehicles when measured on the chassis dynamometer without taking into account the differences in the aerodynamic drag between the vehicles." These results are not unexpected given the known trade-off between NO x and GHG emissions regarding injection timing and similar engine calibration techniques. Further, many of the current aftertreatment technologies used to mitigate criteria pollutant emissions require energy to operate and thus cut into the engine's fuel efficiency. Finally, representatives of the glider assembler industry contend that glider vehicles reduce GHG and other air emissions on a "lifecycle basis" because of the savings created by using recycled materials, including the reuse of cast steel in the remanufacturing process. Other studies report more comparable GHG emission numbers. For example, the Union of Concerned Scientists (UCS) estimates GHG emissions at 7%-9% lower and 4% lower using estimates with on-road operating assumptions and more recently manufactured vehicles. The UCS comments argue that recent advancement in engine design "makes clear just how quickly any possible short-term fuel economy advantage for glider vehicles disappears." Following promulgation of the Phase 2 rule, EPA received from representatives of the glider vehicle assembler industry a joint petition requesting that the agency reconsider the application of the Phase 2 rule to glider vehicles, glider engines, and glider kits. The petitioners made three principal arguments. First, they argued that EPA is not authorized by CAA Section 202(a)(1) to regulate glider kits, glider vehicles, or glider engines. Second, they contended that in the Phase 2 rule EPA "relied upon unsupported assumptions to arrive at the conclusion that immediate regulation of glider vehicles was warranted and necessary." Third, they asserted that reconsideration was warranted under Executive Order 13783 of March 28, 2017, "Promoting Energy Independence and Economic Growth." In addition, the petitioners took particular issue with what they characterized as EPA's assumption that the NO x and PM emissions of glider vehicles would be increased significantly. They highlighted the findings of a Tennessee Tech University (TTU) study that analyzed NO x , PM, and carbon monoxide emissions from both remanufactured and OEM engines. The results of the study show that "remanufactured engines from model years between 2002 and 2007 performed roughly on par with OEM 'certified' engines" and "in some instances even out-performed the OEM engines." Since the proposal, TTU leaders and other stakeholders have raised questions about the accuracy of the TTU study, the role engineering experts at the university played in it, and the relationship between specific glider kit manufacturers and the university. TTU has since asked EPA to "withhold any use or reference to said study pending the conclusion of [an] internal investigation." Finally, the petitioners argued that the Phase 2 rule had failed to consider the significant environmental benefits that glider vehicles create. They noted that glider vehicle GHG emissions are less than those of OEM vehicles due to glider vehicles' greater fuel efficiency and that the carbon footprint of glider vehicles is further reduced by the savings created by recycling materials. On November 16, 2017, EPA (under Administrator Scott Pruitt) proposed a repeal of the emission standards and other requirements on heavy-duty glider vehicles, glider engines, and glider kits based on a proposed interpretation of the CAA. In the proposed repeal, EPA determined that its previous statutory interpretation of its authority to regulate glider engines, vehicles, and kits was "incorrect" and "not the best reading" of the CAA. EPA based the proposed repeal on a different interpretation of the CAA under which glider vehicles would be found not to constitute "new motor vehicles" within the meaning of CAA Section 216(3), glider engines would be found not to constitute "new motor vehicle engines" within the meaning of CAA Section 216(3), and glider kits would not be treated as "incomplete" new motor vehicles. Under this new interpretation, EPA said it lacked authority to regulate glider vehicles, glider engines, and glider kits under CAA Section 202(a)(1). To support its statutory interpretation, EPA stated that it has "inherent authority to reconsider, revise, or repeal past decisions to the extent permitted by law so long as the agency provides a reasoned explanation." Based on the agency's reading "of the structure and history" of the Motor Vehicle Air Pollution Control Act of 1965 and the Automobile Information Disclosure Act of 1958, EPA contended in the proposed repeal that it would seem clear that Congress intended, for purposes of Title II, that a "new motor vehicle" would be understood to mean something equivalent to a "new automobile"--i.e., a true "showroom new" vehicle. It is implausible that Congress would have had in mind that a "new motor vehicle" might also include a vehicle comprised of new body parts and a previously owned powertrain. In summary, EPA interpreted legislative history to conclude that "it seems likely that Congress understood a 'new motor vehicle' ... to be a vehicle comprised entirely of new parts." Additionally, under EPA's proposed interpretation, the agency would not have the authority to regulate glider kits under CAA Section 202(a)(1). If glider vehicles are not "new motor vehicles" under CAA Section 216(3), then the agency said it would lack authority to regulate glider kits as "incomplete" new motor vehicles. Further, given that a glider kit lacks a powertrain, EPA stated that a glider kit would not explicitly meet the definition of motor vehicle , which is defined to mean "any self-propelled vehicle" under 42 U.S.C. 7550(2). EPA's proposed "Repeal of Emission Requirements for Glider Vehicles, Glider Engines, and Glider Kits" has not been finalized. The comment period for the proposal closed on January 5, 2018. The proposal received over 4,000 comments. Some commentators have supported EPA's efforts to reverse the standards and provide relief to the affected glider vehicle assembler industry. They have reiterated the arguments, as presented in the petitions for reconsideration, that EPA lacks the authority to regulate glider vehicles under the CAA because they could not be considered "new motor vehicles." They assert that the benefit of a glider vehicle over a new truck is a more affordable, reliable, and fuel efficient vehicle for purchasing that requires less maintenance, yields less downtime, and yet offers a range of currently available safety features and amenities. However, some commentators from the trucking sector--including original equipment manufacturers, large fleets, and advanced technology firms--have pushed back against the proposed repeal, arguing that EPA's legal justification could "effectively nullify" the agency's statutory authority over new vehicles and engines and disadvantage numerous OEM businesses that have invested in cleaner engine and emission control technologies. Several large truck manufacturers have expressly supported the limits on glider vehicles, including Volvo Group, Daimler Trucks North America, and Navistar International Corp (notably, some of the same manufacturers that sell glider kits). Also, comments from 12 attorneys general--from states including California, New York, Illinois, Pennsylvania, and North Carolina--argued that the "proposed repeal rests on a legally untenable reinterpretation of the Agency's duty to regulate harmful air pollutants from 'new motor vehicles' and 'new motor vehicle engines.'" Further, comments from state and local air quality agencies (e.g., the National Association of Clean Air Agencies) noted that the proposed repeal would likely force state and local regulators to place new requirements on stationary sources (e.g., power plants and factories) in their State Implementation Plans in order to meet National Ambient Air Quality Standards for ozone and PM. On February 8, 2018, the California Air Resources Board proposed to adopt the glider vehicle requirements into the state's broader rulemaking aligning California's GHG standards for medium- and heavy-duty trucks and trailers with the federal Phase 2 standards for MYs 2018-2027. The new California rule, when final, would allow only 2010 and later model year heavy-duty truck engines in glider kits. EPA has approved California's waiver request under Section 209(b) of the CAA to adopt its own MY 2014-2018 Phase 1 standards for heavy-duty vehicles. It is uncertain how California and the federal government would proceed with the adoption of the state's Phase 2 program and its glider vehicle provisions if changes are made at the national level. The Administration's 2018 Spring Regulatory Agenda projected a final rule to repeal the glider requirements by May 2018. However, as reported on May 2, 2018, the White House Office of Management and Budget (OMB) rejected EPA's draft final rule on the grounds that EPA had yet to craft a regulatory impact analysis detailing the pollution impacts of the plan. This analysis is required for deregulatory actions according to OMB Guidance, released April 5, 2017, which addresses the requirements of Executive Order 13771 of January 30, 2017, "Reducing Regulation and Controlling Regulatory Costs." On July 6, 2018, EPA issued an 18-month enforcement pause of the Phase 2 production limits on glider vehicles, giving the agency more time to formally revisit the provisions. According to a "no-action assurance" memorandum, the agency would exercise its "enforcement discretion" over production caps that apply to the vehicles if they do not meet modern emissions limits. The exercise of such discretion is one of two "interim steps" the agency planned to take to reduce adverse impacts on the industry. The memorandum states that the agency would also plan to formally extend the regulatory compliance date to December 31, 2019. In a July 13, 2018, letter, 13 states--led by California--urged acting EPA Administrator Andrew Wheeler to withdraw or stay the agency's no-action assurance regarding the production limits on glider vehicles, stating that EPA's enforcement discretion "circumvents the substantive and procedural requirements that EPA must meet in order to modify a rule." Further, on July 17, 2018, three environmental groups filed a petition with the U.S. Court of Appeals for the District of Columbia Circuit seeking an emergency stay of EPA's enforcement discretion, citing the need for "urgent relief in order to avert" substantial and irreparable public health consequences while also urging that the court consider immediately vacating the no-action assurance memorandum. On July 18, 2018, in a 2-1 decision, the D.C. Circuit granted an emergency stay of the memorandum to give the court "sufficient opportunity" to consider the emergency motion. The court also ordered EPA to file a response to the emergency motion by July 25, 2018. Because of the emergency stay, EPA cannot implement the no-action assurance memorandum until the court resolves the merits of the motion or orders otherwise. On July 26, 2018, EPA withdrew the no-action assurance. In a memorandum to EPA assistant administrators, Wheeler noted that the agency suspends enforcement only in rare circumstances and that after consulting with EPA lawyers and policy experts, he "concluded that the application of the current regulations to the glider industry does not represent the kind of extremely unusual circumstances that support the EPA's use of enforcement discretion." However, the memo states that the agency would "continue to move as expeditiously as possible on a regulatory revision regarding the requirements that apply to the introduction of glider vehicles into commerce to the extent consistent with statutory requirements and due consideration of air quality impacts." Glider kits and glider vehicles have presented challenges to the interpretation and enforcement of other federal requirements. Some notable examples include safety standards and tax provisions. While representatives from the glider vehicle assembler industry stress that new gliders maintain "modern safety features and amenities," many glider vehicles are not required to do so under existing interpretation set by Department of Transportation (DOT) agencies. NHTSA and other DOT agencies consider a truck to be "newly manufactured" and subject to Federal Motor Vehicle Safety Standards when a new cab is used in its assembly "unless the engine, transmission, and drive axle(s) (as a minimum) of the assembled vehicle are not new, and at least two of these components were taken from the same vehicle." Thus, many glider vehicles may not be classified as "newly manufactured" for the purposes of federal safety standards. Such vehicles would only need to comply with the standards under 49 C.F.R. Part 571, Subpart B, that were promulgated prior to the date of manufacture for the engine, transmission, and drive axle(s) of the assembled vehicle. One example of a recent requirement from which such glider vehicles would be exempt is the standard for Electronic Stability Control promulgated in 2015, which promised to "prevent 40 to 56 percent of untripped rollover crashes and 14 percent of loss-of-control crashes" annually. Under NHTSA's existing definition, glider vehicles could also be exempt from future safety standards for emerging technologies. Safety technologies that could be left off future glider vehicles due to their exemption could include automatic emergency braking (now required in Europe on most new heavy-duty vehicles), lane departure warning and lane-keeping assist, and vehicle-to-vehicle electronic communication. Further, according to guidance published by the Federal Motor Carrier Safety Administration (FMCSA) in July 2017, vehicles equipped with pre-MY 2000 engines are not subject to the requirements for electronic logging devices. As this exemption is based on the model year of the engine--not the chassis--any glider vehicle equipped with a pre-MY 2000 engine would be exempt. The policy deviates from FMCSA's previous guidance, which emphasized the model year as determined by the Vehicle Identification Number on a truck's chassis. The logging device requirement is designed to help reduce fatigue-related crashes by improving enforcement of hours-of-service limits for truck drivers. For more information on truck safety issues, see CRS Report R44792, Commercial Truck Safety: Overview , by David Randall Peterman. Internal Revenue Code (IRC) Section 4051 imposes a 12% excise tax on the first retail sale price of certain heavy trucks, trailers, and tractors. Specifically, "articles" subject to tax under Section 4051 include (1) automobile truck bodies and chassis having a gross vehicle weight of more than 33,000 pounds, (2) truck trailer and semitrailer bodies and chassis suitable for use with a vehicle having a gross weight of more than 26,000 pounds, and (3) tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. A tractor with a gross weight of 19,500 pounds or less is not subject to the 12% tax if its weight when combined with a trailer or semitrailer is 33,000 pounds or less. One issue of confusion among taxpayers in recent years has been whether a glider kit modification or renovation of a heavy truck chassis triggers excise tax liability. According to IRC Section 4052(f)(1), "repairs or modifications" of a taxable article that do not exceed 75% of the retail price of a comparable new vehicle do not trigger excise tax liability, and this provision serves as a taxpayer safe harbor provision from excise tax liability. The safe harbor provision allowed some glider vehicles to avoid triggering the tax. However, in 2014, the IRS Office of Chief Counsel released an advisory memorandum on the tax treatment of chassis renovations in which a glider kit dealer, or "outfitter," combines components (i.e., glider kits) to produce a highway tractor or truck chassis in four hypothetical scenarios. According to the scenarios in the memorandum--which is not official or binding guidance--the first retail sale of vehicles refurbished using new parts from gliders kits can be treated as new vehicles subject to the 12% excise tax. The memorandum also explained that the constructed price of the glider kit vehicle subject to tax should be calculated as the price of the refurbished vehicle plus a 4% markup minus the value of used components provided by the customer. The advisory opinion was based on an interpretation that a glider kit vehicle triggers tax liability because it was effectively a "new vehicle" and that Congress's intent in enacting the Section 4052(f) safe harbor was to apply it only to "repairs" to an "existing vehicle." Some industry representatives and tax planning professionals saw this as a change in previous practice that such refurbishments would not trigger excise tax liability so long as they collectively did not exceed the 75% of price threshold. More recent IRS guidance seems to confirm an enforcement trend toward treating more glider kit vehicles as subject to excise tax. In 2016 and 2017, IRS issued interim guidance on defining what constitutes a "chassis" subject to excise tax under Section 4051. IRS defined a "chassis" as the frame and supporting structure and all those "components" that are attached to it, except for components specifically exempt from tax. The following is a nonexhaustive list of chassis components: engine, axles, transmission, drivetrain, suspension, exhaust aftertreatment system, and cab. Some tax professionals interpret the interim guidance as the IRS requiring that any components that are removed from a previously taxed chassis and are remanufactured or repaired must be put back into the same chassis in order to satisfy the Section 4052(f) safe harbor requirements. On April 24, 2018, the Department of the Treasury issued a press release indicating that it plans to issue final regulations on Section 4051 as part of the Trump Administration's "burden-reducing guidance" projects, but no date of completion or further details were provided. Members of Congress remain divided on EPA's glider vehicle regulations. Recent congressional actions regarding glider kits and vehicles include proposed legislation and agency oversight requests by committees, groups of lawmakers, and individual Member offices. Examples include Representative Diane Black sponsored two amendments in the 114 th Congress to Department of the Interior, Environment, and Related Agencies Appropriations bills ( H.Amdt. 1313 and H.Amdt. 630 ) to prohibit EPA from using funds to implement, administer, or enforce the agency's Phase 2 fuel efficiency and emissions standards or any other rule with respect to glider kits and glider vehicles. Both amendments were agreed to by voice votes, but neither spending bill was enacted. In a March 12, 2018, letter to EPA Administrator Scott Pruitt, Senators Tom Carper and Tom Udall--Ranking Members to the Senate Environment and Public Works Committee and the Senate Appropriations Committee, respectively--asked the agency to provide documentation on the proposed repeal and to "immediately announce plans to withdraw the proposal." In March 2018, 14 Republican Members of Congress--four Senators and 10 Representatives--sent letters to EPA Administrator Scott Pruitt asking the agency to discontinue efforts to repeal the emissions standards for glider vehicles because a repeal would undermine manufacturing industries in their home states. In a May 16, 2018, letter to DOT Secretary Elaine Chao, Representative Bill Posey asked DOT to defer to EPA's proposed repeal. In its response, DOT stated that it "does not currently impose fuel efficiency requirements on glider kits or glider vehicles" and did not plan to do so. At issue in EPA's Phase 2 standards for glider kits and glider vehicles--and in their proposed repeal--are requirements affecting criteria pollutants, not fuel efficiency. In a May 24, 2018, letter to OMB, 24 Members of Congress from both the House and the Senate "who represent manufacturers and/or users of glider kits" urged OMB to waive the requirement for a Regulatory Impact Analysis for the proposed repeal. In a June 21, 2018, letter, Subcommittee Chairman Greg Gianforte on the House Committee on Oversight and Government Reform asked EPA's Office of the Inspector General (OIG) to investigate the November 20, 2017, NVFEL study. The letter cites documents that show communications between EPA scientists and stakeholders in the trucking industry that compete with the glider vehicle assembler industry that may have impacted the "objectivity and legitimacy" of the study. On September 4, 2018, EPA's OIG announced plans to audit the agency's "selection, acquisition and testing of glider vehicles at the EPA's National Vehicle and Fuel Emissions Laboratory, as well as the EPA's planning for this testing." In a July 12, 2018, letter to EPA Acting Administrator Andrew Wheeler, Chairman Lamar Smith and other Members of the House Committee on Science, Space, and Technology asked EPA officials for documents pertaining to, and a briefing on, the NVFEL study, stating concerns similar to those listed in Chairman Gianforte's letter. On August 21, 2018, EPA Assistant Administrator William Wehrum responded to Chairman Smith stating that "relevant staff ... have assured me that they designed the test program, performed the testing, and wrote the test report--all independent of any outside stakeholder input." The response stated that EPA would work with the committee to schedule a briefing on the NVFEL glider vehicle testing. In an August 29, 2018, follow-up letter to Acting Administrator Wheeler, Chairman Smith requested additional documents and information in order "to appropriately inform the Committee on the rationale to initiate a testing program and the overall independence of the testing program." The House Committee on Science, Space, and Technology's Subcommittee on Oversight and Subcommittee on Environment have scheduled a hearing entitled "Examining the Underlying Science and Impacts of Glider Truck Regulations" on September 13, 2018.

On October 25, 2016, the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration jointly published the second phase of greenhouse gas (GHG) emissions and fuel efficiency standards for medium- and heavy-duty vehicles and engines. The rule affects commercial long-haul tractor-trailers, vocational vehicles, and heavy-duty pickup trucks and vans. It phases in between model years 2018 and 2027. Under the rulemaking, EPA proposed a number of changes and clarifications for standards respecting "glider kits" and "glider vehicles." A glider kit is a chassis for a tractor-trailer with a frame, front axle, interior and exterior cab, and brakes. It becomes a glider vehicle when an engine, transmission, and rear axle are added. Engines are often salvaged from earlier model year vehicles, remanufactured, and installed in the glider kit. The final manufacturer of the glider vehicle (i.e., the entity that assembles the parts) is typically a different entity than the original manufacturer of the glider kit. Glider kits and glider vehicles are produced arguably for purposes such as allowing the reuse of relatively new powertrains from damaged vehicles. The Phase 2 rule contains GHG and criteria air pollution emission standards for glider vehicles. The rule sets limits for glider vehicles similar to those for new trucks, with some exemptions. Under the rulemaking, EPA and various commentators argued that glider vehicles should be considered "new motor vehicles" under the Clean Air Act (CAA) because of recent changes in the glider market. That is, in the decade leading up to the rulemaking, sales of glider vehicles increased by an order of magnitude--from several hundred annually to several thousand or more. EPA and various commentators interpreted this change to be more than an attempt to replace damaged chassis, seeing it instead as an attempt by glider vehicle assemblers to circumvent various federal regulations. At the time, the older model year engines being used in glider vehicles were not required to meet current EPA emission standards for nitrogen oxide and particulate matter (which began in 2007 and took full effect in 2010). Under the Phase 2 rulemaking, EPA estimated that NOx and PM emissions from glider vehicles using pre-2002 engines (prior to exhaust aftertreatment requirements) could be 20-40 times higher than current engines. Subsequent to the Phase 2 rulemaking, EPA received petitions for reconsideration for, among other provisions, the glider requirements. The petitioners argued that EPA lacks the authority to regulate glider vehicles under the CAA because they could not be considered "new motor vehicles." The petitioners asserted that the benefit of a glider vehicle over a new truck is a more affordable, reliable, and fuel efficient vehicle for purchasing that requires less maintenance, yields less downtime, and yet offers a range of currently available safety features and amenities. On November 16, 2017, EPA (under Administrator Scott Pruitt) proposed to repeal the emission standards and other requirements for heavy-duty glider vehicles, glider engines, and glider kits. On July 26, 2018, EPA (under acting Administrator Andrew Wheeler) stated that it would "move as expeditiously as possible on a regulatory revision regarding the requirements that apply to the introduction of glider vehicles into commerce to the extent consistent with statutory requirements and due consideration of air quality impacts." A rule has not been finalized. Some in Congress have supported the Trump Administration's efforts to reverse the standards and provide relief to the affected glider vehicle assembler industry. However, EPA's efforts to delay and repeal the rule have prompted criticism from some trucking industry officials, state air agencies, environmentalists, and other lawmakers who fear that increasing production of glider vehicles could result in a fractured vehicle market and significantly higher in-use emissions of air pollutants associated with a host of adverse human health effects, including premature mortality.

Member-to-Member correspondence has long been used in Congress. For example, since early House rules permitted measures to be introduced only in a manner involving the "explicit approval of the full chamber," Representatives needed permission from other Members to introduce legislation. A common communication medium for soliciting support for this action was a letter to colleagues. For example, Representative Abraham Lincoln, in 1849, formally notified his colleagues in writing that he intended to seek their authorization to introduce a bill to abolish slavery in the District of Columbia. The use of the phrase "Dear Colleague" has been used since at least early in the 20 th century to refer to a letter widely distributed among Members. In 1913, the New York Times included the text of a "Dear Colleague" letter written by Representative Finley H. Gray to Representative Robert N. Page in which Gray outlined his "conceptions of a fit and proper manner" in which Members of the House should "show their respect for the President" and "express their well wishes" to the first family. In 1916, the Washington Post included the text of a "Dear Colleague" letter written by Representative William P. Borland and distributed to colleagues on the House floor. The letter provided an explanation of an amendment he had offered to a House bill. A "Dear Colleague" letter is official correspondence that is sent by a Member, committee, or officer of the House of Representatives or Senate and that is widely distributed to other congressional offices. These letters frequently begin with the salutation "Dear Colleague." The length of such correspondence varies, with a typical "Dear Colleague" running one to two pages. A "Dear Colleague" letter may be circulated in paper through internal mail, distributed on the chamber floor, or sent electronically. "Dear Colleague" letters are often used to encourage others to co-sponsor, support, or oppose a bill. "Dear Colleague" letters concerning a bill or resolution generally include a description of the legislation or other subject matter along with a reason or reasons for support or opposition. Additionally, "Dear Colleague" letters are used to inform Members and their offices about events connected to congressional business or modifications to House or Senate operations. The Committee on House Administration and the Senate Committee on Rules and Administration, for example, routinely circulate "Dear Colleague" letters to Members concerning matters that affect House or Senate operations, such as House changes to computer password policies or a reminder about Senate restrictions on mass mailings prior to elections. Congress has recently expanded its use of the Internet and electronic devices to facilitate distribution of legislative documents. Consequently, electronic "Dear Colleague" letters can be disseminated via internal networks in the House and Senate, supplementing or supplanting paper forms of the letters. Electronic communication has increased the speed and facilitated the process of distributing "Dear Colleague" letters. The House has developed a web-based distribution system--the e -"Dear Colleague" system. Unveiled in 2008, this system replaced an e-mail-based system. The e -"Dear Colleague" system allows Members and staff to attach issue terms to "Dear Colleague" letters, to send letters with graphics and hyperlinks, and to subscribe to "Dear Colleague" letters based on issue terms. Additionally, the e -"Dear Colleague" system contains a searchable archive of all letters. "Dear Colleague" letters may still be sent as a paper letter. For paper letters, the House has specific mailing requirements, including the number of copies required and the schedule for delivery to Member offices. This report first analyzes the volume of electronic "Dear Colleague" letters in the House of Representatives since 2003. The report then analyzes data from the e-"Dear Colleague" system to reveal what can now be known about the use of "Dear Colleague" letters in the House and explores some hypotheses that might explain the data. The report concludes with questions for potential future development of the e -"Dear Colleague" system. The existence of the e-mail "Dear Colleague" system and the web-based e -"Dear Colleague" system means that data on House "Dear Colleague" letters are available beginning in 2003. For the analysis in this report, these data were divided into two datasets. The first dataset, which contains the total number of "Dear Colleague" letters between January 2003 and December 2010, allowed examination of the volume of "Dear Colleague" letters sent. For "Dear Colleague" letters sent between January 2003 and December 2008, data were collected from the archive of e-mail letters collected in the Legislative Information System (LIS). The e -"Dear Colleague" system was used to obtain data on letters sent between January 2009 and December 2010. The second dataset comprises all "Dear Colleague" letters sent between January 2009 and December 2010 through the e -"Dear Colleague" system. This dataset was used to examine how the e -"Dear Colleague" system was used by Members, committees, and officers of the House. For each letter, the date sent, the letter's associated issue terms, the sending office, the letter's title, and any associated bills or resolutions were downloaded. These data were then coded by the Congressional Research Service (CRS) for the letter's purpose, the type of office that sent the letter (Member, committee, House officer, or congressional commission), the political party of the sender (if relevant), and the final disposition of legislation associated with the letter (if any). For the purpose of this report, all analyses were based on "Dear Colleague" letters sent electronically, including letters sent through the e-mail system or the web-based e -"Dear Colleague" system. Paper copies of "Dear Colleague" letters were not included in the analyses since there had been no consistent effort to collect or track these "Dear Colleague" letters. Overall, the number of "Dear Colleague" letters sent electronically between 2003 and 2010 increased each year. Using the first dataset to examine the volume of "Dear Colleague" letters sent electronically, Figure 1 shows the number of "Dear Colleague" letters sent annually from 2003 to 2010. In those years, a total of 78,279 "Dear Colleague" letters were sent electronically. In the 111 th Congress (2009-2010) alone, however, 31,768 "Dear Colleague" letters were sent. The overall increase in the number of electronic "Dear Colleague" letters between 2003 and 2010 might be explained in part by increased use of electronic communications tools in the House. E-mail and webpages are no longer the only electronic communication tools available to Members, committees, and officers. As congressional offices have become more comfortable using social media, such as Facebook, Twitter, and YouTube, to communicate with their constituents, their comfort level with using electronic "Dear Colleague" letters to communicate with other Members, committees, and officers might have also increased. Additionally, the ease of communicating electronically might have contributed to the large number of "Dear Colleague" letters, as this form of communication easily accommodates Washington schedules, rapid response to events, and other aspects of the congressional work environment. Examining the number of electronic "Dear Colleague" letters sent each year provides an overall picture of the increased use of e-mail and web-based distribution. Examining the average number of letters sent each month provides a more detailed look at the distribution of "Dear Colleague" letters over an entire Congress. Figure 2 shows (1) the average number of "Dear Colleague" letters sent each month over the four Congresses that occurred from 2003 to 2010 and (2) the average aggregate over the first and second sessions of each Congress. Between 2003 and 2010, an average of 831 "Dear Colleague" letters were sent each month. As Figure 2 shows, the pattern of "Dear Colleague" letters aligned with the overall congressional work schedule. Between January and September, the number of "Dear Colleague" letters sent in the first and second sessions was fairly similar. After September, however, the pattern in the number of "Dear Colleague" letter changed between the first and second sessions. The volume in September was relatively high in both sessions, but there was a drop-off beginning in October of the second session. For August, there was a significant reduction in the number of "Dear Colleague" letters sent. Primarily, this reduction occurred because of the month-long district work period (recess) that is normally scheduled. As a result of the district work period, Members are likely more focused on constituent service and reelection activities than on introduction of legislation and public policy. Following the August recess, there was an overall decline in the number of "Dear Colleague" letters sent. The decline, however, was more pronounced in the second session. In fact, in October of a first session, there was actually an increase in the number of "Dear Colleague" letters sent before the number of letters declines in November and December. For the second session, after approximately 1,000 letters sent in an average September, the number of "Dear Colleague" letters fell off dramatically for the remainder of the Congress. The drop-off in letters in the last months of the first session was likely the result of a declining workload in the fall of most Congresses. Additionally, the drop-off mirrors a traditional congressional recess at Thanksgiving and sine die adjournment before Christmas. During this time, generally the number of legislative decisions declines and fewer pieces of legislation are introduced. During the second session, the drop-off in "Dear Colleague" letters can likely be explained by the congressional election cycle. Beginning sometime in October, Congress adjourns for a period leading up to the November election, allowing Members to spend time in their district and campaign for reelection. Use of the "Dear Colleague" system during this time is limited, as Members are focused on electoral, not legislative, activities. Following the election, generally the overall congressional workload in any lame-duck session is reduced as Congress meets for brief periods on a limited agenda, the parties work to organize for the next Congress, Members who were reelected devise future legislative and representational strategies, and Members who were not reelected work on closing their offices. The data suggest that Members send "Dear Colleague" letters around the House's legislative calendar and around legislative opportunities to initiate new bills and to influence floor actions. Sending "Dear Colleague" letters during longer breaks and during the final months of the second session are not likely to be as effective as sending letters when the House is in session and during the most legislatively active months. "Dear Colleague" letters reach their target audience if they are sent when Members are in Washington. The analysis in this and subsequent sections uses the second dataset of "Dear Colleague" letters: those sent in the 111 th Congress (2009-2010). While Members, House officers, committees, and House commissions may send "Dear Colleague" letters, Members accounted for 94% (26,380) of all "Dear Colleague" letters sent in the 111 th Congress. Committees sent the next highest volume of "Dear Colleague" letters with 5% (1,396 letters), followed by House officers with 0.6% (158 letters), and House commissions with 0.5% (134 letters). That Members send an overwhelming majority of "Dear Colleague" letters is expected, as the majority of "Dear Colleague" letters are sent to request legislative co-sponsors. While committees only account for 5% of "Dear Colleague" letters, it is possible that the number of "Dear Colleague" letters dealing with committee activities is greater than 5%, since committee members may have sent "Dear Colleague" letters in their own name rather than under a committee's banner. In this case, a letter would have been counted as a Member letter. In the 111 th Congress, 82.5% of all Member letters were sent by Democrats and 17.5% were sent by Republicans. These numbers are not descriptively representative of the House membership for the 111 th Congress. Overall, the 111 th Congress was 59% Democratic and 41% Republican. The difference between the membership of the 111 th Congress and the party affiliation of "Dear Colleague" letter senders may result from one party having placed greater emphasis on using the e -"Dear Colleague" system than the other. It is also possible that, when Members from different parties co-sponsored legislation, only one majority party Member sent a "Dear Colleague" letter on behalf of his or her colleagues. Additionally, because the majority has more opportunities to schedule and direct legislation in the House, majority Members might have been more likely to use the "Dear Colleague" system to express their views and solicit support for their proposals. "Dear Colleague" letters are often used to encourage others to co-sponsor, support, or oppose a bill or resolution. "Dear Colleague" letters concerning a bill or resolution generally include a description of the legislation along with a reason or reasons for support or opposition. For example, a "Dear Colleague" letter sent during the 111 th Congress solicited co-sponsors for H.R. 483 , the Victims of Crime Preservation Fund Act of 2009, and H.R. 3402 , the Crime Victims Fund Preservation Act of 2009. The "Dear Colleague" letter asked for other Members to co-sponsor the bills and then explained why the issue was important. Additionally, "Dear Colleague" letters are used to inform Members and their offices about events connected to congressional business or modifications to chamber operations. The Committee on House Administration, for example, routinely circulates "Dear Colleague" letters to Members concerning matters that affect House operations, such as the announcement in the 111 th Congress of support for Apple iPhones on the House network. Other characteristics and purposes are described below. When a Member, officer, committee, or commission uses the e -"Dear Colleague" system to send a letter electronically, the sender may categorize the letter with up to three issue terms (see Table 1 for a list of categories). When the letter is sent, the categories are included with the "Dear Colleague" letter and are displayed in the subject line of the e-mail sent to subscribers. In the 111 th Congress, a majority of offices (52.6%) chose to assign three categories, the maximum, to their letters, while 26.6% of offices assigned two categories, and 20.8% assigned one category. The available categories were drafted by the Committee on House Administration and the House Chief Administrative Officer based on conversations with offices that used the earlier e-mail-based system and the categories that appeared most frequently on "Dear Colleague" letters sent through that system. The categories have not been updated or changed since they were initially approved by the Committee on House Administration in 2008. Table 1 shows that some categories were used more frequently by senders than others. If an office wanted to assign more than three categories to a letter, it may have sent the letter multiple times. Sending the letter multiple times with different issue terms assigned may have made it possible to reach a wider House audience. Table 1 lists the 32 available categories and the number and percentage of "Dear Colleague" letters associated with each category. In the 111 th Congress, the most popular categories were health care (8.8%) and foreign affairs (7.9%), followed by education (6.0%), family issues (5.8%), economy (5.6%), and environment (5.4%). When evaluating the data, it is important to note that the sender selects a category. While it is possible that some of the self-assigned categories do not accurately reflect the content of a "Dear Colleague" letter, the top six categories mirror the House's legislative focus during the 111 th Congress. To determine the purpose of each "Dear Colleague" letter sent during the 111 th Congress, the author of this report examined each letter for content and placed each letter into one of five categories that described the purpose of the letter. These categories were 1. elicited co-sponsors for legislation; 2. collected signatures for letters to executive branch officials or congressional leadership; 3. invited other Members and staff to events; 4. provided information or advocated on public policy, floor action, or amendments; and 5. announced administrative policies of the House. For letters that expressed multiple goals, the most prominent purpose (i.e., listed in the subject line, header, or first sentence of the letter) was coded. For example, a "Dear Colleague" letter that asked for co-sponsorship often also provided information on public policy or floor action. The author, however, by placing the word "co-sponsor" in the subject line and asking other Members to contact his or her office to co-sponsor a bill or resolution, highlighted co-sponsor solicitation over other goals. Table 2 lists the purposes of letters in the 111 th Congress and the number of letters associated with each purpose. Eliciting co-sponsors was the most common reason for sending "Dear Colleague" letters (53%) in the 111 th Congress. Overall for the Congress, 8,789 bills, resolutions, concurrent resolutions, and joint resolutions were introduced in the House. While the number of co-sponsors for any given piece of House legislation varied (from 0 to 425), the average number of co-sponsors was 17.9. In the 111 th Congress, 1,636 bills, resolutions, concurrent resolutions and joint resolutions were linked with a "Dear Colleague" letter. For this legislation, the average number of co-sponsors was greater than for legislation not associated with a "Dear Colleague" letter. For legislation linked with a "Dear Colleague" letter, the average number of co-sponsors was 38.2. Measuring the exact impact of a "Dear Colleague" on the outcome of any given piece of legislation is not possible. What the data can provide is a glimpse into any variance between the number of co-sponsors for enacted bills with an associated "Dear Colleague" letter and those without. In the 111 th Congress, 265 House bills became law. Of these public laws, 50 (19%) had "Dear Colleague" letters attached to the underlying legislation and 215 (81%) did not. For public laws that had a "Dear Colleague" letter, the underlying House legislation had a higher average number of co-sponsors (74) compared with the underlying House legislation that did not have an associated letter (16). For simple resolutions (H.Res.), the numbers are similar. Of the 1,784 simple resolutions introduced in the House in the 111 th Congress, 894 (50%) were agreed to, two failed to pass the House (0.11%), 836 (47%) were introduced and referred to a committee or subcommittee, and 35 (2%) were reported by a committee but not scheduled for consideration in the House. Additionally, 17 (1%) simple resolutions were tabled on the floor. For simple resolutions that were agreed to in the House, 155 were associated with a "Dear Colleague" letter and 739 were not. Resolutions associated with a "Dear Colleague" letter had an average of 50 co-sponsors, while resolutions not associated with a "Dear Colleague" letter had an average of 24. In addition to eliciting co-sponsors, "Dear Colleague" letters were also used to invite other Members or staff to a briefing or to join a caucus (18.3%). "Dear Colleague" letters provide an opportunity to promote events directly to fellow Members and their staff. For example, a Member sent a "Dear Colleague" letter in June 2010 inviting other Members and staff to a "special briefing" on food security with panelists from the United Nations and the United States Agency for International Development (USAID). "Dear Colleague" letters were often used to solicit other Members to co-sign letters to congressional leadership, committee chairs, and executive branch officials (20.8%). Sending letters to executive branch officials or congressional leadership can be an important tool for Members seeking to influence policymaking. A letter to congressional leadership, committee chairs, or the executive branch with multiple signers, can be used to express Members' opinion on legislation pending before the House or on executive branch policy implementation. For example, the House Committee on Foreign Affairs used a "Dear Colleague" letter to solicit signatures on a letter to President Barack Obama expressing the need for tighter sanctions against Syria. The "Dear Colleague" letter outlined the committee signer's beliefs on why sanctions were important and why other Members should consider signing on. Additionally, the "Dear Colleague" letter provided the text of the letter that would be sent to the White House. Members, committees, and commissions also used "Dear Colleague" letters to provide information to other Members (6.7%). Informational "Dear Colleague" letters included letters that shared newspaper articles, explained a Member's position on a bill, or encouraged support or defeat of measures being considered on the House floor. For example, in June 2010, a Member sent a "Dear Colleague" letter encouraging other Members not to support H.R. 5034, the Comprehensive Alcohol Regulatory Effectiveness (CARE) Act of 2010. The letter shared a letter from the leaders of beer, wine, and sprits associations asking Congress "to preserve the effectiveness of the existing state-based alcohol regulatory system," and outlining the Member's position on the bill. Finally, officers of the House and committees used "Dear Colleague" letters to make administrative announcements (1.2%). These announcements in the 111 th Congress included a restatement of mileage reimbursement rates, special event procedures (e.g., ticketing for House gallery seating), or application of House rules to specific events (e.g., the use of official funds for travel to funerals). The current "Dear Colleague" distribution system provides Members with the option of linking a "Dear Colleague" letter to a specific bill or resolution. Approximately 59.3% of "Dear Colleague" letters were linked in the e -"Dear Colleague" system to legislation in the 111 th Congress. Table 3 shows the type of legislation linked to "Dear Colleague" letters and the overall percentage of legislation introduced in the 111 th Congress. The majority (78.1%) of "Dear Colleague" letters linked to legislation discussed a House bill. Typically, these "Dear Colleague" letters asked for co-sponsors, but they also advocated a position prior to a floor vote or solicited other Members to cosign letters to the administration on public law implementation. The same goals for sending a "Dear Colleague" letter was presumably true for House resolutions. Bills and resolutions associated with a "Dear Colleague" letter were referred to all House committees that have legislative authority. Table 4 shows the primary or sole committee referral for legislation linked to "Dear Colleague" letters and the primary or sole committee of referral for all bills and resolutions introduced in the during the 111 th Congress. The most common committee of referral for legislation linked to "Dear Colleague" letters were similar to the most common primary or sole committee of referral for all legislation. Since the adoption and implementation of the e -"Dear Colleague" system in August 2008, the number of "Dear Colleague" letters sent in the House has continued to increase. In light of the analysis of the volume, use, characteristics, and purpose of "Dear Colleague" letters, several possible administrative and operational questions could be raised to aid the House in future discussions of the e -"Dear Colleague" system. These questions can be divided into two broad categories: questions about the volume of letters and questions about the characteristics and purpose of letters. As the e -"Dear Colleague" system continues to process and archive a higher volume of letters on an annual basis, consideration of the capacity of the system to deliver and archive "Dear Colleague" letters may be necessary. Can the current software or infrastructure handle a continuing increase in the number of "Dear Colleague" letters? Can the current system handle the indefinite archiving of "Dear Colleague" letters? The ability for Members, committees, officers, congressional commissions, and researchers to access historic "Dear Colleague" letters is an invaluable addition of the e -"Dear Colleague" system. Ensuring that this form of internal communication continues to be available would provide a new dimension to research and analysis on past legislative and administrative actions in the House. Additionally, as the number of "Dear Colleague" letters increases, how Member and committee offices handle the receipt of letters could be important. Under the current system, individual staff can receive (by subscription) "Dear Colleague" letters of interest to them. As the number of letters increase and the number of letters with cross-listed categories grows, individual subscribers could begin receiving a single letter multiple times. Creating a process at the system level to help subscribers manage letters might alleviate problems associated with receiving multiple copies of a single letter. Examining the characteristics and purpose of "Dear Colleague" letters in the House raises several questions about additions to the current system that might aid subscribers. First, the addition of information on a letter's purpose could refine the targeting of letters to the correct audience. For example, if a letter was sent to generate bill or resolution co-sponsors, labeling the letter as such would allow subscribers to immediately identify the letter's purpose. Such a label has the potential to ensure that other Members see the request for co-sponsorship and the overall topic of the letter in an expedited manner. Second, creating a linkage between "Dear Colleague" letters discussing pending legislation and the Legislative Information System (LIS) might be useful for Member and committee offices. Such a linkage would allow Members and committees to identify "Dear Colleague" letters associated with specific legislation without searching the e -"Dear Colleague" website. Listing relevant "Dear Colleague" letters in LIS could also improve the visibility of letters and attract additional interest from individuals who had not received the letter through their subscriptions. Third, creating additional issue terms could help "Dear Colleague" letter senders better target their letters. Having additional issue term choices would allow interested subscribers to more narrowly refine the types of letters they receive, thus diminishing the overall number of potentially superfluous letters they receive. Creating additional issue terms, however, could also result in an additional influx of letters for subscribers. So long as a limit of three issue terms is placed on each letter, when a sender wants a letter in more than three issue terms the letter must be sent multiple times. Adding additional issue terms may increase the number of cross-posted letters, creating additional work for subscribers to sort through the "Dear Colleague" correspondence. Finally, since the majority of "Dear Colleague" letters are sent to request bill or resolution co-sponsors, an automated way of handling responses to co-sponsorship requests might be useful. Under the current e -"Dear Colleague" system, individual offices are responsible for fielding and processing requests for co-sponsorship. If a new feature could be developed to compile positive responses for co-sponsors, Member offices could be relieved of compiling co-sponsorship lists. The use of electronic "Dear Colleague" letters has increased since 2003. With the introduction of the e -"Dear Colleague" distribution system in 2008, the number of "Dear Colleague" letters sent on an annual basis continues to increase. In 2003, 5,161 "Dear Colleague" letters were sent, while in 2010, 14,531 letters were sent in the House. This report analyzed the number of "Dear Colleague" letters sent and showed that overall more letters were sent during the first session of a Congress than the second session. Additionally, the average number of "Dear Colleague" letters sent in the second session declined between September and December, which coincides with a decline in overall legislative activity at the end of a Congress. During the 111 th Congress, data from the web-based e -"Dear Colleague" system showed that Members sent the most letters (94%), and that the most popular topics were health care (8.8%), foreign affairs (7.9%), education (6.0%), family issues (5.8%), the economy (5.6%), and the environment (5.4%). The data demonstrated that the most frequent use of "Dear Colleague" letters in the 111 th Congress was to elicit legislative co-sponsors (53%). Finally, when examining "Dear Colleague" letters that were linked to a specific piece of legislation, the data showed that public laws with a linked "Dear Colleague" letter had a greater number of average co-sponsors (74) than public laws without an associated "Dear Colleague" letter (16). The same can also be said for House resolutions, where resolutions associated with a "Dear Colleague" letter had an average of 50 co-sponsors and resolutions not associated with a "Dear Colleague" letter had average of 24.

The practice of writing "Dear Colleague" letters--official written correspondence from one Member, committee, or office to other Members, committees, or offices--dates back to at least the 1800s. Yet until recently, it was almost impossible to track the volume or purpose of "Dear Colleague" letters because a centralized, searchable system did not exist. The creation of the web-based e-"Dear Colleague" system has made it possible to systematically examine "Dear Colleague" letters, thereby offering a clearer understanding of what are largely, but not exclusively, intra-chamber communications. In analyzing data on the volume of "Dear Colleague" letters sent between January 2003 and December 2010, several discernable trends can be observed. Overall, the total number of "Dear Colleague" letters sent continued to increase, from 5,161 "Dear Colleague" letters sent in 2003 to 14,531 letters sent in 2010. Additionally, the data show that overall more letters were sent during the first session of a Congress than the second session, and that the average number of "Dear Colleague" letters sent in the second session declined between September and December. This fall-off coincides with a decline in overall legislative activity at the end of a Congress. During the 111th Congress, data from the web-based e-"Dear Colleague" system showed that Members sent the most letters (94%), and that the most popular topics were health care (8.8%) and foreign affairs (7.9%), followed by education (6.0%), family issues (5.8%), economy (5.6%), and environment (5.4%). The data demonstrated that the most frequent use of "Dear Colleague" letters in the 111th Congress was to elicit bill and resolution co-sponsors (53%). Finally, when examining "Dear Colleague" letters that were linked to a specific piece of legislation, the data showed that public laws with a linked "Dear Colleague" letter had a greater number of average co-sponsors (74) than public laws without an associated "Dear Colleague" letter (16). The same can also be said for House resolutions, where resolutions associated with a "Dear Colleague" letter had an average of 50 co-sponsors and resolutions not associated with a "Dear Colleague" letter had an average of 24. In light of the analysis of the volume, use, characteristics, and purpose of "Dear Colleague" letters, several possible administrative and operations questions are raised to aid the House in future discussions of the e-"Dear Colleague" system. These include questions on handling the growth in volume of "Dear Colleague" letters sent per year, and the potential to create additional mechanisms within the e-"Dear Colleague" system to aid subscribers in managing the "Dear Colleague" letters they receive. For a brief explanation on how to send "Dear Colleague" letters, see CRS Report RL34636, "Dear Colleague" Letters: Current Practices, by [author name scrubbed].

Most federal offshore oil and gas production leases contain royalty provisions that require the lessee to pay a certain percentage of revenue on the value of oil and natural gas production to the federal government as the lessor. In 1995, Congress passed the Deep Water Royalty Relief Act (DWRRA), which provides an incentive for exploration of oil and natural gas reserves in "deep water," which might otherwise be uneconomic, by providing that a certain initial volume of production from deep water wells would be exempt from royalty obligations. Section 302 of the DWRRA provides a mechanism by which holders of existing leases can apply for royalty relief, which is to be granted by the Secretary of the Interior if the lease would otherwise be uneconomic. However, Section 302 also provides that these lessees will not be eligible for royalty relief if the price of oil or natural gas exceeds a certain threshold level. While Section 302 of the DWRRA addresses royalty relief for holders of leases in existence at the time of the enactment of the act, Sections 303 and 304 address post-enactment lease sales. Section 303 amends the bidding system to allow Interior to offer leases going forward with royalty relief at the discretion of the Department, while Section 304 carves out an exception to that royalty payment requirement for deep water leases that were entered into within five years of the date of enactment of the DWRRA. Pursuant to Section 304, the standard royalty requirement is to be suspended for lessees holding these leases until a certain volume of oil or natural gas is produced by the lessee. The volumetric limitation on royalty relief varies based on the water depth of the leased tract. Once the volumetric threshold is exceeded, a lessee may be required to make royalty payments. Section 304 sets a statutory minimum for the volumetric threshold for royalty relief--the Secretary of the Interior is authorized to grant a higher volumetric threshold at his or her discretion. In 1998 and 1999, MMS issued deepwater offshore leases that were eligible for royalty suspension but did not include a price-based limitation on that eligibility. As a result, holders of these 1998 and 1999 deepwater leases have no obligations to make royalty payments up to the suspension volumes, regardless of the market price of oil or natural gas; the leases do not contain a price threshold on royalty relief. On August 4, 2007, the House passed H.R. 3221 . Included in this omnibus energy bill is the proposed Royalty Relief for American Consumers Act of 2007. One section of this proposed act bars the Secretary of the Interior from issuing any new leases to holders of "covered leases" unless said leaseholders either renegotiate their "covered leases" to include price thresholds or pay a "conservation of resources" fee as established in the proposed act. The statute defines a "covered lease" as "a lease for oil or gas production in the Gulf of Mexico that is ... issued by the Department of the Interior under Section 304 of the Outer Continental Shelf Deep Water Royalty Relief Act ... and ... not subject to limitations on royalty relief based on market prices that are equal to or less than the price thresholds" described in the DWRRA. Any holder of a "covered lease" is forced to decide between three options: (1) the lessee can keep the lease under its current terms (i.e., without a price threshold) and lose the right to bid on future offshore lease sales in the Gulf of Mexico; (2) the lessee can pay a newly created "conservation of resources" fee, as established elsewhere in the proposed act; or (3) the lessee can renegotiate the covered lease to include royalty relief price thresholds. Many observers interpret the proposed act as a legislative attempt to correct the perceived oversight in the 1998-1999 leases that lack price thresholds. Around the same time that the perceived oversight in the 1998 and 1999 leases described above was brought to the public's attention, Kerr-McGee Oil & Gas Corp. (Kerr-McGee) initiated litigation that challenged the authority of the Department of the Interior (DOI) to impose price thresholds on leases sold between 1996 and 2000 (i.e., the effective period of section 304 of the DWRRA). According to Kerr-McGee, section 304 of the DWRRA, which addresses lease sales during the five-year period between 1996 and 2000, barred the inclusion of royalty relief price thresholds to these leases, and therefore the collection of royalties resulting from the imposition of price thresholds contradicted section 304 of the DWRRA. Kerr-McGee brought its claim in the U.S. District Court for the Western District of Louisiana after the DOI issued an Order directing Kerr-McGee to pay royalties on oil and natural gas produced in 2003 and 2004 under eight leases operated by Kerr-McGee under the DWRRA. On October 30, 2007, the court issued a ruling that essentially confirmed Kerr-McGee's position and found that an Order issued by the DOI directing Kerr-McGee to pay royalties based on a price threshold was in error. The court based its ruling on a decision issued by the U.S. Court of Appeals for the Fifth Circuit in 2004 that interpreted the relevant sections of the DWRRA. According to the court: The Fifth Circuit interpreted Sections 303 and 304 of the DWRRA as they pertain to new production requirements for Mandatory Royalty Relief leases. Section 303 added a new bidding system that gave the Interior the authority to lease any water depth in any location with royalty relief fashioned according to the Interior's discretion. The [Fifth Circuit] found that this power, however, was tempered by the next section, where Congress replaced the Interior's discretion to fashion royalty relief with a fixed royalty suspension scheme based on volume and water depth. Thus, the royalty relief for Mandatory Royalty Relief leases is automatic and unconditional. Based on the Fifth Circuit's previous ruling, the district court found that Section 304 mandates royalty relief up to a certain minimum volume of production, regardless of the market price of oil or natural gas. Therefore, the court concluded that the DOI had "exceeded its Congressional authority" when it sought to collect royalties on Kerr-McGee's oil and gas production that did not exceed these volumetric minimums, regardless of whether the oil and gas produced could be sold at prices in excess of the price thresholds for royalty relief that had been included in the lease terms. Since the Kerr-McGee ruling was issued on October 30, 2007, there has been extensive congressional interest in the impact of the ruling on the proposed Royalty Relief for American Consumers Act of 2007, as described above. Specifically, there is confusion as to how the ruling might affect the restrictions that section 7504 seeks to impose on holders of "covered leases." As discussed above, section 7504 requires that persons who hold "covered leases" either: (1) renegotiate their leases to include price thresholds; (2) pay a "conservation of resources" fee as set forth in the section; or (3) forfeit eligibility for future oil or gas production leases in the Gulf of Mexico. Section 7504 and the legislative efforts that preceded it have generally been described as efforts to remedy a perceived "error" or "oversight" in the 1998 and 1999 deep water leases by forcing renegotiation of those leases to include royalty relief price thresholds, or by using the "conservation of resources" fee structure to recover from these leaseholders amounts that had previously been calculated to be roughly the same amount as would be owed if price thresholds had been in place. The recent ruling by the U.S. District Court for the Western District of Louisiana, if upheld, would effectively eliminate the distinction between the 1998 and 1999 deep water leases, which do not include price thresholds, and the 1996, 1997 and 2000 deep water leases, which contain price thresholds that are not enforceable because they are in violation of congressional intent in enacting section 304 of the DWRRA. If none of the leases issued pursuant to section 304 of the DWRRA contains royalty relief provisions that are subject to price thresholds, then it appears that all of these leases ( i.e. , all deep water leases issued between 1996 and 2000) would be "covered leases" as that term is defined in the proposed act. As noted above, section 7504(d)(1) defines a "covered lease" as "a lease for oil or gas production in the Gulf of Mexico that is ... issued by the Department of the Interior under Section 304 of the Outer Continental Shelf Deep Water Royalty Relief Act ... and ... not subject to limitations on royalty relief based on market prices that are equal to or less than the price thresholds" described in the DWRRA. It is important to note that the definition of "covered leases" is not restricted to leases without price thresholds in their terms, or any other definition that would be contingent upon the language in the leases. If this were the case, then only the 1998 and 1999 leases would be "covered leases," because the 1996, 1997 and 2000 leases contain price threshold language. However, the definition of "covered leases" in section 7504(d)(1) encompasses any lease that is not "subject to limitations on royalty relief" based on oil or natural gas market prices. Thus, if the Western District of Louisiana decision is affirmed on appeal, then it appears that none of the leases issued between 1996 and 2000 would be "subject to limitations on royalty relief based on market price," and thus all of these leases may be "covered leases" under the proposed act. As a result, any entity that holds a deep water lease issued between 1996 and 2000 may be ineligible for future oil or natural gas production leases in the Gulf of Mexico pursuant to section 7504(a) of the proposed act until that entity either renegotiates the lease in question or pays a "conservation of resources" fee. If Congress does wish to encourage recovery of royalties on all leases issued pursuant to section 304 of the DWRRA between 1996 and 2000 that are limited by both price and volumetric thresholds, it could likely do so by passage of the proposed Royalty Relief for American Consumers Act of 2007 as it is currently worded in sections 7501-7505 of H.R. 3221 . This option could affect most companies operating in the deep water OCS area. If Congress wishes to restrict the scope of the proposed act to the 1998 and 1999 leases that did not contain price thresholds, it might consider amending the definition of a "covered lease" accordingly.

On October 30, 2007, the U.S. District Court for the Western District of Louisiana issued a ruling in Kerr-McGee Oil & Gas Corp. v. Allred that rebuffed efforts of the U.S. Department of the Interior (DOI) to collect royalties from offshore oil and gas production leases based on so-called "price thresholds" for previously granted royalty relief. There has been considerable interest in the impact of this ruling on ongoing congressional efforts related to certain "missing" royalty payment requirements in leases issued by the Minerals Management Service (MMS) of the DOI in 1998 and 1999, including the proposed Royalty Relief for American Consumers Act of 2007, as found at sections 7501-7505 of H.R. 3221. The House of Representatives passed H.R. 3221 on August 4, 2007. This report (1) provides background on the Outer Continental Shelf Deep Water Royalty Relief Act (DWRRA), pursuant to which royalty-free leases, including the controversial 1998 and 1999 leases, were issued; (2) summarizes relevant portions of the proposed Royalty Relief for American Consumers Act, which attempts to encourage the renegotiation of the controversial 1998 and 1999 leases; (3) summarizes the recent ruling in the Kerr-McGee matter; and (4) analyzes the potential impact of that recent ruling on the proposed Royalty Relief for American Consumers Act and any similar legislative efforts. This analysis is restricted to a discussion of the potential impact of the recent ruling on section 7504 of H.R. 3221, which would place restrictions on holders of leases that lack price thresholds. It does not address section 7503 of H.R. 3221, which seeks to "clarify the authority" of the Secretary of the Interior to include price thresholds on royalty relief in offshore leases pursuant to section 304 of the DWRRA.

International medical graduates (IMGs) are foreign nationals or U.S. citizens who graduate from a medical school outside of the United States. In 2007, the most recent year for which data are available, there were 902,053 practicing physicians in the United States, and IMGs accounted for 25.3% (228,665) of these. The use of foreign nationals remains a means of providing physicians to practice in underserved areas. This report focuses on those IMGs who are foreign nationals, hereafter referred to as foreign medical graduates (FMGs). Many FMGs first entered the United States to receive graduate medical education and training as cultural exchange visitors through the J-1 cultural exchange program. While there are other ways for FMGs to enter the United States, including other temporary visa programs as well as permanent immigration avenues, this report focuses on FMGs entering through the J-1 program. As exchange visitors, FMGs can remain in the United States on a J-1 visa until the completion of their training, typically for a maximum of seven years. After that time, they are required to return to their home country for at least two years before they can apply to change to another nonimmigrant status or legal permanent resident (LPR) status. Under current law, a J-1 physician can receive a waiver of the two-year home residency requirement in several ways: the waiver is requested by an interested government agency (IGA) or state department of health; the FMG's return would cause extreme hardship to a U.S. citizen or LPR spouse or child; or the FMG fears persecution in the home country based on race, religion, or political opinion. Most J-1 waiver requests are submitted by an IGA and forwarded to the Department of State (DOS) for a recommendation. If DOS recommends the waiver, it is forwarded to U.S. Citizenship and Immigration Services (USCIS) in the Department of Homeland Security (DHS) for final approval. Upon final approval by USCIS, the physician's status is converted to that of an H-1B professional specialty worker. Prior to 2004, J-1 waiver recipients were counted against the annual H-1B cap of 65,000. An IGA may request a waiver of the two-year foreign residency requirement for an FMG by showing that his or her departure would be detrimental to a program or activity of official interest to the agency. In return for sponsorship, the FMG must submit a statement of "no objection" from the government of his or her home country, have an offer of full-time employment, and agree to work in a health professional shortage area or medically underserved area for at least three years. According to USCIS regulations, the FMG must be in status while completing the required term and must agree to begin work within 90 days of receipt of the waiver. If an FMG fails to fulfill the three-year commitment, he or she becomes subject to the two-year home residency requirement and may not apply for a change to another nonimmigrant, or LPR status until meeting that requirement. Although any federal government agency can act as an IGA, the main federal agencies that have been involved in sponsoring FMGs are the Department of Veterans Affairs (VA), the Department of Health and Human Services (HHS), the Appalachian Regional Commission (ARC), and the United States Department of Agriculture (USDA). Under the "Conrad Program" discussed below, state health departments may also act as IGAs. HHS has begun accepting waivers to primary care physicians only relatively recently. Historically, HHS had been very restrictive in its sponsorship of J-1 waiver requests. HHS emphasized that the exchange visitor program was a way to pass advanced medical knowledge to foreign countries, and that it should not be used to address medical underservice in the United States. HHS' position was that medical underservice should be addressed by programs such as the National Health Service Corps. Prior to December 2002, HHS only sponsored waivers for physicians or scientists involved in biomedical research of national or international significance. In December 2002, HHS announced that it would begin sponsoring J-1 waiver requests for primary care physicians and psychiatrists in order to increase access to healthcare services for those in underserved areas. HHS began accepting waiver applications on June 12, 2003, but suspended its program shortly after for reevaluation. On December 10, 2003, HHS released new program guidelines, and reinstated their program. Established by Congress in 1965, ARC is a joint federal and state entity charged with, among other things, ensuring that all residents of Appalachia have access to quality, affordable health care. The region covered by ARC consists of all of West Virginia and parts of Alabama, Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, and Virginia. ARC will submit a request for a waiver at the request of a state in its jurisdiction. The waiver must be recommended by the governor of the sponsoring state. In return, the FMG must agree to provide primary care for at least 40 hours a week for three years at a health professional shortage area facility. The facility must be a Medicare or Medicaid-certified hospital or clinic that also accepts medically indigent patients. The facility must also prove that it has made a good faith effort to recruit a U.S. physician in the six months preceding the waiver application. In addition, the physician must be licensed by the state in which he or she will be practicing, and must have completed a residency in family medicine, general pediatrics, obstetrics, general internal medicine, general surgery, or psychiatry. The physician must sign an agreement stating that he or she will comply with the terms and conditions of the waiver, and will pay the employer $250,000 if he or she does not practice in the designated facility for three years. On May 17, 2004, the DRA officially began accepting applications for its new J-1 visa waiver program. The DRA includes 240 county or parish areas in Alabama, Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri and Tennessee. The goal of the Authority is to stimulate economic development and foster partnerships that will have a positive impact on the economy of the eight states that make up the Authority. Under the DRA's waiver program, physicians must submit an application processing fee; agree to practice in DRA designated shortage areas for a period of at least three years; and agree to pay $250,000 to the sponsoring facility if they do not fulfill any portion of their commitment, or $6,945 per month for each month they fail to fulfill their requirement. In 1994, Senator Kent Conrad sponsored the provision establishing the J-1 visa waiver program at the state level. The program is commonly referred to as the "Conrad State Program" program after him. Under the original program, participating states were allowed to sponsor up to 20 waiver applications for primary care physicians annually. To date, this provision has been extended several times. In 1996, the program was extended until 2002. Once again in 2002, the program was extended until 2004 and the number of waivers allowed per state was increased to 30. In 2004, Congress extended the Conrad program until June 1, 2006, and expanded the program to allow states to recruit primary care and specialty physicians. Other provisions of the law exempted waiver recipients from the H-1B annual cap, and allowed the states to place up to five physicians in facilities that serve patients living in designated shortage areas without regard to the facility's location. Previously, physicians could only serve in facilities located in designated shortage areas. In 2007, the program was extended through June 1, 2008. The waiver process for states is the same as other IGAs, however administration of the program varies by state. FMGs who are sponsored for a J-1 visa waiver by a state agree to practice medicine in designated shortage areas in the sponsoring state for a period of three to four years. FMGs working in these areas are not only required to meet the general requirements for medical licensing in the United States, but they are also required to meet state-specified licensing criteria. According to a 2006 Government Accountability Office (GAO) report on the J-1 program, states accounted for 90% of waiver requests, and had requested more than 3,000 waivers between 2003 and 2005. Several bills were introduced in the 110 th Congress that would have extended or expanded the Conrad Program. Ultimately, P.L. 110-362 extended the program through March 6, 2009. In an effort to extend the state J-1 waiver program for physicians, Representative Zoe Lofgren introduced H.R. 1127 on February 23, 2009, and it became public law on March 20, 2009. This law extends the waiver provision until September 30, 2009. On July 8, 2009, Senator Orrin Hatch introduced S.Amdt. 1428 to the Department of Homeland Security Appropriations Act ( H.R. 2892 ). The amendment, which passed unanimously on July 9, 2009, would extend the program through September 30, 2012. H.R. 2892 passed the Senate on July 9, 2009.

The Educational and Cultural Exchange Visitor program has become a gateway for foreign medical graduates (FMGs) to gain admission to the United States as nonimmigrants for the purpose of graduate medical education and training. The visa most of these physicians enter under is the J-1 nonimmigrant visa. Under the J-1 visa program, participants must return to their home country after completing their education or training for a period of at least two years before they can apply for another nonimmigrant visa or legal permanent resident (LPR) status, unless they are granted a waiver of the requirement. To qualify for a waiver, a request must be submitted on behalf of the FMG, by an Interested Government Agency (IGA), or a state Department of Health. In exchange, the FMG must agree to work in a designated healthcare professional shortage area for a minimum of three years. The ability of states to request a waiver is known as the "Conrad State Program," and was added temporarily to the Immigration and Nationality Act (INA) in 1994. The "Conrad State Program" has been extended by the past several Congresses. Most recently, the program was extended until September 30, 2009, by P.L. 111-9. This report will be updated as warranted by legislative developments.

Partly as a result of the increased use of horizontal drilling and hydraulic fracturing to extract natural gas from shale formations in the United States, the domestic supply of natural gas has increased relative to demand, leading to lower domestic prices. Domestic oil production has also increased after decades of decline thanks to new drilling technologies These production increases have generated new interest by some U.S. companies in exporting liquefied natural gas (LNG) to take advantage of relatively higher prices in world markets. This new interest in exporting natural gas has also produced renewed interest in the laws and regulations governing the export of other fossil fuels, including crude oil and coal. This report reviews federal laws and the regulatory regime governing the export of natural gas, crude oil, and coal. This report provides an overview of federal laws and regulations and agency roles in authorizing and regulating the export of these fossil fuels. The report addresses several categories of federal laws and regulations, including (1) statutes that establish the authorization process for the actual export of any of the three listed fossil fuels; (2) statutes that govern the permitting of the facilities that export any of the listed fossil fuels; and (3) generally applicable trade statutes and treaties that affect exports of fossil fuels. In general, transactions involving the export of items from the United States to a foreign country are subject to the Export Administration Regulations (EAR) enforced by the Department of Commerce's Bureau of Industry and Security (BIS). However, transactions that fall within the scope of the EAR do not necessarily require an export license from BIS. Whether an export license is required depends on several factors, including the nature of the item, its end use, and its ultimate destination. The EAR provides instructions for exporters to follow when determining whether an export transaction is subject to the EAR and, if so, whether the transaction requires a license. Other general requirements may apply to transactions involving the export of items from the United States. For example, for exports of items subject to the EAR that do not take place electronically or in another intangible form, an exporter is required in certain circumstances to submit a Shipper's Export Declaration (SED) or Automated Export System (AES) Record to BIS and the International Trade Administration in the Department of Commerce's Bureau of the Census. A declaration or record typically contains an identification of the exporter and the commodity being shipped; the date of exportation; and the country of ultimate destination, among other information. The Energy Policy and Conservation Act of 1975 directed the President to "promulgate a rule prohibiting the export of crude oil and natural gas produced in the United States, except that the President may ... exempt from such prohibition such crude oil or natural gas exports which he determines to be consistent with the national interest and the purposes of this chapter." The act further provides that the exemptions to the prohibition should be "based on the purpose for export, class of seller or purchaser, country of destination, or any other reasonable classification or basis as the President determines to be appropriate and consistent with the national interest and the purposes of this chapter." This general prohibition on crude oil exports and the exemptions to that prohibition are found in the BIS regulations on Short Supply Controls at 15 C.F.R. SS754.2. The regulations provide that a license must be obtained for exports of crude oil, including those to Canada. The regulations further provide that BIS will issue licenses for certain crude oil exports that fall under one of the listed exemptions, including (i) exports from Alaska's Cook Inlet; (ii) exports to Canada for consumption or use therein; (iii) exports in connection with refining or exchange of strategic petroleum reserve oil; (iv) exports of heavy California crude oil up to an average volume not to exceed 25,000 barrels per day; (v) exports that are consistent with certain international agreements; (vi) exports that are consistent with findings made by the President under certain statutes; and (vii) exports of foreign origin crude oil where, based on satisfactory written documentation, the exporter can demonstrate that the oil is not of U.S. origin and has not been commingled with oil of U.S. origin. The regulations also direct BIS to review applications to export crude oil that do not fall under one of these exemptions on a "case by case basis" and to approve such applications on a finding that the proposed export is "consistent with the national interest and the purposes of the Energy Policy and Conservation Act." However, the regulations also seem to suggest that only certain specific exports will be authorized pursuant to this case-by-case review. The regulations provide that while BIS "will consider all applications for approval," generally BIS will approve only those applications that are either for temporary exports (e.g., a pipeline that crosses an international border before returning to the United States), or are for transactions (1) that result directly in importation of an equal or greater quantity and quality of crude oil; (2) that take place under contracts that can be terminated if petroleum supplies of the United States are threatened; and (3) for which the applicant can demonstrate that for compelling economic or technological reasons, the crude oil cannot reasonably be marketed in the United States. The regulations also provide for a few enumerated exceptions to the general license requirement. These exceptions include foreign origin crude oil stored in the Strategic Petroleum Reserves, small samples exported for analytic and testing purposes, and exports of oil transported by pipeline over rights-of-way granted pursuant to Section 203 of the Trans-Alaska Pipeline Authorization Act. These exports do not require a license from BIS. Section 3 of the Natural Gas Act (NGA) provides that "no person shall export any natural gas from the United States to a foreign country or import any natural gas from a foreign country without having first secured an order of the Commission authorizing it to do so." This authorization is to be issued "unless, after opportunity for hearing, [the Commission] finds that the proposed exportation or importation will not be consistent with the public interest." The Commission is further empowered to grant authorizations in part and to modify or place terms and conditions upon authorizations and to supplement its orders as appropriate. At the time of the NGA's enactment in 1938, the "Commission" referred to the Federal Power Commission. However, in 1977 the Federal Power Commission was dissolved and its responsibilities were transferred to the Department of Energy (DOE) as well as the Federal Energy Regulatory Commission (FERC), an independent agency operating within DOE, pursuant to the Department of Energy Organization Act. Title III of this act transferred all functions of the Federal Power Commission to DOE except for those subsequently assigned to FERC in Title IV. Title III of the DOE Organization Act thus transferred the authority to authorize natural gas imports and exports from the Federal Power Commission to DOE. Title IV provides added clarity on this point. Section 402(f) of the act specifically states that "[n]o function ... which regulates the exports or imports of natural gas or electricity shall be within the jurisdiction of [FERC] unless the Secretary assigns such functions to [FERC]." Natural gas exporting responsibilities are handled by the Office of Fossil Energy within DOE. The procedures for filing for authorization to import or export natural gas are set forth in DOE regulations found at 10 C.F.R. Part 590. The regulations establish filing requirements as well as the procedures for review of applications, including procedures that allow interested parties to participate in the process prior to the issuance of orders by DOE. The regulations also provide for an expedited filing and review process for one-time small volume imports and exports for "scientific, experimental or other non-utility gas use" without necessitating a permit. The Energy Policy Act of 1992 amended the NGA Section 3 generic requirement for a permit in order to export natural gas to create a more streamlined authorization process for imports from and exports to certain countries. Subsection (c) of Section 3 provides that the importation of natural gas from or exportation of natural gas to a country with which the United States has in effect "a free trade agreement requiring national treatment for trade in natural gas shall be deemed to be consistent with the public interest, and applications for such importation and exportation shall be granted without modification or delay." This provision eased the authorization process for certain countries in the interest of free trade, including Canada and Mexico, the only countries with whom natural gas importation and exportation takes place via pipeline. Section 3 of the NGA also protects the role of the states in the permitting decisions. State rights under various environmental statutes are protected with respect to both export authorization by DOE and permitting by FERC (discussed infra ) in Section 3(d), and Section 3(e) mandates the notification of relevant state authorities in order to gather their input during the process. Although the Energy Policy and Conservation Act of 1975 authorized the President to restrict coal exports, the President does not appear to have exercised this authority to impose any significant export restrictions specific to coal. In fact, there have been legislative efforts aimed at expanding coal exports. For example, Section 1338 of the Energy Policy Act of 1992 directed the Secretary of Commerce to create a plan for expanding coal exports. Almost all U.S. coal exports pass through ports on the East Coast or in the Gulf of Mexico, so laws and regulations applicable to such facilities would potentially affect coal exports. Such laws and regulations are briefly discussed below. The previous section of this report discusses federal authorization of the export of natural resources, not the construction and operation of export facilities. However, in many cases approval for the export facility itself also must be obtained from the federal government. This section discusses various approval requirements for different types of facilities that enable the export of oil and natural gas. Note that, in addition to the facility approvals described below, a facility used in the export or import of fossil fuels may require additional federal approvals or authorizations. For instance, construction and operation of ports in any navigable waters in the United States are regulated by the U.S. Army Corps of Engineers (ACE). In order to construct any port facility, permits must be obtained from ACE, which will review applications to see that they are in compliance with the Clean Water Act, the Rivers and Harbors Act, and the Marine Protection Research and Sanctuaries Act. Because coal is generally not exported via a special facility designed to transport the commodity, there are no special facility permitting requirements applicable to coal exports, but facilities through which coal (or any fossil fuel) may be exported must satisfy these generic federal requirements. Crude oil can be exported either by pipeline or via tanker or other vessel. If an oil pipeline crosses the border with Canada or Mexico, the border crossing facility must be authorized by the federal government. The executive branch exercises permitting authority over the construction and operation of "pipelines, conveyor belts, and similar facilities for the exportation or importation of petroleum, petroleum products" and other products pursuant to a series of executive orders. This authority has been vested in the U.S. State Department since the promulgation of Executive Order 11423 in 1968. Executive Order 13337 amended this authority and the procedures associated with the review, but did not substantially alter the exercise of authority or the delegation to the Secretary of State in Executive Order 11423. Executive Order 11423 provides that, except with respect to cross-border permits for electric energy facilities, natural gas facilities, and submarine facilities: The Secretary of State is hereby designated and empowered to receive all applications for permits for the construction, connection, operation, or maintenance, at the borders of the United States, of: (i) pipelines, conveyor belts, and similar facilities for the exportation or importation of petroleum, petroleum products, coal, minerals, or other products to or from a foreign country; (ii) facilities for the exportation or importation of water or sewage to or from a foreign country; (iii) monorails, aerial cable cars, aerial tramways and similar facilities for the transportation of persons or things, or both, to or from a foreign country; and (iv) bridges, to the extent that congressional authorization is not required. Executive Order 13337 designates and empowers the Secretary of State to "receive all applications for Presidential Permits, as referred to in Executive Order 11423, as amended, for the construction, connection, operation, or maintenance, at the borders of the United States, of facilities for the exportation or importation of petroleum, petroleum products, coal, or other fuels to or from a foreign country. " Executive Order 13337 further provides that after consideration of the application and comments received: If the Secretary of State finds that issuance of a permit to the applicant would serve the national interest, the Secretary shall prepare a permit, in such form and with such terms and conditions as the national interest may in the Secretary's judgment require, and shall notify the officials required to be consulted ... that a permit be issued. Thus, the Secretary of State is directed by the order to authorize those border crossing facilities that the Secretary has determined would "serve the national interest." Note that the source of the executive branch's permitting authority is not explicitly stated within the executive orders. Powers exercised by the executive branch are authorized by legislation or are inherent presidential powers based in the Constitution. Executive Order 11423 does not reference any statute or constitutional provision as the source of its authority, although it does state that "the proper conduct of foreign relations of the United States requires that executive permission be obtained for the construction and maintenance" of border crossing facilities. Executive Order 13337 refers only to the "Constitution and the Laws of the United States of America, including Section 301 of title 3, United States Code. " Section 301 of Title 3 provides that the President is empowered to delegate authority to the head of any department or agency of the executive branch. Courts that have addressed the legitimacy of this exercise of authority have found that it is a legitimate exercise of "the President's constitutional authority over foreign affairs and his authority as Commander in Chief." As discussed above, Executive Orders 11423 and 13337 explicitly exclude cross-border natural gas pipelines (among others) from their reach. Instead, permitting for these facilities is addressed in Executive Order 10485, which governs the issuance of Presidential Permits for natural gas facilities. Executive Order 10485 designates and empowers the now-defunct Federal Power Commission: (1) To receive all applications for permits for the construction, operation, maintenance, or connection, at the borders of the United States, of facilities for the transmission of electric energy between the United States and a foreign country. (2) To receive all applications for permits for the construction, operation, maintenance, or connection, at the borders of the United States, of facilities for the exportation or importation of natural gas to or from a foreign country. (3) Upon finding the issuance of the permit to be consistent with the public interest, and, after obtaining the favorable recommendations of the Secretary of State and the Secretary of Defense thereon, to issue to the applicant, as appropriate, a permit for such construction, operation, maintenance, or connection. The Secretary of Energy shall have the power to attach to the issuance of the permit and to the exercise of the rights granted thereunder such conditions as the public interest may in its judgment require. In many ways, this authority resembles the authority over oil pipelines granted to the State Department in Executive Orders 11423 and 13337. However, as mentioned above, Executive Orders 11423 and 13337 do not describe the source of the executive branch permitting authority granted by the orders. Judicial opinions strongly suggest the permitting authority is an exercise of the President's "inherent constitutional authority to conduct foreign affairs." By contrast, Executive Order 10485 cites federal statutes which may at least partially form the basis for the permitting authority granted to the DOE by the order. The order states that "section 202(e) of the Federal Power Act, as amended ... requires any person desiring to transmit any electric energy from the United States to a foreign country to obtain an order from the Federal Power Commission authorizing it to do so" and that "section 3 of the Natural Gas Act ... requires any person desiring to export any natural gas from the United States to a foreign country or to import any natural gas from a foreign country to the United States to obtain an order from the Federal Power Commission authorizing it to do so." These appeals to statutory authority should be considered and possibly addressed in any legislation seeking to amend the current Presidential Permit process for border crossings for energy facilities. The Department of Energy Organization Act of 1977 eliminated the Federal Power Commission and transferred its functions to either the newly created DOE or the FERC, an independent regulatory agency within DOE. Section 402(f) of that act specifically reserved import/export permitting functions for DOE rather than FERC. As a result, DOE took over the FPC's Presidential Permit authority for border crossing facilities under Executive Order 10485 pursuant to the act. The authority to issue Presidential Permits for natural gas pipeline border crossings was subsequently transferred to FERC in 2006 via DOE Delegation Order No. 00-004.00A. Section 3(e) of the NGA, adopted in Section 311 of the Energy Policy Act of 2005, assigns the "exclusive authority to approve or deny an application for the siting, expansion or operation of a Liquefied Natural Gas (LNG) terminal" to FERC. Section 3 designates FERC as the "lead agency for the purposes of coordinating all applicable Federal authorizations" and for complying with federal environmental requirements. Section 3(e) also directs FERC to promulgate regulations for pre-filing of LNG import terminal siting applications and directs FERC to consult with designated state agencies regarding safety in considering such applications. FERC implements its authority over onshore LNG terminals through the agency's regulations at 18 C.F.R. SS153. These regulations detail the application process and requirements under Section 3 of the NGA. The process begins with a pre-filing, which must be submitted to FERC at least six months prior to the filing of a formal application. The pre-filing procedures and review processes are set forth at 18 C.F.R. SS157.21. Once the pre-filing stage is completed, a formal application may be filed. FERC's formal application requirements include detailed site engineering and design information, evidence that a facility will safely receive or deliver LNG, and delineation of a facility's proposed location. The regulations also require LNG facility builders to notify landowners who would be affected by the proposed facility. To facilitate natural gas infrastructure projects, which includes LNG projects, FERC has adopted rules to provide "blanket certificates" that provide authorization to interstate pipelines to improve or upgrade existing facilities or construct certain new facilities pursuant to a streamlined process. The Marrakesh Agreement Establishing the World Trade Organization (WTO) contains the agreements relating to international trade that are binding for all WTO members. Although there is no specific agreement relating to trade in energy products, such as liquefied natural gas, coal, or oil, the trade in these products is regulated under the General Agreement on Tariffs and Trade (GATT). Several of these sections could potentially impact a nation's ability to limit or restrict fossil fuels. Article I of the GATT 1994 requires that "any advantage, favour, privilege or immunity granted by any [WTO member] to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other [WTO members]." Article I applies to all rules and formalities in connection with importation and exportation. This broad category of rules and formalities appears likely to include prerequisites for exportation such as licensing requirements or other preliminary measures. More favorable treatment given to imports from particular countries in the context of import licensing requirements has been held to confer an advantage within the meaning of Article I. Generally, this means that as soon as the United States provides for certain treatment of fossil fuel exports to one country, the United States has to treat exports to all other WTO members in the same fashion. A licensing regime that provided for more favorable treatment for exports of fossil fuels to some countries, but subjected other WTO countries to a slower process could potentially be inconsistent with Article I of the GATT. However, there are exceptions to the Most Favored Nation Treatment requirements for Free Trade Agreements (FTA). Article XXIV of GATT 1994 allows countries to provide more favorable treatment to countries with which they have established an FTA. In order to qualify for the Article XXIV exception, the FTA must meet certain requirements outlined in the Article. Most notably, the free trade agreement must generally eliminate duties--such as tariffs--and restrictions on commerce between the parties to the agreement for "substantially all the trade in products originating in those territories." Therefore, in order for an agreement to qualify, it is likely that the FTA would have to cover more than just energy products flowing between the two territories. However, if the countries have a qualifying FTA, more favorable treatment towards energy products moving between those countries could be included in that FTA without violating the GATT, although this may require a WTO panel to find that these provisions regarding energy products are essential to the agreement. Article XI of the GATT covers import and export restrictions. Article XI:1 of the GATT bars the institution or maintenance of quantitative restrictions on exports to any WTO member's territory. Quantitative restrictions limit the amount of a product that may be exported--common examples are embargoes, quotas, minimum export prices, and certain export licensing requirements. Under Article XI, duties, taxes, and other charges are the only GATT-consistent methods of restricting exports. Any government action that expressly precludes the exportation of certain goods is inconsistent with the GATT. Although there are few WTO panel decisions on export bans, panels have consistently found that import bans implemented through licensing systems violate Article XI. This jurisprudence can be expected to inform any WTO panel decision on the GATT-consistency of export bans and licensing. WTO Panel decisions have also held that "discretionary" or "non-automatic" licensing requirements are prohibited under Article XI--therefore, a licensing program that gives discretion to an agency to deny an export license to potential exporters on the basis of vague or unspecified criteria would violate Article XI. Moreover, a GATT panel held that export licensing practices that cause delays in issuing licenses may be a restraint of exports that is inconsistent with Article XI. A fossil fuel export licensing regime that restricts exports could have the effect of keeping domestic prices of fossil fuels lower than they otherwise would be. This raises the question of whether such a licensing program could be considered an actionable subsidy to downstream users of the fossil fuels such as members of the petrochemical industry. Under the GATT 1994 and the Agreement on Subsidies and Countervailing Measures (SCM Agreement), an actionable subsidy may be the subject of countervailing measures or challenge before a panel by a WTO member when the subsidy adversely affects the interests of that member. Adverse effects might result if export restraints on fossil fuels lead to lower input costs for downstream manufacturers that use the fuels, giving the manufacturers' products a competitive edge over the products of the other members' manufacturers in domestic or foreign markets. The SCM Agreement defines a "subsidy" as "a financial contribution by a government or any public body within the territory of a Member" that confers a benefit. Under the agreement, one way that a "financial contribution" may occur is when a government directs a private body to sell goods to a domestic purchaser. In U.S. -- Measures Treating Export Restraints as Subsidies , the United States Trade Representative (USTR) argued before a WTO panel that a government's restriction on exports could be considered "functionally equivalent" to that government directing private parties to sell a good to domestic purchasers. The USTR argued that this resulted in a subsidy to downstream producers that used the good as an input in their production processes. The panel rejected this argument, stating that although a restriction on exports of a good may result in lower prices for domestic users of that good, the restriction was not an explicit command or direction by the government to private parties to sell the good within the meaning of the SCM Agreement. This ruling suggests that future panels may be reluctant to find that a restriction on exports or a similar government intervention in a market is a "financial contribution" by a government. Thus, it seems unlikely that licensing procedures could constitute a subsidy under WTO rules, even if they lead to restrictions on exports. Article XX of the GATT provides for certain exceptions that a member country may invoke if it is found to be in violation of any GATT obligations. In order for the defense to be successful, the member country must show that its action fits under one of these general exceptions and that it satisfies Article XX's opening clauses, known as the "chapeau." When dealing with trade in energy products, a country will most likely use the exceptions under Article XX(b) or XX(g). A country may justify a GATT inconsistent practice under Article XX(b) if the practice in question is "necessary to protect human, animal, or plant life or health." Article XX(g) may permit otherwise GATT inconsistent measures that "relat[e] to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption." If a WTO member invokes an Article XX exception to the application of any quantitative export restrictions, Article XIII potentially requires that those export restrictions must be administered in a nondiscriminatory manner--that is, the restrictions must comport with the most-favored nation treatment discussed above. Restrictions on fossil fuels for reasons of international or domestic security that would otherwise violate the GATT 1994 may potentially be justified under the broadly worded exception for essential security interests contained in Article XXI. One paragraph of this article allows a member to take "any action which it considers necessary for the protection of its essential security interests ... taken in time of war or other emergency in international relations." While there is a lack of WTO case law on Article XXI, the nearly identical security exception under Article XXI of the General Agreement on Tariffs and Trade 1947 (GATT 1947) provides some guidance. Under the GATT 1947, the contracting parties had broad discretion with respect to identifying an "emergency." According to one source, each party was the judge of what was essential to its own security interests. Measures that parties sought to justify under Article XXI of the GATT 1947 included trade embargoes, import quotas, and suspensions of tariff concessions. Parties pointed to both potential and actual dangers as "emergencies" to justify measures otherwise inconsistent with the GATT 1947. With respect to who determines whether a WTO member's use of a national security exception is valid, the United States has taken the position that Article XXI is "self-judging." That is, each member invoking Article XXI judges whether its use of the exception is valid. While there is currently no WTO case law on the use of Article XXI of the GATT 1994, some scholars have speculated that, in the future, a WTO panel or the Appellate Body may decline to defer to a WTO member's judgment that its use of Article XXI is appropriate and, instead, may subject a member's use of the exception to scrutiny. For example, a panel may consider whether there is an emergency in international relations justifying national security screening for exports of fossil fuels to certain countries but not others. In addition to the GATT, the United States is party to numerous FTAs. It is beyond the scope of this report to discuss fully the provisions of each FTA signed by the United States. However, as an example, several FTAs require national treatment for trade in natural gas. These include FTAs with Australia, Bahrain, Canada, Chile, Colombia, Dominican Republic, El Salvador, Guatemala, Honduras, Jordan, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, Republic of Korea, and Singapore. The FTAs with Costa Rica and Israel do not require national treatment for trade in natural gas. As a further example, under the North American Free Trade Agreement (NAFTA) the United States has certain obligations related to energy trade with Mexico and Canada. Chapter 6 of NAFTA deals with "Energy and Basic Petrochemicals." Chapter 6 reconfirms the Parties' obligations under the GATT and imposes additional obligations on the Parties, such as certain requirements for export taxes. NAFTA also imposes barriers to invoking some of the general exceptions to the GATT. For example, a country may only invoke the "conservation of exhaustible natural resources" exception if it does not result in a higher price for exports than for domestic consumption of the energy products. These additional obligations illustrate that compliance with FTAs must be considered when establishing export regulations for energy products. In addition, according to news reports, two proposed FTAs--the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP)--could potentially include international obligations regarding the automatic approval by the United States of LNG exports to countries such as Japan (TPP) or the European Union (TTIP). S. 192 , the Expedited LNG for American Allies Act of 2013, was introduced in the Senate on January 31, 2013, by Senator John Barrasso. An identical bill, H.R. 580 , was introduced in the House of Representatives by Representative Michael Turner. The bills would amend Section 3 of the NGA to provide that expedited approval of LNG exports would be granted to four different categories of foreign countries: (1) nations for which there is in effect a free trade agreement (FTA) requiring national treatment for trade in natural gas; (2) a member country of the North Atlantic Treaty Organization (NATO); (3) Japan, so long as the Treaty of Mutual Cooperation and Security of January 19, 1960, between Japan and the United States remains in effect; and (4) "any other foreign country if the Secretary of State, in consultation with the Secretary of Defense, determines that exportation of natural gas to that foreign country would promote the national security interests of the United States." At least two other bills that pertain to the export of natural gas have been introduced. H.R. 1189 , the American Natural Gas Security and Consumer Protection Act, was introduced in the House by then-Representative Ed Markey. The bill would amend the NGA to require the Secretary of Energy to develop regulations for determining whether an export of natural gas from the United States to a foreign country is in the public interest for the purposes of issuing an export authorization. Under the regulations, the public interest determination would have to be made after the Secretary's consideration of several factors, including the energy security of the United States; the ability of the United States to reduce greenhouse gas emissions; and an environmental impact statement issued under the National Environmental Policy Act that analyzes the impact of extraction of exported natural gas on the environment in communities where the gas is extracted. H.R. 1191 , the Keep American Natural Gas Here Act, was also introduced in the House by then-Representative Ed Markey. Among other things, it would provide that the Secretary of the Interior could accept bids on new oil and gas leases of federal lands (including submerged lands) only from bidders certifying that all natural gas produced pursuant to such leases would be sold only in the United States. With regard to oil, H.R. 1190 , the Keep America's Oil Here Act, was introduced in the House by then-Representative Ed Markey. The bill would provide that the Secretary of the Interior could accept bids on new oil and gas leases of federal lands (including submerged lands) only from bidders certifying that oil produced pursuant to such leases, and any refined petroleum products produced from that oil, would be sold only in the United States. The bill would allow the President to waive this requirement for a lease in certain circumstances, including when a waiver is necessary under an international agreement. In addition, S. 435 , the American Oil for American Families Act of 2013, was introduced in the Senate by Senator Robert Menendez. The bill would ban the export of crude oil or refined petroleum products derived from federal lands (including land on the Outer Continental Shelf). Various other bills introduced in the 113 th Congress seek to loosen restrictions on, or expedite the federal government's consideration of approvals for, the export of oil or natural gas to certain foreign countries. Recent advances in natural gas exploration and production technology have led to a newfound interest in the possibility of expanding U.S. fossil fuel exports. Such exports, and the facilities needed to conduct export operations, are subject to a panoply of federal laws and regulations. These include the authorizations required by the Natural Gas Act, a generic ban on crude oil exports, and various laws and regulations applicable to construction and operation of export facilities. Currently, any party wishing to export fossil fuels must comply with these laws and regulations. Under international trade rules, restrictions on exports of fossil fuels could potentially be difficult to reconcile with Articles I and XI of the GATT 1994. Article XXI, the exception for essential security interests, may be cited in order to justify potential violations of GATT Articles I and XI. The United States has traditionally considered this exception to be self-judging. However, it is possible that a panel or the Appellate Body might scrutinize the United States' use of the exception. Article XX of the GATT provides additional exceptions that a member country may invoke if it is found to be in violation of any GATT obligations. However, Article XIII potentially requires that if an otherwise GATT inconsistent measure is permitted to remain in force due to an Article XX exception, the measure must be administered in a nondiscriminatory manner. Export restrictions that treat WTO members differently would appear not to satisfy the potential nondiscriminatory requirements of Article XIII.

Recent technological developments have led to an increase in domestic production of natural gas and crude oil. As a result, there is interest among some parties in exporting liquefied natural gas (LNG) and crude oil to take advantage of international markets. This has placed new attention on the laws and regulations governing, and in many cases restricting, the export of fossil fuels. In most cases, export of fossil fuels requires federal authorization of both the act of exporting the fuel and the facility that will be employed to export the fuel. For example, the export of natural gas is permitted by the Department of Energy's Office of Fossil Energy, while the construction and operation of the export facility must be authorized by the Federal Energy Regulatory Commission (FERC). Oil exports are restricted, but an export that falls under one of several exemptions can be authorized by the Department of Commerce's Bureau of Industry and Security. Oil pipelines that cross international borders must be permitted by the State Department. Coal exports do not require special authorization specific to the commodity; however, as with natural gas and crude oil, other generally applicable federal statutes and regulations may apply to the export of coal. Restrictions on exports of fossil fuels could potentially have implications under international trade rules. They may possibly be inconsistent with the most favored nation requirement of Article I of the General Agreement on Tariffs and Trade 1994 (GATT 1994) if certain World Trade Organization (WTO) members are treated differently than others. Limits on exports could also potentially violate the prohibition on export restrictions contained in Article XI of the GATT 1994 if they prescribe vague and unspecified criteria for export licensing. However, an export licensing regime does not appear to constitute a "subsidy" to downstream users of fossil fuels under WTO rules. Article XXI, the exception for essential security interests, may provide justification for potential violations of GATT Articles I and XI. The United States has traditionally considered this exception to be self-judging. However, it is possible that a panel or the Appellate Body might scrutinize the United States' use of the exception. Article XX of the GATT provides additional exceptions that a member country may invoke if it is found to be in violation of any GATT obligations. For example, WTO members may maintain an otherwise GATT inconsistent measure if it is necessary to protect an exhaustible natural resource or necessary to protect human health or the environment. Article XIII potentially requires that if an otherwise GATT inconsistent measure is permitted to remain in force due to an Article XX exception, the measure must be administered in a nondiscriminatory manner. Export restrictions that treat WTO members differently would appear not to satisfy the potential nondiscriminatory requirements of Article XIII.

As the Internet has become a significant venue for facilitating commercial transactions, it may be more common in this day and age for a consumer to first turn to the Internet to purchase goods rather than to go to a store. This could be said for almost all types of goods, including firearms and ammunition. A simple search for the terms "sale" and "firearm" results in a multitude of websites devoted to the sale of firearms or ammunition. Accordingly, questions and concerns have arisen regarding the extent to which federal law regulates the sale of such goods. A review of applicable federal laws, discussed below, establishes that Internet-based firearm sales are not imbued with a special character by virtue of their medium of transfer, and are in fact subject to the same degree of regulation as any other type of firearm transaction. The unique qualities of Internet transactions, however, may pose significant obstacles to enforcing these firearm regulations. The sale of ammunition, however, is subject to less federal regulation than firearms. It is this latter fact that has become the subject of heightened scrutiny in the aftermath of the tragic mass shooting that occurred in a Colorado movie theater in July 2012. The suspected shooter, who killed 12 persons and injured at least 58, reportedly purchased at least 6,000 rounds of ammunition online. Following this incident, Senator Frank Lautenberg and Representative Carolyn McCarthy have introduced new legislation, the Stop Online Ammunition Sales Act ( S. 3458 / H.R. 6241 ), that would more strictly regulate the online sale of ammunition. Congress enacted the Gun Control Act of 1968 (GCA or Act) to "keep firearms out of the hands of those not legally entitled to possess them because of age, criminal background or incompetency, and to assist law enforcement authorities in the states and their subdivisions in combating the increasing prevalence of crime in the United States." To this end, the GCA prohibits certain classes of individuals from possessing firearms and establishes a comprehensive regulatory scheme designed to prevent the transfer of firearms to such individuals. In particular, the GCA establishes nine classes of individuals who are prohibited from shipping, transporting, possessing, or receiving firearms in interstate commerce. The individuals targeted by this provision include (1) persons convicted of a crime punishable by a term of imprisonment exceeding one year; (2) fugitives from justice; (3) individuals who are unlawful users or addicts of any controlled substance; (4) persons legally determined to be mentally defective, or who have been committed to a mental institution; (5) aliens illegally or unlawfully in the United States, as well as those who have been admitted pursuant to a nonimmigrant visa; (6) individuals who have been discharged dishonorably from the Armed Forces; (7) persons who have renounced United States citizenship; (8) individuals subject to a pertinent court order; and, finally, (9) persons who have been convicted of a misdemeanor domestic violence offense. These nine categories of persons are also prohibited from shipping, possessing, or receiving ammunition in interstate commerce. When the GCA was enacted, the transfer and sale of ammunition appear to have been regulated in the same manner as firearms. In 1986, Congress passed the Firearm Owners' Protection Act (FOPA), which repealed many of the regulations regarding ammunition. Consequently, as discussed below, the transfer and sale of ammunition are not as strictly regulated as the transfer and sale of firearms. In order to effectuate the general prohibitions outlined above, the GCA imposes significant requirements on the transfer of firearms. Pursuant to the Act, any person who is "engaged in the business" of importing, manufacturing, or dealing in firearms must apply and be approved as a Federal Firearms Licensee (FFL or licensee). FFLs are subject to several requirements designed to ensure that a firearm is not transferred to an individual disqualified from possession under the Act. For example, a licensee must verify the identity of a transferee by examining a government-issued identification document bearing a photograph of the transferee, such as a driver's license; conduct a background check on the transferee using the National Instant Criminal Background Check System (NICS); maintain records of the acquisition and disposition of firearms; report multiple sales of handguns to the Attorney General; respond to an official request for information contained in the licensee's records within 24 hours of receipt; and comply with all other relevant state and local regulations. Not all sellers of firearms are required to be approved FFLs, however. The GCA contains a specific exemption for any person who makes "occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms." Although private sellers are not required to conduct a background check or maintain official records of transactions under federal law, they are prohibited from transferring a firearm if they know or have reasonable cause to believe that the transferee is a disqualified person. When the GCA was originally enacted in 1968, the sale and transfer of ammunition were regulated in nearly the same manner as firearms. This meant that an individual "engaged in the business" of dealing ammunition, among other things, had to be licensed under the GCA, and was required to maintain records of the ammunition sale. In 1986, however, Congress enacted the Firearm Owners' Protection Act (FOPA), which repealed these types of regulations for sales and transfer of ammunition. Consequently, one does not need to be an FFL to deal in ammunition, nor are such sellers (including FFLs) required to keep a record of ammunition sales. Notably, while FFLs have never been required under federal law to conduct a background check for purchasers of ammunition, they still may choose to do so because it remains unlawful for any seller of ammunition to transfer ammunition knowing or having reasonable cause to believe that such person is a prohibited possessor. In addition to the aforementioned requirements imposed upon the sale of firearms by licensed and unlicensed individuals generally, federal law also places significant limitations on the actual interstate transfer of weapons. These provisions are of particular interest in analyzing Internet-based firearm sales, given the inherently interstate quality of such activity and the perceived potential for abuse in the Internet sale context. Although FFLs have the ability to sell and ship firearms in interstate or foreign commerce, the GCA places several restrictions on the manner in which a transfer may occur. Specifically, while a licensee may make an in-person, over-the-counter sale of a long gun (i.e., shotgun or rifle) to any qualified individual regardless of her state of residence, a licensee may only sell a handgun to a person who is a resident of the state in which the dealer's premises are located. Relatedly, a licensee is prohibited from shipping firearms, both handguns and long guns, directly to consumers in other states. Instead, FFLs making a firearm sale to a non-resident must transfer the weapon to another FFL that is licensed in the transferee's state of residence and from whom the transferee may obtain the firearm after passing the required NICS background check. Firearm transfers between non-FFL sellers are also strictly regulated. Specifically, whereas FFLs may transfer a long gun to a non-resident non-licensee in an over-the-counter sale, the GCA specifically bars a non-FFL from directly selling or transferring any firearm to any person who is not a resident of the state in which the non-FFL resides. Instead, interstate transactions between non-FFLs result in the transferring party shipping the firearm to an FFL located in the transferee's state of residence. On the other hand, ammunition sales are currently less extensively regulated than firearm sales. Prior to 1986, however, not only were sales of ammunition conducted through FFLs who were required to be licensed to engage in the business of dealing ammunition, but FFLs were prohibited from shipping ammunition to a private person (non-FFL). The transfer of ammunition to an out-of-state purchaser, therefore, had to be conducted much like a handgun sale to an out-of-state purchaser, with the FFL transferring the ammunition to another FFL located in the state of the purchaser. After FOPA repealed these provisions in 1986, sellers are no longer required to have a license to deal in ammunition, and they are not prohibited from shipping ammunition directly to a private person regardless of the purchaser's state of residence. While there is less regulation of ammunition at the federal level, a few states have enacted legislation that requires either, or both, a seller and purchaser of ammunition to be licensed by the state. It is these aforementioned provisions on interstate transfers that arguably control the present inquiry regarding the extent to which Internet-based firearm and ammunition transactions are regulated under federal laws. The panoply of provisions discussed above establishes a federal scheme that regulates every firearm sale, irrespective of the medium of transaction. Even though these laws do not specifically address online or Internet sales, they broadly address the transfer of any firearm in interstate or foreign commerce. The mere fact that a firearm transaction is negotiated over the Internet does not exempt it from the requirements that apply to traditional sales conducted in person or those facilitated through classified advertisements in newspapers. In other words, FFLs who advertise firearms over the Internet are still prohibited from directly shipping a firearm to a non-FFL purchaser. If an out-of-state non-FFL purchaser desired to buy a firearm (i.e., a handgun or long gun) from the FFL, then the FFL would have to arrange for the firearm to be transferred to another FFL located in the purchaser's state and from whom the non-FFL purchaser could obtain the firearm after passing a background check. Similarly, private sellers of firearms who advertise the sale of firearms over the Internet could only make a direct transfer to a purchaser who is a resident of the seller's own state. The private seller would still be prohibited from directly transferring his firearms to an out-of-state non-FFL purchaser, and would be required to arrange for the firearm to be transferred to an FFL located in the purchaser's state. Internet-based sales and transfers of ammunition, on the other hand, may be conducted freely by FFL and non-FFL sellers to in- or out-of-state purchasers, given the GCA's lack of proscription against such conduct. Although existing GCA provisions encompass Internet-based firearm transactions and freely permit the direct transfer of ammunition between seller and purchaser, concerns have arisen since the beginning of the Internet revolution that there is ample opportunity for abuse of the existing firearm regulations or an increased potential for violations of federal law. Almost 12 years ago, the Department of Justice (DOJ) identified several factors it found unsettling regarding firearm sales over the Internet. In addition to the possibility that prohibited persons may be successful in acquiring firearms over the Internet, DOJ stated that the Internet "provides convenient fora" for the advertisement and sale of firearms by non-licensed individuals who are not required to conduct background checks or retain records of sales. Because non-FFL transactions are regulated less strictly, DOJ observed that non-licensed individuals might be encouraged to illegally engage in the business of dealing in firearms. Furthermore, there could be an increase in violations of federal law, as the prospect of quick profits from Internet sales may "create a temptation on the part of FFLs to circumvent" existing federal laws. During this time, the Working Group on Unlawful Conduct on the Internet (Working Group), established by President Clinton in 2000, stated that the sale of firearms over the Internet poses "unique problems" for law enforcement. The Working Group first maintained that illegal online sales would be more difficult to detect than sales facilitated through traditional venues such as print advertisements, since "the [I]nternet provides people with the means to advertise guns for sale on message boards, through e-mail, in chat rooms, or other websites that will be difficult to find and may even be inaccessible to law enforcement." Another hindrance to law enforcement efforts suggested by the Working Group is the lack of a fixed physical location for the execution of Internet-based sales. Whereas the Bureau of Alcohol, Tobacco, Firearms and Explosives may conduct inspections and review records of transactions with traditional sales made at gun stores or gun shows, Internet-based transactions would be much more difficult to monitor. It is unclear the extent to which law enforcement has experienced problems in detecting illegal firearm transactions, or whether it has the investigatory resources or capabilities to devote to enforcing firearm laws over the Internet. It should also be noted that when these reports were issued, there was little substantive evidence to support the assumption that individuals advertising firearms over the Internet were more likely to ignore firearm laws than those employing traditional methods of sale. Even though the observations from DOJ and the Working Group have an intuitive appeal and appear logically sound, an investigation by the General Accounting Office (GAO) from 2001 on Internet-based firearm sales detected no illegal activity with respect to FFLs. The GAO investigation was limited in scope, but none of the FFLs solicited by the undercover investigator agreed to engage in any illegal activity. More recently, however, the city of New York issued a report in December 2011 on its undercover investigation, which specifically examined online gun sales from private sellers. The results from this investigation present a marked contrast from the earlier GAO investigation. The city of New York's investigation examined 125 private sellers from 14 states who advertised on 10 different websites. Investigators indicated to these private sellers that they "probably couldn't pass a background check." Of the 125 private sellers, 77 agreed to sell a gun to someone who said he could not pass a background check. While these investigations were conducted several years apart and were both limited in scope, results from the GAO investigation could be interpreted as undermining the contention that the use of the Internet to facilitate firearm transactions will result in increased illegal activity with respect to FFLs. In contrast, the city of New York's investigation could give credence to the observation that the Internet increases the potential for abuse by private sellers to make unlawful sales of firearms to prohibited purchasers. In addition to these long-existing concerns regarding the sale of firearms over the Internet, concerns have also been raised with respect to online ammunition sales, especially in light of reports that the suspected gunman in the Colorado movie theater shootings purchased at least 6,000 rounds of ammunition online. In response to this, Senator Frank Lautenberg and Representative Carolyn McCarthy introduced S. 3458 and H.R. 6241 , the Stop Online Sales Ammunition Act of 2012. Primarily, this legislation would reinstitute the ammunition regulation that had been repealed when FOPA was passed in 1986. It would require an individual who wishes to sell ammunition to be a licensed dealer, irrespective of whether such business is conducted with the principal objective of livelihood and profit, because the amendment does not include the phrase "engaged in the business." Accordingly, the bill would arguably prevent any secondary sales of ammunition, that is, sales between non-FFLs, an action that is currently permitted with respect to secondary sales of firearms. Although a licensee selling ammunition would not be required to conduct a NICS background check under the bill, the licensee would be required to examine a valid photo identification of the transferee before completing the transfer. It would also make it unlawful for a licensee to directly transfer or deliver ammunition to any non-licensee and would require licensees to keep track of ammunition transfers to the same extent that they keep track of firearm transfers. These requirements would have the likely effect of requiring the seller and buyer to meet in person to complete the transaction. Furthermore, one component of the bill that was not a part of the original ammunition regulations from 1968 is the requirement that licensees prepare a report of multiple sales for federal and local authorities whenever the licensee disposes of more than 1,000 rounds of ammunition to a non-licensee during any five consecutive business days. In contrast to the proposed ammunition bill discussed above, proposed gun control measures have primarily focused on extending the background check requirements to private sellers rather than targeting the interstate scheme under the GCA. Such measures, like the Fix Gun Checks Act of 2011 ( H.R. 1781 / S. 436 ), would effectively require some in-person contact to be made through an FFL or a law enforcement agency because they would require a background check be conducted for every firearm sale. These measures perhaps focus on extending background check requirements because, as discussed above, the existing scheme on the interstate transfer of firearms arguably encompasses Internet-based firearms transactions, such that most firearm transactions are transferred through FFLs, unless it is an intrastate sale between two non-FFLs.

As the Internet has become a significant venue for facilitating commercial transactions, concerns have arisen regarding the use of this medium to transfer firearms. This report discusses the sale of firearms and ammunition over the Internet, with a focus on the extent to which federal law regulates such activity. A review of the relevant factors indicates Internet-based firearm transactions are subject to the same regulatory scheme governing traditional firearm transactions. Over the years, this has raised concern about the possibility of increased violation of federal firearm laws, as well as challenges that law enforcement may face when attempting to investigate violations of these laws. A review of the relevant factors also indicates that the sale and transfer of ammunition are not as strictly regulated as firearms, and that these changes came into effect in 1986. Lastly, this report highlights recent legislative proposals, S. 3458 and H.R. 6241, companion measures introduced by Senator Frank Lautenberg and Representative Carolyn McCarthy in the 112th Congress that would affect online ammunition transactions.

The federal False Claims Act (FCA), codified at 31 U.S.C. SSSS 3729-3733, provides for judicial imposition of civil monetary penalties and damages for the knowing submission of false claims to the U.S. government. The FCA, as amended, is considered a vital tool used by the U.S. government to recover losses due to fraud, and, in particular, it has been utilized with respect to false claims made to defraud government health care programs such as Medicare and Medicaid. Reports indicate that in FY2007, the U.S. government recovered $2 billion dollars in settlements and judgments in FCA cases, and more than 75% of these recoveries were from health care entities. Under three key provisions of the FCA, civil liability may be imposed on any person that (1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval [31 U.S.C. SS 3729(a)(1)]; (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government [31 U.S.C. SS 3729(a)(2)]; or (3) conspires to defraud the Government by getting a false or fraudulent claim allowed or paid [31 U.S.C. 3729(a)(3)]. Penalties under the FCA include treble damages, plus an additional penalty of $5,500 to $11,000 for each false claim filed. Civil actions may be brought in federal district court under the False Claims Act by the Attorney General or by a private person referred to as a relator ( i.e ., a "whistleblower"), for the person and for the U.S. government, in what is termed a qui tam action. The ability to initiate a qui tam action has been viewed as a powerful weapon against fraud, in that it may be initiated by a private party who may have direct and independent knowledge of any misconduct. Popularity of qui tam actions brought under the FCA may be attributed in large part to the fact that successful relators can receive between 15% and 30% of the monetary proceeds of the action or settlement that are recovered by the government. In Allison Engine Co. v. U.S. ex. rel. Sanders , the Navy contracted with two shipyards to build destroyers. The shipyards subcontracted with Allison Engine Company to build generator sets (Gen-Sets), which would provide electrical power for the destroyers. Allison Engine subcontracted with General Tool Company (which also used a subcontractor) to manufacture different parts needed for the Gen-Sets. The Navy's contracts with the shipyards required that all parts of the destroyers, including the Gen-Sets, be constructed in accordance with Navy specifications. This requirement was included in the contracts with the subcontractors. In addition, the contracts required that each Gen-Set come with a certificate of conformance that certified the unit met the Navy's requirements. All of the money used to pay the contractors for the work on the Gen-Sets ultimately came from the U.S. Treasury. Former employees of General Tool Company, Roger Sanders and Roger Thacker (the relators), brought actions against Allison Engine Company and other subcontractors under SSSS 3729(a)(1)-(3) of the FCA, alleging fraud with respect to the construction of the Gen-Sets. The relators contended that the subcontractors knew that there were defects in the construction of the Gen-Sets and that the Gen-Sets did not conform to Navy specifications. Still, the subcontractors submitted invoices to the shipyards for payment, which constituted "false or fraudulent claims" paid by the government in violation of the FCA. During the jury trial before the district court, the relators produced evidence that the subcontractors had issued certificates of conformance containing false statements that the Gen-Sets complied with Navy requirements, as well as invoices that the subcontractors presented to the shipyards. However, the relators did not provide evidence of the subcontractors or the shipyards submitting a false claim to the Navy. While the subcontractors argued that the relators' claim failed because there was no demonstration that the false claims were presented to the government, the relators asserted that their claim under the FCA was sufficient because government funds had been used to pay the invoices that were presented to the shipyards. The district court agreed with the subcontractors and granted their motion for judgment as a matter of law. The court concluded that in order to sustain a claim under SSSS 3729(a)(1) and (a)(2) of the FCA, there must be a showing that a false claim was presented to the U.S. government. On appeal, the Sixth Circuit reversed the district court in relevant part and found the subcontractors liable under the FCA. The court of appeals evaluated the statutory language and found that, while liability under SS 3729(a)(1) depends on whether a claim has been presented to the government, the language in SSSS 3729(a)(2) and (a)(3) contains no indication that presentment is required, so as long as there is a showing that the claim was paid with government funds. The court of appeals opined that the legislative history of the FCA supported this view. Additionally, while the Sixth Circuit articulated that SS 3729(a)(2) requires a "causal connection" between the defendant's false statement and the payment or approval of the claim by the government, the court focused its decision on the idea that proof of presentment is not required in order to bring a successful FCA claim under SS 3729(a)(2) and (a)(3). The Supreme Court granted certiorari on the issue of whether false claims for federal government money made by subcontractors are actionable under SS 3729(a)(2) or SS 3729(a)(3) of the FCA, if the claims were not presented to the U.S. government. In a unanimous decision, the Supreme Court vacated the Sixth Circuit decision and remanded the case for further proceedings. While the Court held that a false claim does not have to be presented to the government under SSSS 3729(a)(2) and (a)(3), the Court found that under SS 3729(a)(2), a plaintiff "must prove that the defendant intended that the false record or statement be material to the Government's decision to pay or approve the false claim." Similarly, under SS 3729(a)(3), a plaintiff must demonstrate that the conspirators agreed to make use of the false record or statement in an effort to defraud the government, and that the statement would have a material effect on the government's decision to pay the false or fraudulent claim. The Court found that the language of SS 3729(a)(2) did not support the Sixth Circuit's finding that a plaintiff can establish liability under the FCA by showing that a false statement resulted in the use of government funds to pay a false or fraudulent claim. The Court pointed to the language of the subsection, in particular, the phrase " to get a false claim paid by the government." As the Court articulated, "'[t]o get' denotes purpose, and thus a person must have the purpose of getting a false claim 'paid or approved by the Government' in order to be liable under SS 3729(a)(2)." Without this element of intent, the Court elaborated, the reach of the FCA would expand beyond its role of "combating fraud against the government." Further, the Court explained that "[r]ecognizing a cause of action under the FCA for fraud directed at private entities would threaten to transform the FCA into an all-purpose antifraud statute." Additionally, the Court agreed with the Sixth Circuit that, while a plaintiff must present a claim to the government under SS 3729(a)(1), SS 3729(a)(2) does not require proof that a defendant's false record or statement was submitted to the government, but instead that the defendant submitted the claim for the purpose of getting the claim paid by the government. The Court also found that under SS 3729(a)(3) it is not necessary to show that conspirators presented a false claim to the government, but instead that conspirators agreed that the false record or statement would have a material effect on the government's decision to pay the claim. As mentioned above, the FCA is often invoked due to fraud in federal health care programs such as Medicare and Medicaid. Although Allison Engine does not address its application to health care cases, there has been speculation over how the case could affect FCA health care litigation, especially since claims for payment from federal health care programs like Medicare and Medicaid can be paid for with federal funds, but are often paid through some type of intermediary. Some commentators have suggested that Allison Engine could make it more difficult for plaintiffs to bring an FCA claim against health care entities. While lower courts have begun to evaluate cases in light of the Allison Engine decision, it remains to be seen whether the decision will have a significant effect on health care litigation under the FCA. The Social Security Act gives private entities a large role in the administration of Medicare, which includes making coverage determinations, as well as processing and paying claims. For example, under Medicare Parts A and B, non-government organizations contract to serve as the fiscal agent between health care providers and the federal government. It has been proposed that on the basis of Allison Engine , defendants may be able to argue for dismissal of an FCA claim by alleging that the claim at issue was merely relied upon by the private entities that processed and paid the claim; that the claim was not submitted with the purpose of inducing payment by the government; or that the falsehoods were not material to the government's decision to pay the claim. On the other hand, a plaintiff may be able to argue that health care providers and others submitting a Medicare claim are fully aware that, while they are submitting a claim to a contractor, the claims are ultimately paid by Medicare. This awareness could possibly demonstrate an intent to defraud the government, as opposed to a private contractor. Perhaps a more difficult question is how Allison Engine will affect Medicaid claims. Medicaid is a state-administered program that is jointly financed by states and the federal government. When some Medicaid beneficiaries receive care from a health care provider, the provider bills the state Medicaid program for the services. Other Medicaid enrollees receive their care through managed care organizations (MCO), entities that are usually paid monthly, in advance for each enrollee. Typically, the state pays the provider or MCO from a combination of state funds and federal funds, which the Centers for Medicare and Medicaid Services (CMS) advances to the state each quarter. The state later files an expenditure report with CMS in which the state may claim federal reimbursement for Medicaid expenditures, and there is a reconciliation of the expenditures with the federal advance. Applying the reasoning of Allison Engine , it has been suggested that plaintiffs will have difficulty proving that a defendant intended to defraud the federal government when the claim was submitted to a state Medicaid program. However, it still seems possible that plaintiffs may be able to bring successful FCA claims for Medicaid fraud under the reasoning of Allison Engine . For example, if a plaintiff could demonstrate that a defendant intended a state Medicaid program to rely on a false record or statement in order to receive federal reimbursement, a court may be willing to find that the plaintiff meets the requirements of SS 3729(a)(2). In United States ex. rel. Romano v. New York Presbyterian Hospital , one of the first court opinions to rely on the Supreme Court's decision in Allison Engine , the relator alleged that the defendant hospital was liable under the FCA for its complicity in submitting false bills to Medicaid. The hospital argued that it was entitled to summary judgment because, as a matter of law, it could not have violated the FCA's requirement of presentment to a federal officer "for payment or approval" because the Medicaid claims were submitted to and approved by state agencies. The court denied the hospital's motion for summary judgment and found that based on the Allison Engine decision, the question to be addressed was whether or not the hospital acted with the requisite intent when it submitted false claims to state Medicaid agencies, and this was a question of fact to be determined at trial. Members of the111 th Congress have introduced legislation which would make several changes to the FCA and could, if enacted, make it easier for certain plaintiffs to bring an FCA claim. These bills include the False Claims Act Clarification Act of 2009 ( S. 458 ), introduced by Senator Grassley, and the False Claims Act Correction Act of 2009 ( H.R. 1788 ), introduced by Representative Berman. According to congressional reports accompanying similar versions of these bills from the 110 th Congress, the legislation aims to clarify the meaning of several provisions of the FCA due to "restrictive" judicial interpretations of the statute that are said to run contrary to congressional intent. In addition, the Fraud Enforcement and Recovery Act of 2009 ( S. 386 , as reported in the Senate), which was introduced by Senator Leahy and Senator Grassley to enhance federal enforcement capabilities to counteract mortgage fraud, securities fraud, and fraud with respect to federal financial assistance, would also amend the FCA to "clarify that the False Claims Act was intended to extend to any false or fraudulent claim for government money or property, whether or not the claim is presented to a government official or employee ... and whether or not the defendant specifically intended to defraud the U.S. government." Proposed amendments to the FCA included in S. 458 , H.R. 1788 , and S. 386 (which all contain similar, but not identical, provisions) could potentially limit the application of Allison Engine . For example, section 2 of S. 458 would amend 31 U.S.C. SS 3729(a)(2) to provide that a person who "knowingly makes or uses ... a false record or statement to get a false or fraudulent claim paid or approved" can be liable to the government for penalties. The bills all remove the phrase "by the government" from SS 3729(a)(2), presumably for the purpose of clarifying that this section of the FCA covers false claims which are paid for by private parties with government grant or contract funds. While S. 458 and H.R. 1788 retain the phrase "to get," which the Allison Engine Court relied on as a basis for its determination that must be an element of intent to defraud the government in a successful SS 3729(a)(2) claim, S. 386 would amend SS 3729(a)(2) to provide that any person who "knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim" is liable under the FCA. According to a Senate report, the purpose of this language is to eliminate the intent requirement articulated in Allison Engine . Depending on how a court interprets what records or statements are "material to" a false claim, relators may have a considerably greater opportunity to bring an FCA claim in cases where a false claim was submitted to a recipient of government funds. However, it should be noted that while all three bills could make it easier for a relator to bring a claim under SS 3729(a)(2) in situations where the false claim was not submitted directly to the government, under these bills a relator still must prove that a defendant knowingly made or used the false or fraudulent claim.

The False Claims Act (FCA), an important tool for combating fraud against the U.S. government, generally provides that a person who knowingly submits, or causes to be submitted, a false or fraudulent claim for payment to the U.S. government may be subject to civil penalties and damages. Recently, the Supreme Court examined the scope of the FCA in Allison Engine v. United States ex rel. Sanders, in which a former employee of a subcontractor brought an action against other subcontractors who had allegedly submitted a false claim to the prime contractor on a U.S. defense contract. The Court struck down the FCA claim against the subcontractors, holding that a demonstration that a false claim was paid for with government funds, without more, does not establish liability under 31 U.S.C. SSSS 3729(a)(2) and (a)(3). Under these sections, the Court found that a plaintiff must prove that the defendant intended to defraud the government (and not just a recipient of government funds) when it submitted or agreed to make use of the false claim. Given that the FCA is frequently invoked in the health care context, it has been questioned how this decision could affect these cases. This report provides an overview of the FCA and the Allison Engine decision, analyzes how this decision could affect certain FCA health care claims, and discusses proposed legislation that would amend the False Claims Act (i.e., the False Claims Act Clarification Act of 2009 (S. 458), the False Claims Act Correction Act of 2009 (H.R. 1788), and the Fraud Enforcement and Recovery Act of 2009 (S. 386)), which could limit the application of the Allison Engine decision.

RS21761 -- Medicare Advantage: What Does It Mean For Private Plans Currently Serving MedicareBeneficiaries? Updated April 20, 2004 The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA, P.L. 108-173 ) added a voluntary prescription drug benefit to Medicare and made manychanges to the Medicare+Choice (M+C) program, now called Medicare Advantage (MA). Changes to MA include(1) increased payment rates, (2) a competition program in2006, (3) the addition of regional plans beginning in 2006, and (4) a six-year comparative cost adjustment programin 2010 that enhances competition between MA plans andrequires traditional Medicare to compete with MA plans. Although plan participation is likely to increase due tothe increased payments, long-term plan participation isunknown. MMA added a voluntary prescription drug benefit to Medicare. Starting in 2006, beneficiaries will have access to a drug plan whether they are in traditional fee-for-service(FFS) Medicare, or enrolled in managed care. The prescription drug coverage will be provided through either newlycreated prescription drug plans or for those beneficiaries inMA, Medicare Advantage Prescription Drug (MA-PD) plans. Managed care organizations will be required to offerat least one plan that includes the standard prescription drugbenefit, or an actuarially equivalent drug benefit, but may offer additional plans without a drug benefit, or with amore generous benefit. Generally, organizations offeringMA-PD plans will be required to comply with the rules and procedures required of companies offering a prescriptiondrug plan to beneficiaries in the FFS Medicare programunder the new Part D. Similar rules and procedures will be established for the prescription drug plans and MA-PDplans with respect to: enrollment, dis-enrollment,termination, coverage periods, appeals, information dissemination and the procedure of submitting a bid for the costof providing the drug benefit. Historically Medicare managed care plans were able to attract enrollees by offering additional benefits, one of the most popular being prescription drugs. Beneficiaries whoenrolled in these plans were willing to accept some of the restrictions of managed care, such as limitations onprovider choice, in order to have the additional benefits. Beginning in 2006, beneficiaries will be able to get prescription drugs whether they are in traditional FFS Medicareor an MA-PD plan. To compete with traditional Medicare,some plans may redesign their benefit packages to remain attractive to their enrollees. For example, they mayconsider adding vision or dental services, if they do not alreadyinclude them, reducing cost sharing, or enhancing the prescription drug benefit. In 2004, 36% of Medicare Advantage enrollees are enrolled in a plan that includes prescription drugs with no additional premium. (1) These plans are providingprescriptiondrug coverage to enrollees because their cost of providing all benefits covered by Medicare under Hospital Insurance(Part A) and Supplementary Medical Insurance (Part B) isless than the current payment rate. Starting in 2006, MA-PD plans will receive additional money from Medicareto pay for the prescription drug benefit. If a plan can continueto provide the standard Part A and B benefits at a lower cost (i.e., if its bid for covering Part A and B benefits is lessthan the benchmark, explained in more detail below), thenit can provide other additional benefits with some of the savings that might, in previous years, have gone towardsproviding prescription drugs. What can plans do to compete with traditional FFS Medicare? Managed care organizations will be allowed to make their plans more attractive to beneficiaries by reducingout-of-pocket expenses (copayments for Part A and Part B benefits, the premium for Part B coverage, or thepremium for the prescription drug coverage) or by adding benefitssuch as eyeglasses and earing aids. Plans may also add additional drug coverage beyond the basic Medicare benefit,but there is a disincentive for them to do this. Once anenrollee reaches the annual out-of-pocket threshold for catastrophic drug coverage ($3,600 in 2006, which wouldbe reached with $5,100 in total drug spending under a standardplan) Medicare provides reinsurance -- paying the plan a portion of the enrollee's additional drug costs. Third partypayments, including MA payments, do not count towardthe beneficiary's out-of-pocket threshold. Additional drug coverage would reduce the enrollees' out-of-pocketexpenses, so that fewer enrollees would reach the out-of-pocketthreshold, and those who did would reach it later in the year. The additional coverage would thus reduce the moneya plan would receive from Medicare. Alternatively, plans may decide to add or enhance a drug benefit in 2004 to increase enrollment and gain a competitive advantage in the managed care market prior to thebeginning of the Medicare drug benefit in 2006. Some plans have enhanced their drug benefits for 2004, asdiscussed below. Plans may also offer Medicare-endorsed drugdiscount cards to their own enrollees through the newly established drug discount card program under MMA. Thecards could provide discounts on drug prices even if the plandoes not have a drug benefit, or if the plan benefit cap is reached. (2) Beneficiaries who enroll in a plan in 2004 may be more likely to remain with the plan when theMedicaredrug benefit is added to the program in 2006. For 2004, MMA changed the payment rate calculation for Medicare managed care plans, resulting in increased payment rates for all counties. (3) Previously, plansreceived thehighest of three possible rates -- a floor rate, a minimum increase above the previous year's rate, or a blend of localand national rates -- subject to a budget neutralityprovision. (4) MMA made three major changes to thepayment formula for 2004, all designed to increase payment rates. First, a fourth payment type was added: 100%of percapita fee-for-service Medicare costs. (5) Second, thebudget neutrality adjustment was eliminated, allowing a blend payment to be paid when it is the highest of the fourrates,even when that would increase total expenditures. The blend payment uses a combination of local and nationalrates, and is designed to reduce variance in payments acrosscounties. Third, the minimum increase was changed from a 2% increase above the previous year's rate to the greaterof 2% or the percentage by which per capita Medicareexpenditures grew nationally in the previous year. In 2005 and beyond, payments will be annually updated by thenew minimum increase or, at the Secretary's discretion, but atleast once every three years, the higher of either the new minimum increase or 100% of the updated (rebased) FFSper capita payment. Payment rate increases beginning in March 2004 vary from county to county. The average increase (weighted by the number of enrollees) relative to the 2003 rate is 10.8%. The smallest increase for the same period is approximately 6.3%. Approximately 94% of enrollees live in countieswhere the increase is 20% or less. A small number of planswill receive increases of more than 45%. The higher payment rates may encourage organizations to stay inMedicare, and may attract other organizations, increasingcompetitive pressures on existing plans. It may also encourage plans to expand their service areas. Approximately21% of counties not currently served by a managed care planqualify for an average payment increase of 15% or greater. For six consecutive years private plans have withdrawnfrom Medicare or reduced their service areas citing lowpayment rates as the primary cause. CMS indicates that plans are using the increases to 2004 payments to: (1)strengthen provider networks with 43% of the funds; (2) reducepremiums with 31% of the funds; (3) enhance benefits, including prescription drug cards, with 17% of the funds;and (4) reduce cost sharing with 5% of the funds. Five percentof the additional funds are being held in the stabilization fund for use before the end of 2005. Until 2006, organizations participating in Medicare managed care must submit to CMS an estimate of the cost of providing Part A and B benefits to the average beneficiary. This estimate is called an Adjusted Community Rate (ACR) proposal and it is submitted each year for each planthe organization offers. The ACR is compared to the paymentthe plan would receive for serving beneficiaries. If the payment is larger than the cost of serving beneficiaries, theplan is required to return the full amount of the difference tothe beneficiary in the form of additional benefits, reduced cost-sharing or a reduction in the Part B premium. Theorganization may also save the difference in a "stabilizationfund" to defray future costs. Starting in 2006, plans will no longer file ACRs. Instead, their estimate of the cost of providing benefits to beneficiaries will be called a bid. The bid will be compared to a percapita benchmark for the area that is similar to a payment rate prior to 2006. If the benchmark is higher than thebid, the plans must return 75% of the difference to thebeneficiaries in the form of reduced cost-sharing for Part A and B benefits, additional MA benefits, or a credittowards any monthly MA premium, prescription drug premium,or Part B premium. If the bid is above the benchmark, Medicare will pay the plan the benchmark and the beneficiarywill pay the difference between the bid and thebenchmark. The bid portion of the competition program starting in 2006 differs from the ACR process in two ways. First, MMA grants the Secretary the authority to negotiate plan bids. Second, prior to 2006, plans return 100% of the difference to beneficiaries if the payment exceeds the ACR; after2006, plans will return only 75% of the difference if thebenchmark exceeds the bid, and the remaining 25% will be returned to the government as savings. It is unclear whether the Secretary's ability to negotiate will have an impact on plans currently in Medicare. It is also unclear whether returning 25% of plan savings to thegovernment instead of providing that amount to the beneficiary will have an effect on plans. Some observers expectplan bids to be close to the benchmark with little savingsreturned to either the beneficiary or the government. Others, including the Congressional Budget Office, estimateplan bids will be below the benchmarks, resulting in savingsfor both beneficiaries and the government. Sharing savings with the government could result in plans providingless generous supplemental benefits than they otherwise wouldhave, which could make it more difficult to compete with traditional Medicare It is possible that the bid process may be less burdensome than the ACR process, though that will depend on details of how the implementing regulations are written. The ACRprocess, in effect until 2006, requires a comparison that is not required in the bid. Under the Medicare+Choiceprogram, plans are not allowed to earn a higher return from theirMedicare business than their commercial market. One section in the ACR requires a calculation of the plan'sexpected returns from providing Medicare-covered benefits toMedicare beneficiaries versus providing the same benefits to their non-Medicare business. No such calculation isrequired under the bid process beginning in 2006. Private plans participating in Medicare specify the areas they want to serve. They define their service areas as sets of counties and county parts. Starting in 2006, plans will beencouraged (but not required) to serve entire regions designated by the Secretary as part of a new regional program. The regional program is designed to encourage plans,specifically preferred provider organizations (PPOs), to serve areas they had not previously served, particularly ruralareas, in an effort to make Medicare managed care moreclosely resemble the Federal Employees Health Benefits Program (FEHBP). A plan participating in the newregional program will (1) have a network of providers who agree toa contractually specified reimbursement for covered benefits, (2) provide for reimbursement for all covered benefits,regardless of whether the benefits are provided within thenetwork, and (3) serve one or more regions. The Secretary will establish between 10 and 50 regions throughout the country based on analyses of current insurance markets. Plans offered in the regional program will becalled MA regional plans, while non-regional plans will be called MA local plans. An MA regional plan maychoose to serve more than one region, or may serve the entirenation, but it can not segment its service area to offer different benefits or cost sharing requirements to beneficiarieswithin the same region. In addition to the difference in service areas, MA regional plans will differ from MA local plans in (1) benefit package, (2) access to risk-sharing arrangements and incentivepayments, and (3) potential additional payments to hospitals that join managed care networks. First, the benefitpackage for MA regional plans must include a single deductiblefor Part A and B services, and it must include a catastrophic limit on expenditures. The conference report for MMA( H.Rept. 108-391 ) indicates these requirements will makethe regional plans more closely resemble the private plans for the under-65 population. The amount of thecatastrophic limit is not specified in the law. Second, to encourageplans to participate in the regional program and serve areas they have not previously chosen to serve, Medicare willinitially share risk with MA regional plans in 2006 and 2007if a plan's costs fall outside of a specified range or "risk corridor"; plans will assume only a portion of the risk forunexpected high costs and plans will be required to return aportion of the savings to Medicare for unexpected low costs. Another incentive to participate in the regionalprogram is a stabilization fund that can be used to encourage plansto serve one or all regions, or to encourage plans to stay in regions they might otherwise leave. Initially $10 billionwill be available to the fund, but additional funds will beavailable from any savings from regional plans with bids below the regional benchmark. Third, since establishingnetworks can be difficult in less-populated areas, MMAincludes a provision whereby hospitals can receive a payment from CMS to join an MA regional plan's network ifthe hospital can prove that the costs of serving the plan'senrollees exceed the Medicare Part A payment. In such cases, the plan must also pay the hospital at least theMedicare Part A payment for services provided to enrollees. What does this mean for plans currently in Medicare? All areas of the country will be part of a region in the regional program, including areas currently served by local MAplans. It is unclear whether the incentives to participate in the regional program will be (1) enough to encourageplans to participate, or (2) so great that regional plans can offermore generous benefits than local MA plans and attract beneficiaries away from the local plans within the region. Moreover, some plans may choose to participate in theregional program in addition to, or instead of participating as local MA plans. How local MA plans react to theregional program will be based on business decisions about risk,profit and competition. The Secretary is to establish a six-year comparative cost adjustment (CCA) program beginning on January 1, 2010, and ending on December 31, 2015. The CCA program isdesigned to enhance competition between local private plans in the Medicare program and to compare the overallefficiency of these plans with respect to traditional Medicare. MA plans in CCA area can only be local plans, as regional plans can not participate in the program. An area canqualify for the program if it is a metropolitan statistical area(MSA) with at least two MA organizations and has at least 25% of Medicare beneficiaries enrolled in MA localplans. Of those MSAs that qualify, no more than 6 areas, or25% of the areas that meet the requirements will participate. There are two major differences between comparative cost adjustment areas and non-CCA areas. First, in a CCA area, payments to local MA plans will be based oncompetitive bids, similar to payments for the regional MA plans. The benchmark that is compared to each plan'sbid is not strictly an increase over the previous year'sbenchmark (as in non-CCA areas), but rather a weighted average of plan bids and the cost of traditional FFSMedicare in an area. (There is a five-year phase-in of CCAbenchmarks.) Second, in a CCA area, traditional Medicare will compete with local MA plans. While FFSbeneficiaries in non-CCA areas will continue to pay the standardMedicare Part B premium, beneficiaries in CCA areas could have their Part B premium either increased ordecreased. FFS beneficiaries in CCA areas would pay higher Part Bpremiums if the cost of providing the standard Medicare benefit package was more expensive in FFS than the costin the local MA plans. Conversely, FFS beneficiaries in aCCA area would paid lower Part B premiums if the FFS costs are less expensive the MA costs. The premium isphased-in over five years, and additionally, cannot exceed105% of what it would have been for beneficiaries in the CCA area. Proponents of the CCA program anticipate that competition in CCA areas would decrease costs to the Medicare program, perhaps through such strategies as steepernegotiations with providers or more attention to disease management. Opponents of the CCA program argue thatbeneficiaries who want to remain in traditional Medicare maybe financially penalized with increased Part B premiums.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (P.L.108-173) added a voluntary prescription drugbenefit to Medicare and established the Medicare Advantage program to replace the Medicare+Choice program. Theact increases payments to private plans beginning in March2004, creates a new competitive program in 2006, adds a regional program also in 2006, and creates a temporaryprogram that requires traditional Medicare to compete withprivate plans in 2010. These changes were designed to increase private plan participation and to increasecompetition in Medicare. Although plan participation is likely toincrease in the short-term, long-term participation is unknown. This paper outlines major changes to the managedcare program and indicates how these changes may affectparticipation. This report will not be updated.

In 1976, President Gerald R. Ford signed the Toxic Substances Control Act (15 U.S.C. 2601 et seq .; TSCA). Thirty-five years of experience with TSCA implementation and enforcement have demonstrated the strengths and weaknesses of the law and led many to propose legislative changes to TSCA's core provisions in Title I. On April 15, 2010, Senator Lautenberg introduced comprehensive legislation ( S. 3209 ) to amend TSCA, and Representatives Waxman and Rush posted draft TSCA reform legislation on the home page of the House Committee on Energy and Commerce. The latter House draft was subjected to stakeholder comments and critiques in a series of meetings during the spring. The proposal was revised and introduced July 22, 2010, as H.R. 5820 . This report compares key provisions of S. 3209 , as introduced, H.R. 5820 , as introduced, and current law. The major provisions of TSCA Title I are summarized in Tables 1 through 6. The first column of each table describes the provisions of TSCA Title I. The second and third columns summarize provisions of S. 3209 and H.R. 5820 , respectively, that are related to the TSCA provisions in the first column. New provisions that would be added to the end of TSCA Title I by one or both proposals--for example, those related to reduced use of animals for toxicity testing--are summarized in Table 6 . The basic organization of TSCA would be unaffected by the proposals. For example, provisions related to testing would still be in Section 4, requirements for notifying EPA when a new chemical or new use is proposed would still be in Section 5, and regulatory authorities would remain in Section 6. Also unaffected would be recently enacted changes, such as a provision that bans exports of elemental mercury. However, most of the original Title I provisions would be amended or deleted by the proposed legislation, and both proposals would make substantial changes to current law. For example, both proposals would shift the burden of demonstrating the safety of chemicals from the U.S. Environmental Protection Agency (EPA) to manufacturers and processors, and would prohibit manufacture, processing, and distribution of any chemical substance or mixture for any use for which safety had not been demonstrated to EPA's satisfaction. Exemptions from prohibitions would be allowed for particular uses only if a use was "in the paramount interest of national security"; lack of the chemical use "would cause significant disruption in the national economy"; the use was essential or critical and there was no safer feasible alternative; or the chemical use, relative to alternatives, provided a benefit to health, the environment, or public safety. In addition, the proposals would require data development and submission to EPA for all chemicals in commerce, rather than only for chemicals that EPA has found "may present an unreasonable risk of injury to health or the environment" and for which EPA has demonstrated a data need, as required under current law. The proposed amendments to TSCA would increase public access to information about EPA's decisions as well as to some information about chemicals that currently is treated as confidential business information. Based on the data received, EPA would be directed to target chemicals with particular characteristics (for example, persistence in the environment) for early evaluation and possible risk management. Once a chemical has been evaluated and EPA has determined whether (or under what conditions) use of the chemical was safe, the proposals would require risk management action to promptly reduce use of, or exposure to, the chemicals of highest concern, and to encourage development of "safer alternatives." Action would be expedited by allowing EPA to issue administrative orders instead of rules (which must be promulgated under current law), exempting certain EPA decisions from judicial review, and removing certain TSCA requirements that are in addition to requirements specified in the Administrative Procedure Act (5 U.S.C. 553) for notice and comment rulemaking. The scope of EPA oversight also would be expanded by S. 3209 and H.R. 5820 . Both include language that would allow EPA to define various distinct forms of substances that are the same in terms of molecular identity but differ in structure and function, such as manufactured nanoscale forms of carbon and silver. Both proposals also broaden the scope of environmental risks that EPA may manage to include risks found in the indoor environment; currently, TSCA applies only to chemicals in the ambient environment. The proposed amendments also appear to more clearly authorize EPA control of risks posed by articles formed from a substance. Both proposals would authorize EPA activities not currently authorized under TSCA to allow implementation of international agreements pertaining to persistent organic pollutants and other hazardous chemicals. For example, the proposals would authorize EPA to regulate chemicals manufactured solely for export. The authority provided by S. 3209 is specific to three international agreements, while the authority provided by H.R. 5820 applies more generally to any international agreement concerning chemicals. Both proposals would prohibit production and use of some chemicals, but S. 3209 prohibits production and use when it is inconsistent with U.S. obligations under the treaties that have entered into force for the United States. H.R. 5820 directs EPA to ban activities only for specified chemicals that are intentionally produced and are not already regulated under U.S. law. The effect of TSCA on state and local chemical laws also would be modified by the proposals. Current law, TSCA Section 18, generally does not preempt state laws. However, if EPA requires testing of a chemical under section 4, no state may require testing of the same substance for similar purposes. Similarly, if EPA prescribes a rule or order under section 5 or 6, no state or political subdivision may have a requirement for the same substance to protect against the same risk unless the state or local requirement is identical to the federal requirement, is adopted under authority of another federal law, or generally prohibits the use of the substance in the state or political subdivision. TSCA authorizes states and political subdivisions to petition EPA, and authorizes EPA to grant petitions, by rule, to exempt a law in effect in a state or political subdivision under certain circumstances. A petition may be granted if compliance with the requirement would not cause activities involving the substance to be in violation of the EPA requirement, and the state or local requirement provides a significantly higher degree of protection from the risk than the EPA requirement does, but does not "unduly burden interstate commerce." The proposed amendments would simplify this section of TSCA. S. 3209 provides that TSCA would not preempt laws relating to a chemical substance, mixture, or article unless they were less stringent than federal law. H.R. 5820 provides that the act does not affect the right of a state or locality to adopt or enforce its own requirements unless compliance with both the state or local requirements and TSCA is "impossible." Several novel provisions are included in both legislative proposals. One provision, for example, would require definition and listing of localities with populations that are "disproportionately exposed" to toxic chemicals. EPA would be directed to develop an action plan to reduce exposure in such "hot spots." Another provision would direct the EPA Administrator to coordinate with the Secretary of Health and Human Services to conduct a biomonitoring study to determine whether a chemical that research has indicated may be present in human biological substances and that may have adverse effects on human development in fact is present in pregnant women and infants. If the chemical is found to be present, manufacturers and processors must disclose to EPA, commercial customers, consumers, and the general public all known uses of the chemical and all articles in which the chemical is expected to be present. Children's environmental health also is addressed by the bills. Both proposals would establish a children's environmental health research program at EPA and an advisory committee to provide independent advice relating to implementation of TSCA and protection of children's health. The proposals also would establish at least four research centers to encourage the development of safer alternatives to existing hazardous chemical substances. "Green chemistry and engineering" also would be promoted through grants. Finally, the proposed amendments would direct EPA to minimize use of animals in toxicity testing. An advisory committee would be established to publish a list of testing methods that reduce use of animals. So-called "alternative testing methods" have been under development for many years, but remain a minor component of toxicity testing programs. The proposals differ in many details (which will not be discussed here) and in several noteworthy ways that are summarized in Tables 1 through 6. One significant difference is the length of time each proposal allows before all chemicals in commerce must be tested for toxicity. For all existing chemicals that have not been placed on a priority list, data sets must be submitted within 14 years of the date of enactment of S. 3209 . H.R. 5820 allows five years for data development. Another difference that may spur debate is the definition of the safety standard that chemicals are required to meet. H.R. 5820 would require that a chemical substance or mixture "is not reasonably anticipated to present a risk of injury to health or the environment," "provides a reasonable certainty of no harm, including to vulnerable populations," taking into account aggregate and cumulative exposure to a chemical, "and protects the public welfare from adverse effects, including effects on the environment." S. 3209 would require that EPA ensure "aggregate exposure and cumulative exposure of the general population or of any vulnerable population to the chemical substance or mixture presents a negligible risk of any adverse effect." Although they propose somewhat different safety standards, both proposals propose a health-based standard, which might generally discourage consideration of other factors, such as benefits of chemical use or costs of alternative chemicals in similar applications. (However, EPA would be authorized to consider such benefits and costs under certain circumstances. See in Table 4 under the heading "Exceptions to prohibitions and other restrictions" the description of TSCA 6(e) as it would be amended.) In contrast, current law requires that a chemical not pose "an unreasonable risk of injury to health or the environment," and that regulation should control any unreasonable risk to the extent necessary using the "least burdensome" means of available control. This TSCA standard has been interpreted to require cost-benefit balancing. The proposals also treat the identification of chemicals of highest concern differently. H.R. 5820 directs EPA to expedite action for 19 specified chemicals. S. 3209 leaves identification of such chemicals to the Administrator's discretion, directing her to "act quickly to manage risks from chemical substances that clearly pose the highest risks to human health or the environment." Finally, only H.R. 5820 addresses "persistent, bioaccumulative, and toxic" chemicals (PBTs) directly. The bill directs EPA to promulgate a rule establishing criteria for identifying PBTs and requires listing of all PBTs within 18 months of enactment and every three years thereafter. EPA is required to impose conditions on the manufacture, processing, distribution, use, and disposal of PBTs to achieve the "greatest practicable reductions in exposure." EPA then is required to conduct the safety evaluation for all PBTs and to impose further risk management controls as needed. These and other similarities and differences are summarized in Tables 1 through 6.

On April 15, 2010, Senator Lautenberg introduced legislation (S. 3209) to amend the core provisions of the Toxic Substances Control Act (TSCA) Title I. Representatives Waxman and Rush introduced comprehensive legislation to amend TSCA (H.R. 5820) on July 22, 2010. This report compares key provisions of S. 3209, as introduced, H.R. 5820, as introduced, and current law (15 U.S.C. 2601 et seq.). Both bills would amend the 35-year-old law to shift the burden of demonstrating safety for chemicals in commerce from the U.S. Environmental Protection Agency (EPA) to manufacturers and processors of chemicals. Both bills also would prohibit manufacture, processing, and distribution of any chemical substance or mixture for which safety has not been demonstrated. Although they propose somewhat different safety standards for EPA to enforce, both bills suggest a health-based standard. In contrast, current law requires that a chemical not pose "an unreasonable risk of injury to health or the environment," and that any regulation should control unreasonable risk to the extent necessary using the "least burdensome" means of available control. This TSCA standard has been interpreted to require cost-benefit balancing. To facilitate safety assessment, the proposals would require data development and submission to EPA for all chemicals in commerce. TSCA amendments would direct EPA to target chemicals with particular characteristics (for example, persistence in the environment) for earlier evaluation and possible risk management. Any regulatory action would be expedited, for example, by allowing EPA to issue orders rather than rules. The bills also would add new sections to TSCA. Of particular significance is a section authorizing actions that would allow U.S. implementation of three international agreements, which the United States has signed but not yet ratified. Other new sections would provide authority for EPA to support research in so-called "green" engineering and chemistry, promote alternatives to toxicity testing on animals, encourage research on children's environmental health, and require biomonitoring of pregnant women and infants. A "hot spots" provision would require EPA to identify locations where residents are disproportionately exposed to pollution and to develop strategies for reducing their risks. The proposals differ in many details and in several noteworthy ways. For example, for all existing chemicals that have not been placed on a priority list, data sets must be submitted within 14 years of the date of enactment of S. 3209, but within five years of enactment of H.R. 5820. The proposals also treat the identification of chemicals of highest concern differently. H.R. 5820 directs EPA to expedite action for 19 specified chemicals, while S. 3209 leaves identification of such chemicals to the Administrator's discretion. These and other provisions of the two legislative proposals are compared with current law in Tables 1 through 6.

The party ratio in a House of Representatives standing committee refers to the proportional number of members of each party caucus assigned to each committee. Determining sizes, ratios, and committee assignments are among the first actions taken following a general election and at the beginning of a Congress. The Standing Rules of the House of Representatives are silent regarding committee sizes and party ratios; the apportionment of committee seats is a decision of the majority leadership that may include discussions between majority and minority party leaderships occurring during early organization meetings. Historically, the number of majority seats on some committees has exceeded, in varying degrees, the strength of the majority party in the House chamber, regardless of which party has been in power. This generally has ensured that the majority party has a sufficient number of members distributed across committees to control voting in many committees. The exception has been the House Committee on Ethics (known as the Committee on Standards of Official Conduct prior to the 112 th Congress), for which House Rules guarantee an equal share of the seats to the two parties. This report shows House committee party ratios for 18 Congresses from the 98 th Congress (1983-1985) through the beginning of the 115 th Congress (2017-2019). Tables for each Congress include the standing committees and a permanent select committee as established and named in each Congress. An additional table ( Table 1 ) provides a comparison of majority party strength in the House chamber and total committee seats. The data presented in this report are drawn from the official lists of standing committees and any permanent select committees published by the Clerk of the House early in each Congress. The data reflect the full number of seats assigned to each party, even in instances when some assignments made by a party left seats unfilled. Data on overall party strength in the House are taken from historical tables in the 2009-2010 Official Congressional Directory, 11 1 th Congress , for the 98 th through 111 th Congresses. The data for the 112 th -115 th Congresses are from the Clerk of the House website. Independent Members are listed separately, consistent with the Clerk's committee lists. The Delegates representing American Samoa, the District of Columbia, Guam, the U.S. Virgin Islands, and the Northern Mariana Islands, as well as the Resident Commissioner of Puerto Rico, are included in the figures for total number of committee seats. They are not included in total House data; total House data and percentages are based on 435 Members. For most Congresses, the total party division numbers reflect party strength after the November elections; they do not reflect changes due to deaths or resignations followed by special elections, or changes in party affiliation after the beginning of the Congress. Table 1 shows a comparison of majority party strength in the House chamber with total majority committee seats for the 98 th Congress through the 115 th Congress. Unfilled seats on committees (if so noted in the Clerk's lists) are counted in individual and overall committee totals for consistency. Tables 2-1 9 show for each of the 18 Congresses examined, by majority, minority, and Independents (where present) House party breakdown and majority margin; total committee seats, majority and minority committee seats, and majority margin; the standing and select committees (with legislative jurisdiction) as established and named in each Congress; committee seats allocated to the majority and minority parties, including Independents (where present), for each committee; and majority-minority seat margin for each committee.

The party ratio in a House of Representatives standing committee refers to the proportional number of members of each party caucus assigned to each committee. Determining sizes, ratios, and committee assignments are among the first actions taken following a general election and at the beginning of a Congress. The Standing Rules of the House of Representatives are silent regarding committee sizes and party ratios; the apportionment of committee seats is a decision of the majority leadership that may include discussions between majority and minority party leaderships. Historically, the number of majority seats on some committees has exceeded, in varying degrees, the strength of the majority party in the House chamber, regardless of which party has been in power. This generally has ensured that the majority party has a sufficient number of members distributed across committees to control voting in many committees. The exception has been the House Committee on Ethics (known as the Committee on Standards of Official Conduct prior to the 112th Congress), for which House Rules guarantee an equal share of the seats to the two parties. This report shows House committee party ratios for 18 Congresses, covering the period from the 98th Congress (1983-1985) through February 2017, the first part of the 115th Congress (2017-2019). Table 1 shows a comparison of majority party strength in the House chamber with total majority committee seats for the 98th Congress through the beginning of the 115th Congress. Unfilled seats on committees (if so noted in the Clerk's lists) are counted in individual and overall committee totals for consistency. Tables 2-19 show for each of the 18 Congresses examined, by majority, minority, and Independents (where present) House party breakdown and majority margin; total committee seats, majority and minority committee seats, and majority margin; the standing and select committees (with legislative jurisdiction) as established and named in each Congress; committee seats allocated to the majority and minority parties, including Independents (where present), for each committee; and majority-minority seat margin for each committee. Committee ratios data for this report are from the official committee lists for each Congress issued by the Clerk of the House, using editions that generally reflect the party ratios in effect at the beginning of each Congress. Later versions of the Clerk's lists, or the use of alternate sources or methodologies, may yield different results. Independent Members are listed separately, consistent with the Clerk's committee lists. Tables for each Congress include the standing committees and any permanent select committees as established and named in each Congress.

On June 26, 2015, the Supreme Court issued its decision in Obergefell v. Hodges legalizing same-sex marriage throughout the country by requiring states to issue marriage licenses to same-sex couples and to recognize same-sex marriages that were legally formed in other states. In doing so, the Court resolved a circuit split regarding the constitutionality of state same-sex marriage bans. This report provides background on, and analysis of, significant legal issues raised by the Supreme Court's decision in Obergefell . It first offers background on the constitutional principles on which the Court relied in Obergefell to invalidate state same-sex marriage bans as unconstitutional. Then, it walks through the Court's opinion and rationale. Finally, it discusses potential implications of the Court's decision. Under the Fourteenth Amendment's Equal Protection Clause, "[n]o State shall ... deny to any person within its jurisdiction the equal protection of the laws." Though there is no parallel constitutional provision expressly prohibiting the federal government from denying equal protection of the law, the Supreme Court has held that equal protection principles similarly apply to the federal government. Under the Constitution's equal protection guarantees, when courts review governmental action that distinguishes between classes of people, they apply different levels of scrutiny depending on the classification involved. The more suspect the government's classification, or the more likely that the government's classification was motivated by discrimination, the higher the level of scrutiny that courts will utilize in evaluating the government's action. Increased scrutiny raises the likelihood that a court will find the action unconstitutional. Generally speaking, there are three such levels of scrutiny: (1) strict scrutiny; (2) intermediate scrutiny; and (3) rational basis review. Strict scrutiny is the most demanding form of judicial review. The Supreme Court has observed that strict scrutiny applies to governmental classifications that are constitutionally "suspect," or that interfere with fundamental rights. In determining whether a classification is suspect, courts consider whether the classified group (1) has historically been subject to discrimination; (2) is a minority group exhibiting an unchangeable characteristic that establishes the group as distinct; or (3) is inadequately protected by the political process. There are generally three governmental classifications that are suspect--those based on race, national origin, and alienage. When applying strict scrutiny to governmental action, reviewing courts consider whether the governmental action is narrowly tailored to a compelling government interest. The government bears the burden of proving the constitutional validity of its action under strict scrutiny, and, in doing so, must generally show that it cannot meet its goals via less discriminatory means. Intermediate scrutiny is less searching than strict scrutiny, though it subjects governmental action to more stringent inspection than rational basis review. Intermediate scrutiny applies to "quasi-suspect" classifications such as classifications based on gender or illegitimacy. When reviewing courts apply intermediate scrutiny to governmental action, they determine whether the action is substantially related to achieving an important government interest. As with strict scrutiny, the government bears the burden of establishing the constitutional validity of its actions under intermediate scrutiny. Rational basis review is the least searching form of judicial scrutiny, and generally applies to all classifications that are not subject to heightened levels of scrutiny. For governmental action to survive rational basis review, it must be rationally related to a legitimate government interest. When evaluating governmental action under rational basis review, courts consider the legitimacy of any possible governmental purpose behind the action. That is, courts are not limited to considering the actual purposes behind the government's action. Additionally, the governmental action needs only be a reasonable way of achieving a legitimate government purpose to survive rational basis review; it does not need to be the most reasonable way of doing so, or even more reasonable than alternatives. Accordingly, rational basis review is deferential to the government, and courts generally presume that governmental action that is subject to such review is constitutionally valid. Parties challenging governmental actions bear the burden of establishing their invalidity under rational basis review. The U.S. Constitution's due process guarantees are contained within two separate clauses; one can be found in the Fifth Amendment, and the other resides in the Fourteenth Amendment. Each clause provides that the government shall not deprive a person of "life, liberty, or property, without due process of law." However, the Fifth Amendment applies to action by the federal government, whereas the Fourteenth Amendment applies to state action. The Constitution's due process language makes clear that the government cannot deprive individuals of life, liberty, or property without observing certain procedural requirements. The Supreme Court has interpreted this language to also include substantive guarantees that prohibit the government from taking action that unduly burdens certain liberty interests. More specifically, substantive due process protects against undue governmental infringement upon fundamental rights. In determining whether a right is fundamental, Supreme Court precedent looks to whether the right was historically and traditionally recognized, and whether failing to recognize the right would contravene liberty and justice. The Supreme Court has held that governmental action infringing upon fundamental rights is subject to strict scrutiny, and thus must be narrowly tailored to a compelling government interest. Under strict scrutiny, the government must generally show that it has a "substantial" and "legitimate" need for its action to be in furtherance of a compelling government interest. If the government successfully establishes a compelling interest, its action cannot encumber fundamental rights any more than is necessary to achieve the government's need. Additionally, the government could not have possibly taken alternative action that would similarly further its interest while being less burdensome on fundamental rights. Otherwise, the government's action is not narrowly tailored to the government's interest. The Supreme Court has recognized a number of rights as fundamental, including the right to have children, use contraception, and marry. In Obergefell , the Court considered whether the Fourteenth Amendment's substantive due process guarantees require states to issue marriage licenses to same-sex couples and require states to recognize same-sex marriages that were legally formed in other states. The Supreme Court resolved a circuit split on the constitutionality of state same-sex marriage bans, finding them unconstitutional in Obergefell v. Hodges . In doing so, the Court relied on the Constitution's due process and equal protection principles to hold that states must issue marriage licenses to same-sex couples and recognize same-sex marriages that were legally formed in other states. The majority in Obergefell rested its decision upon the fundamental right to marry. The Court observed that it has long found the right to marry to be constitutionally protected, though it acknowledged that its precedent describing the right presumed an opposite-sex relationship. Even so, according to the Court, these cases have identified reasons why the right to marry is fundamental, which apply equally to same-sex couples. These reasons included (1) personal choice in whom to marry is inherent in the concept of individual autonomy; (2) marriage's unique support and recognition of a two-person, committed union; (3) the safeguarding of children within a marriage, as both same-sex couples and opposite-sex couples have children; and (4) marriage as a keystone of the nation's social order, with no distinction between same-sex couples and opposite-sex couples in states conferring benefits and responsibilities upon marriages. Accordingly, the Court extended the fundamental right to marry to same-sex couples. In holding that the fundamental right to marry includes same-sex couples' right to marry, the Court appeared to acknowledge its departure from precedent for determining whether a right is fundamental--mentioned earlier in this report--which considers whether it is "deeply rooted in this Nation's history and tradition and implicit in the concept of ordered liberty." The Court observed that if rights were defined by who could historically use them, old practices could continuously prevent new groups from exercising fundamental rights. As such, the Court found that "rights come not from ancient sources alone. They rise, too, from a better informed understanding of how constitutional imperatives define a liberty that remains urgent in our own era." After determining that the fundamental right to marry includes the right of same-sex couples to marry, the Court also seemed to depart from precedent--and the approaches of courts of appeals that relied on the fundamental right to marry to strike down state same-sex marriage bans--by not applying strict scrutiny to such bans. As previously noted, courts generally subject governmental action that infringes upon a fundamental right to strict scrutiny, requiring that the action be narrowly tailored to a compelling government interest to be constitutional. The states had argued two primary interests for their bans on same-marriage: (1) the desire to wait and see how the same-sex marriage debate progresses before changing long-existing marriage norms; and (2) incentivizing procreating couples to stay together during child rearing. However, the Court made no mention of whether the state same-sex marriage bans at issue were narrowly tailored to these justifications. Rather, the Court noted why these justifications were invalid without appearing to apply any of the typical levels of judicial review (i.e., rational basis review, intermediate scrutiny, or strict scrutiny). The Court held that both equal protection and due process guarantees protect the fundamental right to marry, and that states can no longer deny this right to same-sex couples. Importantly, in doing so, the Court did not hold that classifications based on sexual orientation warrant any form of heightened scrutiny. In fact, the Court made no mention of the proper level of scrutiny applicable to such classifications. Some of the dissenting Justices in Obergefell thought that the majority exceeded the Court's proper role by removing the question of whether same-sex couples have the right to marry from the democratic process, where, they stated, it is properly resolved. According to these Justices, the five-person majority should not have resolved the hotly contested issue of same-sex marriage for the entire country; such resolution should have come from the people. The dissenting Justices also voiced concern with the majority looking beyond history and tradition to establish a fundamental right contrary to Supreme Court precedent. According to the dissenting Justices, the requirement that fundamental rights be rooted in tradition and history exists to prevent the Court from imparting its policy decisions regarding which rights have constitutional protection. Although the Supreme Court answered questions surrounding the constitutionality of state same-sex marriage bans in Obergefell , its decision raised a number of other questions. These include questions regarding, among other things, Obergefell 's broader impact on the rights of gay individuals; the proper level of judicial scrutiny applicable to classifications based on sexual orientation; what the decision might mean for laws prohibiting plural marriages; the Court's approach to recognizing fundamental rights moving forward; and the proper level of judicial scrutiny applicable to governmental action interfering with fundamental rights. This section briefly explores these questions. Obergefell raised questions about the decision's broader impact on the rights of gay individuals--that is, whether its rationale extends rights to gay individuals outside of the marriage context. However, the decision appears limited to the marriage context. Although the majority opinion did make reference to same-sex marriage bans implicating equal protection guarantees, its holding rested entirely on such bans infringing upon the fundamental right to marry in violation of both equal protection and due process guarantees. The Court did not mention whether classifications based on sexual orientation are suspect or quasi-suspect, and thus warrant any form of heightened scrutiny. If the Court had rendered such a holding, its decision would have arguably had broader implications for the rights of gay individuals, as it would have potentially subjected all governmental action that classifies based on sexual orientation to a heightened form of judicial scrutiny. Prior to Obergefell , federal appeals courts were split regarding the proper level of judicial scrutiny applicable to governmental action that classifies based on sexual orientation. The U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) has held that classifications based on sexual orientation warrant heightened scrutiny, though it did not clarify whether this heightened scrutiny was intermediate or strict scrutiny. The U.S. Court of Appeals for the Second Circuit (Second Circuit) has similarly found that classifications based on sexual orientation are quasi-suspect, and thus any governmental action that classifies based on sexual orientation is subject to intermediate scrutiny. Conversely, however, the U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit) has held that governmental action that classifies based on sexual orientation is neither suspect nor quasi-suspect, and thus subject only to rational basis review. Because the Court's decision in Obergefell rested on the fundamental right to marry--and therefore seems limited to the marriage context--nothing in the opinion appears to resolve the circuit split between the Second, Sixth, and Ninth Circuits regarding the correct level of scrutiny applicable to classifications based on sexual orientation. Other lower courts will be left to grapple with this issue in the future. This ambiguity leaves open the possibility that, moving forward, circuit courts could either, like the Second and Ninth Circuits, apply heightened scrutiny to laws that classify based on sexual orientation (e.g., laws that provide exemptions from anti-discrimination legislation for religious entities based on their objections to certain sexual orientations), or could apply rational basis review to such laws like the Sixth Circuit. The fact that some lower courts may apply heightened scrutiny to government action that classifies based on sexual orientation where other courts may not is significant because, as discussed earlier in this report, laws subject to higher levels of scrutiny are more likely to be found unconstitutional. As such, this could create a situation wherein similar laws that classify based on sexual orientation receive dissimilar outcomes when facing constitutional challenge, depending on the evaluating court. The Supreme Court's decision in Obergefell also raised questions regarding whether the Court's rationale could potentially extend the fundamental right to marry to polygamy. In fact, Chief Justice John Roberts, in his dissent in Obergefell , seems to suggest that the majority's opinion could lead to the legalization of plural marriages. However, the majority's opinion seems crafted so as to try to limit its reach to the same-sex marriage context, in a possible attempt to prevent its rationale from extending the fundamental right to marry to plural marriages. As previously discussed, the majority in Obergefell found that the four reasons why the right to marry is fundamental apply equally to same-sex couples, and thus extended the fundamental right to marry to same-sex couples. Some commentators have observed that there are distinctions between plural marriages and same-sex marriages sufficient to prevent Obergefell 's rationale from being extended to legalize plural marriage. Conversely, other commentators have observed that parts of the Court's opinion discussing why the fundamental right to marry includes same-sex marriage (e.g., the majority's consideration of individual autonomy and family) could potentially provide basis for extending constitutional protections to plural marriages. Additionally, the majority in Obergefell seemingly departed from precedent for determining whether a right is fundamental by looking beyond historical and traditional recognition. This deviation from prior cases raises the possibility that, when determining whether a right is fundamental in the future, the Court will consider how the right is viewed at the time, in addition to its historical and traditional recognition. This could have the effect of expanding the number of rights that are deemed fundamental for purposes of substantive due process protections. Finally, the Court did not clarify which, if any, of the typical levels of judicial review (i.e., rational basis review, intermediate scrutiny, or strict scrutiny) it applied to state same-sex marriage bans after finding that such bans interfere with same-sex couples' fundamental right to marry. Moving forward, this raises questions regarding the proper level of judicial scrutiny applicable to governmental action that infringes upon fundamental rights. Given that increased scrutiny decreases the likelihood that a court will find government action constitutional, this could create ambiguity regarding the degree to which the government can permissibly take action that interferes with fundamental rights.

On June 26, 2015, the Supreme Court issued its decision in Obergefell v. Hodges requiring states to issue marriage licenses to same-sex couples and to recognize same-sex marriages that were legally formed in other states. In doing so, the Court resolved a circuit split regarding the constitutionality of state same-sex marriage bans and legalized same-sex marriage throughout the country. The Court's decision relied on the Fourteenth Amendment's equal protection and due process guarantees. Under the Fourteenth Amendment's Equal Protection Clause, state action that classifies groups of individuals may be subject to heightened levels of judicial scrutiny, depending on the type of classification involved or whether the classification interferes with a fundamental right. Additionally, under the Fourteenth Amendment's substantive due process guarantees, state action that infringes upon a fundamental right--such as the right to marry--is subject to a high level of judicial scrutiny. In striking down state same-sex marriage bans as unconstitutional in Obergefell, the Court rested its decision upon the fundamental right to marry. The Court acknowledged that its precedents have described the fundamental right to marry in terms of opposite-sex relationships. Even so, the Court determined that the reasons why the right to marry is considered fundamental apply equally to same-sex marriages. The Court thus held that the fundamental right to marry extends to same-sex couples, and that state same-sex marriage bans unconstitutionally interfere with this right. Though the Supreme Court's decision in Obergefell resolved the question of whether or not state same-sex marriage bans are unconstitutional, it raised a number of other questions. These include questions regarding, among other things, Obergefell's broader impact on the rights of gay individuals; the proper level of judicial scrutiny applicable to classifications based on sexual orientation; what the decision might mean for laws prohibiting plural marriages; the Court's approach to recognizing fundamental rights moving forward; and the proper level of judicial scrutiny applicable to governmental action interfering with fundamental rights. This report explores these questions.

On January 9, 2014, officials in West Virginia discovered that an estimated 10,000 gallons of the chemical 4-methylcyclohexanemethanol (MCHM), mixed with a small amount of glycol ethers known as PPH, leaked from a 46,000-gallon aboveground storage tank at a chemical storage facility owned by Freedom Industries on a site northeast of Charleston, WV. A substantial amount of the chemical was released into the Elk River, a tributary to the Kanawha River. Moving downriver, an unknown amount of the chemical plume entered intake pipes of a water treatment facility located 1.5 miles from the chemical storage facility, causing the issuance of state and federal emergency declarations and prompting the local water utility to issue a "do not use" order that directed more than 300,000 commercial and residential customers in nine counties of West Virginia not to drink or use tap water for any purpose other than flushing toilets. Multiple responses followed. Federal, state, and local emergency response, public health, and environmental officials assembled resources to sample and test for the chemical at the treatment plant and in the water distribution system. Officials sought to obtain and evaluate information about toxicity and potential hazards in order to understand the impact of the chemical contamination. Emergency officials delivered and made water supply available to affected citizens. Recommendations of the U.S. Centers for Disease Control and Prevention (CDC) were used to determine a "safe level" of the chemicals and when the ban on the use of tap water could be lifted. It was fully and finally lifted on January 18, 2014. The U.S. Chemical Safety Board began an investigation of the incident to determine what happened and how to prevent a similar incident in the future. Public and congressional interest in the incident has been significant. Oversight hearings by House and Senate committees began within a month to review the event and to identify policy issues regarding the federal and state roles in regulating chemical facilities and whether legislative remedies may be warranted. Several concerns emerged from these discussions: Many have called for more robust inspections and controls at bulk chemical storage and manufacturing facilities and efforts to enhance inspection, spill containment, leak detection, and training requirements for personnel who manage activities at such facilities. Although underground storage tanks (USTs) are extensively regulated, relatively few federal regulations apply to aboveground storage tanks. For example, federal requirements for prevention and preparedness for releases from aboveground tanks apply to tanks containing oil, but do not apply to tanks storing hazardous substances or tanks containing non-hazardous substances or chemicals such as those at the Freedom Industries facility. There has been dispute over whether the tanks in question were subject to federal or state regulatory requirements that they be structurally sound and have adequate secondary containment, and whether existing requirements were effectively enforced. Little was known about the toxicity of the chemicals that leaked, which complicated efforts by the water utility, emergency responders, and other officials to assess risks to the affected public. Questions were raised about the adequacy of requirements for chemical testing of MCHM and PPH, as well as thousands of other chemicals used in commerce throughout the country. Facilities that store hazardous chemicals in excess of threshold quantities or experience a release in excess of established quantities are required by federal law to report and notify state and local emergency response personnel. However, there are no requirements that nearby or downstream water suppliers be notified. Rather, it is assumed that state and local emergency responders would notify affected entities and individuals. Many have called for more effective accident prevention, encompassing siting and design of chemical storage tanks, as well as inspections to safeguard against structural failure. Similarly, some now recommend that federal environmental laws should give greater attention to protecting sources of water against pollution and contamination. Some of these concerns are reflected in two bills that have been introduced in response to the chemical spill: S. 1961 , the Chemical Safety and Preparedness Act, introduced by Senator Manchin on January 27, and H.R. 4024 , the Ensuring Access to Clean Water Act of 2014, introduced by Representative Capito on February 10. This report describes and analyzes S. 1961 , as reported, and H.R. 4024 . The bills have a number of core elements and provisions in common--both would seek to create a new chemical release prevention and response program to address gaps highlighted by the West Virginia spill--but they take different approaches to doing so. S. 1961 would make programmatic changes by amending the Safe Drinking Water Act (SDWA), while H.R. 4024 would amend the Clean Water Act (CWA). Table A-1 in the Appendix to this report provides a comparison of the two bills. On July 31, 2014, the Senate Committee on Environment and Public Works reported S. 1961 ( S.Rept. 113-238 ), with an amendment in the nature of a substitute. While basic program elements remain similar to the bill as introduced, the reported bill includes new terms, definitions, and various added details and clarifications. The following discussion reviews the Senate bill, as amended. S. 1961 would amend the SDWA, adding a new "Part G" to require states or the Environmental Protection Agency (EPA) to carry out a chemical storage tank surface water protection (CSTSWP) program to protect public water systems from releases of chemicals from storage tanks. The bill would give states or EPA two years to establish a CSTSWP program that provides for oversight and inspection of chemical storage tanks, including tanks located in source water areas identified through the SDWA source water assessment program. Although S. 1961 would establish the tank program under the SDWA, a state would determine which state agency would implement the program. The chemical storage tank program would be administered by states that have primary enforcement responsibility for public water systems (i.e., primacy ), or by EPA if either (A) a state does not have primacy or (B) a state has primacy but expressly refrains from administering and implementing a program. Primacy states choosing not to establish a program would be required to notify EPA of their decision no later than two years after enactment. S. 1961 would require EPA to issue guidance and provide other technical assistance to assist states in implementing the bill's requirements. However, the bill would not authorize funding to support state administration of the CSTSWP program. The bill delineates minimum elements for chemical storage tank programs, including requirements for tanks and tank owners and operators (such as construction and leak detection, inspections, and emergency response plans that provide for immediate notification to public water systems of chemical releases) and requirements for states (including tank inspections and a comprehensive tank inventory). S. 1961 , as introduced, did not include a definition for the term "chemical." The reported bill defines "chemical" to mean a chemical substance that is identified as a hazardous substance under Section 101(14) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, commonly referred to as Superfund); subject to emergency planning or reporting requirements of the Emergency Planning and Community Right-To-Know Act (EPCRA); or defined as a contaminant under SDWA Section 1401(6). The introduced bill focused on chemical storage facilities; however, as reported, S. 1961 changes the focus from "facilities" to "tanks." Under the amended bill, "covered chemical storage tanks" would include onshore, fixed, aboveground bulk chemical storage containers (and related piping and appurtenances) or a combination of containers from which a chemical release would pose a risk of harm to a public water system. This change in scope from facilities to tanks, specifically, may add clarity and certainty as to what exactly would be subject to regulation under the legislation. Additionally, a focus on "tanks" may make any new requirements more compatible with existing state aboveground storage tank regulatory programs. The bill excludes from the definition a tank or container that is subject to regulations under Clean Water Act Section 311(j)(1). In addition, S. 1961 gives states or EPA broad authority to adopt additional exclusions based on substantially similar federal or state laws or based on a determination that the tank "would not pose a risk of harm to a public water system." Under the bill, CSTSWP programs must provide for oversight and inspection of tanks and contain the following minimum requirements: Covered chemical storage tank requirements including design, construction, and maintenance standards; leak detection; spill and overfill control; inventory control for promptly determining the quantity of chemicals released in the event of a spill; an emergency response and communication plan (including procedures for immediately notifying relevant water systems, and state and local emergency response officials, as required by EPCRA); training and safety plan; tank integrity inspections; corrosion protection; and financial responsibility requirements. Inspections of tanks: high hazard tanks--annually by a certified inspector for the owner or operator; tanks identified in a source water assessment area--at least once every three years for facilities; and other tanks--every five years. Comprehensive inventory of covered facilities in the state. Proposed Section 1472(d) would require CSTSWP programs to be implemented and enforced in accordance with SDWA broadly, thus making the bill's requirements subject to federal enforcement authorities (including civil penalties), any monitoring or recordkeeping requirements EPA may establish by regulation, judicial review, citizens' civil actions, EPA general regulatory authority, and other provisions. Relatedly, a tank program and associated requirements would be considered a part of the national primary drinking water regulations for purposes of state primary enforcement responsibility. The substitute amendment to S. 1961 added Section 1472(g) to clarify that state actions regarding the administration of a CSTSWP program would not affect state primacy for other SDWA programs. Among other provisions, the Senate bill would authorize EPA or a state to issue corrective action orders (proposed Section 1473), and would make facility owners or operators liable for costs incurred by EPA or a state for response actions taken under the new Part G (proposed Section 1474). Proposed Section 1745 would prohibit the transfer of a facility unless an inspection is conducted and any necessary measures are taken to address the inspection results. Under proposed Section 1476, a state or EPA would be required to provide to public water systems, on request, information maintained on emergency response plans and chemical inventories for chemical storage tanks within the same watershed as the water system. EPA or the state would also be required to provide to public water systems, on request, existing information on the potential toxicity of stored chemicals that EPA or the state deems relevant to evaluate the risk of harm to water systems, and safeguards that can be taken to detect or limit the impacts of a release of stored chemicals. Primacy states would be required to submit a copy of emergency response plans to EPA and the Department of Homeland Security (DHS). In states where EPA administered the program, EPA would be required to submit a copy of emergency response plans to the state and DHS. S. 1961 would authorize, but not require, public water system owners or operators to commence--or to petition EPA to commence--a civil action for equitable relief to address any activity or facility that may present an imminent and substantial endangerment to the health of persons supplied by the water system. The House measure, H.R. 4024 , which would establish a new Title VII in the CWA, is similar to the Senate bill in many respects. For example: Broadly similar to S. 1961 , H.R. 4024 would require EPA or states to carry out a chemical storage facility source water protection program. The purpose of the program in the House bill is to protect navigable waters that states have designated for use as domestic water sources. ( S. 1961 would require states or EPA to administer a chemical storage tank surface water protection program aimed at protecting public water systems.) Minimum requirements for state programs are very similar to those in S. 1961 , although the Senate bill would require inspection of covered chemical storage tanks, while the House bill calls for inspection of aboveground storage tanks at covered facilities. S. 1961 would require annual inspections for "high hazard" storage tanks (the term is not defined); the House bill has no similar provision. EPA would be authorized to provide technical assistance to a state carrying out the program (but EPA is not required to issue guidance and provide technical assistance, as in S. 1961 ). Neither bill directs EPA to issue regulations or requires states to submit their programs to EPA for review and approval. Neither bill explicitly provides a formal sanction or consequence if a state fails to carry out a chemical storage facility source water protection program. As with S. 1961 , under H.R. 4024 , EPA or a state would be authorized to issue a "corrective action order" to require the owner or operator of a covered chemical facility to carry out requirements of the title. Likewise, the owner or operator of a public water system may commence a civil action in court to address "any activity or facility" that may present an imminent and substantial endangerment to the health of persons supplied by the water system. Or the public water system may petition EPA or the state to commence a civil action or issue an order. Procedures for EPA to respond to such a petition are specified. Paralleling S. 1961 , under H.R. 4024 the owner or operator of a covered chemical storage facility shall be liable to EPA or a state for costs of a response action under the proposed new CWA Title VII. However, neither bill explicitly authorizes a response action relating to the release of a chemical; thus it is unclear to what the cost recovery provision refers. (EPA's ability to initiate a response action would be dependent upon the availability of appropriations.) The bills include comparable provisions regarding transfer of ownership of a covered chemical storage facility or tanks. ( S. 1961 would allow one year, rather than 30 days, to address the results of a pre-transfer inspection, and specifies criteria for qualifying inspections.) The bills also include similar provisions requiring a covered chemical storage facility/tank owner or operator to prepare an emergency response and communication plan, but only S. 1961 explicitly requires procedures for giving immediate notice of a release to relevant water systems. Both bills would require EPA or a state to provide a copy of the plan to neighboring water system operators, EPA (if the plan was submitted to a state), and the Secretary of Homeland Security. (Under S. 1961 , if EPA administered the program, EPA would be required to provide the emergency response plans to the state.) Provisions are included to protect sensitive or security-related information in the plan. While both bills provide that an inventory of each chemical held at a covered chemical storage facility be shared with public water systems, neither bill requires that the inventory be updated to reflect changes in the facility's operation, or types or amounts of chemicals stored there. ( S. 1961 specifies that EPA or a state would be required only to provide response plans, chemical inventories, and other information to a public water system on request.) Both bills allow a state to adopt standards regarding chemical storage facilities or tanks that are more stringent than minimum requirements in the legislation. H.R. 4024 explicitly allows a state to adopt or enforce standards regarding chemical storage facilities that are more stringent than minimum requirements in the legislation. This provision would conform the bill to CWA Section 510, which allows states to adopt or enforce water pollution abatement requirements more stringent than those specified in the CWA. S. 1961 specifies that the bill's requirements are to be implemented in accordance with the SDWA, and makes conforming amendments to SDWA Section 1414(e), which provides that nothing in the SDWA diminishes the authority of a state to adopt or enforce any law or regulation respecting drinking water regulations or public water systems. Despite many broad similarities between the bills, H.R. 4024 does contain numerous differences from the Senate bill. Selected differences are highlighted below. First, as noted above, the purpose of the program in H.R. 4024 is to protect navigable waters that states have designated for use as domestic water sources. The use of the phrase "navigable waters" in the bill derives from the basic jurisdictional reach of the CWA, which is "navigable waters"--defined in the act to mean "the waters of the United States, including the territorial seas." H.R. 4024 applies to a release from a chemical storage facility that poses a risk to "a navigable water that is designated for use as a domestic water supply." Under the CWA, states adopt water quality standards, which include designated use or uses for water bodies in the states (such as public water supply, recreation, or industrial water supply) and criteria to support the designated uses by setting acceptable upper limits on pollutants in the waterbody. The bill is thus concerned with protecting waters designated by states for use as public water supply--typically the highest and most protective use that a state adopts--but not other waters that also could affect public health and welfare. For example, many state standards designate waters for fish consumption, or water contact recreation (swimming and fish), uses that can result in public exposure to and consumption of water that could be affected by a chemical facility release just as easily as a water designated for domestic water supply. Second, while both bills call for the new program to be carried out by EPA or by a state that exercises primary enforcement responsibility for the underlying act, that means different things under the SDWA and CWA. H.R. 4024 would require that the new chemical storage facility program be carried out by states that have been delegated primary authority to issue CWA discharge permits. Forty-six states are authorized by EPA to implement CWA responsibilities that include adopting water quality standards, issuing discharge permits, conducting water quality monitoring, and enforcing the law. In the remaining states (Idaho, Massachusetts, New Hampshire, and New Mexico), plus the District of Columbia and most U.S. Territories, EPA retains core CWA responsibilities such as issuing permits, and it would be required to carry out the program detailed in H.R. 4024 . As discussed above, S. 1961 would apply to states that have primary enforcement authority for public water systems under the SDWA: EPA would implement programs in Wyoming, the District of Columbia, and most Indian lands. Third, only S. 1961 would direct EPA to implement a program in a primacy state that refrains from establishing one. H.R. 4024 includes no similar requirement or explicit authority. Fourth, the bills use different terms and definitions for "storage tank." H.R. 4024 defines "aboveground storage tank" to mean a container at a covered chemical storage facility located on or above ground with fluid capacity in excess of 1,100 gallons, or a tank that is greater than 500 gallons capacity and is located within 500 feet of a navigable water that is designated for domestic water supply. S. 1961 includes a definition for "covered chemical storage tank," but does not exclude any tanks based on storage capacity or distance from surface water; such determinations would be left to each state or EPA. Both bills would exclude tanks ( S. 1961 ) or facilities ( H.R. 4024 ) subject to spill prevention, containment, and removal measures under CWA Section 311(j)(1), which would exclude tanks or facilities storing oil. Both bills also would authorize states or EPA to establish other exclusions. Fifth, the bills define "chemical" differently. The House bill defines "chemical" to mean "any substance or mixture of substances." The proposed definition differs from and is broader than definitions in other laws, and interpreting it could raise questions such as whether it is intended to include a substance such as oil, which is subject to separate provisions in CWA Section 311. S. 1961 includes a three-part definition of "chemical," focusing on regulated hazardous chemicals and substances, but also encompassing the SDWA definition of "contaminant." Sixth, H.R. 4024 directs EPA to survey and report on state programs and regulations developed to implement the requirements of the legislation. Seventh, the House bill provides for civil penalties, not to exceed $15,000 per day, for violation by an owner or operator of a covered chemical storage facility of a requirement or an order issued by EPA or a state pursuant to the legislation. The stated penalty amount is less than the general civil penalty provision in Section 309(d) of the CWA, which specifies not to exceed $25,000 per day for each violation of the act. S. 1961 would make the bill's requirements subject to existing SDWA enforcement provisions, including Section 1414(b), which authorizes EPA to bring a civil action in the appropriate U.S. district court to require compliance with any applicable SDWA requirement or with an administrative compliance order. These SDWA civil penalties may not exceed $25,000 for each day the violation occurs. Eighth, the requirements of S. 1961 would be implemented and enforced in accordance with the underlying statute (SDWA). The House bill contains no similar provision. The spill from chemical storage tanks in West Virginia has generated considerable debate over the current state of regulation of such facilities, at both the federal and state level. As Congress considers possible legislative responses, multiple approaches may emerge. Both of the bills discussed in this report contemplate creating state-led programs to provide for oversight and inspection of covered chemical storage facilities or tanks. Neither bill would require EPA to issue regulations or limit state authority to set stricter requirements. A key difference is that S. 1961 would require the federal government to carry out a program in the event that a state with primary enforcement authority does not establish a program. Additionally, only S. 1961 would require chemical storage tank programs to be administered and enforced in accordance with the underlying statute (SDWA). Neither bill would provide additional funds to states to support development or administration of the program called for in the legislation. Requirements, such as conducting periodic inspections of chemical storage facilities, may be a challenge for resource-limited states without supplemental funding or shifting of funds from other activities to support program needs. Options for funding state-administered programs in the past have included authorizing appropriations for state grants, and providing explicit authority to support program costs through fees. Likewise, S. 1961 does not consider the resources that EPA might need if a large number of primacy states refrain from implementing the program contemplated in the legislation. It is unclear how many facilities might be covered under either bill, as there is no existing inventory--a gap that both bills propose to close by requiring each state to develop its own inventory (a national inventory is not called for in either bill). Although the number of chemical storage facilities and tanks is expected to be large, the bills give states and EPA considerable flexibility to determine which of those might be "covered" facilities or tanks or might be excluded from inclusion in the new program. Whether a state or EPA might choose to exclude some facilities or tanks--for example, those that are large, based on a determination that they already meet appropriate standards, or those that are small, based on a determination that they pose relatively little risk of harm to public water supplies--is unknown for now. At congressional hearings and in other fora, some--including some state regulatory agencies--have expressed the view that federal legislative response to the Elk River chemical spill would be premature until more complete information about the incident is available and an assessment has been done of gaps in environmental laws and regulations and how best to address them--whether through amendment of laws and/or programs or enhancement of existing authorities. Further, regardless of the role of states in the pending bills, some stakeholders prefer allowing states to take the lead in determining the need for and details of programs to address chemical storage facilities within their borders. The Administration's views on the need for legislation to address spills from chemical storage facilities generally or on the specific bills discussed here are unknown for now.

In January 2014, an estimated 10,000 gallons of 4-methylcyclohexanemethanol (MCHM) and other chemicals leaked from a bulk aboveground storage tank at a chemical storage facility located upstream from the intake pipes of the water treatment plant serving Charleston, WV, and nearby counties. In the wake of the resulting contamination of this large public water supply, Congress has undertaken oversight and is considering legislative options. The chemical storage tank at the center of the West Virginia incident appears to not have been subject to regulation under various federal or state laws aimed at protecting water resources from chemical releases. Oversight hearings by House and Senate committees began within a month to review the event, and to identify policy issues regarding the federal and state roles in regulating chemical facilities and whether legislation might be warranted. In further response to the spill, S. 1961, the Chemical Safety and Preparedness Act, was introduced on January 27, 2014, and H.R. 4024, the Ensuring Access to Clean Water Act of 2014, was introduced on February 10, 2014. This report describes and analyzes H.R. 4024 and S. 1961, as reported. The bills share a number of broadly similar provisions--both would direct states or the Environmental Protection Agency (EPA) to establish programs to prevent and respond to releases from chemical storage facilities (H.R. 4024) or tanks (S. 1961) located near drinking water sources--but they take different approaches to doing so: S. 1961 would make programmatic changes by amending the Safe Drinking Water Act (SDWA), while H.R. 4024 would amend the Clean Water Act (CWA). The bills would require states with primary enforcement responsibility for public water systems (S. 1961), or states with primary authority to issue CWA discharge permits (H.R. 4024), to establish a regulatory program for chemical storage tanks or facilities, and would have EPA establish programs in other states. Only S. 1961 would require EPA to establish and administer the program in primacy states that refrain from doing so. H.R. 4024 would require EPA or states to carry out a "chemical storage facility source water protection program" within one year of enactment, while S. 1961 would give EPA or states two years to establish a "chemical storage tank surface water protection program." Both bills include similar program requirements: (1) a state inventory of chemical storage facilities (H.R. 4024) or tanks (S. 1961); (2) regular inspections; and (3) requirements for facilities or tanks (including construction standards, leak detection, emergency response and communication plans, employee training, etc.). Both bills would authorize EPA or a state to issue corrective action orders to enforce the requirements of the legislation, and to recover response costs from facility or tank owners or operators. The bills would require pre-transfer inspections of facilities or tanks, and require information about stored chemicals and response plans to be shared with local water systems. The bills define "chemical" and "storage tank" differently, but would give states or EPA broad discretion in determining the scope of covered facilities or tanks. Both bills contemplate creating state programs to provide for oversight and inspection of covered chemical storage facilities or tanks, but neither would provide financial resources to assist states in establishing or administering the programs. The pending bills broadly present one approach among an array of possible approaches that have received some discussion. Some Members of Congress and stakeholders have suggested that a federal legislative response to the West Virginia spill is premature, saying that they favor allowing states to take the lead in determining the need for and details of programs to address chemical storage tanks and facilities within their borders.

Introduction The Deepwater Horizon oil spill has caused significant socioeconomic injuries to the Gulf of Mexico fishing industry. Immediate economic injuries occurred because large areas of federal and state waters in or adjacent to the spill area were closed to fishing as a precautionary measure to ensure the safety of seafood. Perhaps of greater concern are intermediate and long-term harm to Gulf of Mexico ecosystems. Seafood production is dependent on Gulf ecosystems for spawning areas, nurseries, and growth. Over 84 days beginning on April 20, 2010, the Deepwater Horizon oil well released over 200 million gallons (4.9 million barrels). During the spill, oil was dispersed through the application of 1.8 million gallons of surface and subsurface chemical dispersants. By June 2, 2010, the area of federal waters closed to fishing had grown to its maximum of 88,522 square miles or nearly 37% of federal waters in the Gulf of Mexico. The maximum portions of state waters closed to fishing during the spill were Alabama (40%), Florida (2%), Louisiana (55%), and Mississippi (95%). Survey teams also have documented 1,053 total linear miles of oiled shoreline. At issue for Congress is whether current efforts will be sufficient to restore the fishery to pre-spill conditions. Congress may continue to conduct oversight of efforts to promote fishing industry recovery and Gulf restoration. Immediate issues are likely to focus on providing financial compensation to fishermen, ensuring seafood safety, and maintaining Gulf seafood markets. Congress also may consider long-term efforts to restore the Gulf environment and related fishery productivity. In addition to restoration requirements defined in statute by the Oil Pollution Act (OPA, P.L. 101-380 ) and National Oceanic and Atmospheric Administration (NOAA) Natural Resource Damage Assessment (NRDA) regulations under OPA, the Administration has proposed a long-term plan to restore the Gulf region. The plan would redirect Clean Water Act penalty revenues for this purpose and establish a Gulf Restoration Council to coordinate restoration efforts. Congress may consider the Administration's proposal and related issues such as the allocation and use of restoration funds. The primary objective of this report is to summarize information related to damages caused by the oil spill to Gulf fisheries and efforts to mitigate these damages. Many uncertainties exist because of the complexity and scale of Gulf fisheries and ecosystems that have been affected by the oil spill. Direct and indirect damages to fisheries and the Gulf environment are still being assessed and these efforts are likely to continue for years to come. Commercial and Recreational Fisheries Other than Alaska, historically, the Gulf region has produced the greatest amount of seafood by volume and value in the United States. In 2008, Gulf commercial fishery landings totaled 1,273 million pounds with a dock-side value of $697 million. When related processor, wholesale, and retail businesses are included, the seafood industry of the Gulf states supported over 213,000 full- and part-time jobs with related income impacts of $5.5 billion. The top commercial species by value were shrimp ($366 million), menhaden ($64 million), oysters ($60 million), and blue crab ($39 million). Table 1 provides commercial landings and revenue for major species by state in the Gulf of Mexico region. Recreational fisheries also make significant contributions to the region's economy by supporting businesses such as charters, bait and tackle shops, restaurants, and hotels. In 2008, 5.7 million Gulf recreational fishermen, both visitors and residents, took 24 million fishing trips. In 2008, recreational fishermen spent over $12.5 billion on durable equipment and trips in the Gulf region. Some of the main species targeted by recreational fishermen include snappers, several types of drum, sheepshead, and Spanish mackerel. Although recreational expenditures cannot be directly compared to commercial revenues, these figures provide an indication of the magnitude of economic activity related to these fisheries. Commercial and recreational fisheries are among the main activities supporting the economy and social well-being of many Gulf coastal communities. The Deepwater Horizon oil spill has directly harmed the fishing industry through closures and changes in seafood demand. Large areas of federal and state waters were closed to fishing as a precautionary measure to ensure the safety of seafood. During the closures fisheries landings and associated revenues decreased significantly in central Gulf fishing ports. It is likely that demand for Gulf seafood has decreased because of changes in consumer perceptions related to the spill. The spill also has harmed the Gulf environment, resulting in mortality of organisms, eggs, and early life stages and harm to habitat and other elements of the Gulf ecosystem. The scale and nature of the spill make it difficult for the public or government to quantify these effects. The closing and opening of areas has involved a tradeoff between ensuring public safety and providing fishing opportunities to recreational and commercial fishermen. In addition to public health concerns, marketing of oil-tainted products would further compromise the reputation of Gulf seafood. On the other hand, closures directly constrain recreational and commercial fishermen and delays in reopening areas are costly to the fishing industry. On May 2, 2010, 12 days following the explosion and fire of the Deepwater Horizon, NOAA closed 6,817 square miles of the Gulf of Mexico to commercial and recreational fishing. The closure was implemented to ensure potentially contaminated seafood would not enter markets and pose a risk to human health. The closure grew to include portions of Louisiana, Mississippi, Alabama, and Florida state waters. At the peak of the closure, 88,522 square miles, or nearly 37%, of all federal waters in the Gulf of Mexico were off-limits to fishing. The maximum proportions of state waters closed to fishing during the spill were Alabama (40%), Florida (2%), Louisiana (55%), and Mississippi (95%). Since the flow of oil from the well-head was stopped in July, most of Louisiana state waters and all of Mississippi, Alabama, and Florida state waters have been re-opened to fishing. As of January 24, 2011, only 1,041 square miles of federal waters immediately surrounding the well-head remain closed to commercial and recreational fishing. FDA, NOAA, and coastal states established a protocol to determine when areas may be re-opened to fishing. Once areas have been determined to be free of oil from the spill, re-opening has been considered on a species-by-species basis. Seafood samples of the species in question must pass both sensory and chemical analyses to ensure there are no harmful oil residues. For sensory testing, edible portions of the species are tested by a panel of experts who check samples for oil and dispersant odor and taste. If all tested samples for a given site pass the sensory test, additional samples undergo chemical analysis to test for polycyclic aromatic hydrocarbons (PAHs) and dispersants. All seafood samples from an area must pass both tests for the area to be reopened to fishing. Some have criticized the testing protocols because they believe seafood sampling coverage has been insufficient, the setting of PAH levels of concern should have incorporated additional factors, and the list of toxic substances being tested is too narrow. NOAA has collected samples from federal waters while state personnel have collected samples from state waters. On August 19, 2010, FDA officials stated the following in congressional testimony: To date all samples have passed sensory testing for oil or dispersants and, as with the surveillance sampling, the results of all chemical analyses have shown PAH levels well below the levels of concern, usually by a factor of 100 to 1,000 below those levels, essentially at the same level as were seen before the spill. For federal waters reopened through November 15, 2010, sensory analyses have found no detectable oil or dispersant odors or flavors, and results of chemical analyses have been well below levels of concern. Further, NOAA and FDA sampling from commercial landing sites and markets have not found seafood contaminated by oil or dispersant. According to the FDA, "fish and shellfish harvested from areas re-opened or unaffected by the oil spill are considered to be safe to eat." The areas affected by the closures are some of the richest fishing grounds in the Gulf for commercial species such as shrimp, menhaden, and oysters. Although many factors influence commercial landings, when compared to the same period in 2009 (January through December), total Gulf landings for all shrimp species in 2010 decreased by 35.6 million pounds (27%). On the state level, shrimp landings decreased by 32% in Louisiana, 60% in Mississippi, 56% in Alabama and nearly 15% in Texas, while increasing by nearly 15% for the Florida west coast. Menhaden landings in Louisiana also decreased by 171 million pounds (17%). The decreases in landings resulted in lower revenues in the harvesting sector. Immediate losses were dependent on target species, location, and alternative fishing opportunities. Landings information for other species and associated revenue information are not available at this time. In addition to impacts resulting directly from oil, the oyster industry has been harmed by efforts to protect Louisiana estuaries from oil intrusion. Following the oil spill, the state of Louisiana released freshwater from the Mississippi River into estuaries in greater amounts than usual in an attempt to keep oil from reaching Louisiana's estuaries. The strategy may have had limited success in keeping oil offshore, but with unintended consequences. The freshwater releases decreased salinity on the oyster grounds below the level that oysters can tolerate and resulted in significant mortality of oysters, by some estimates 50% of Louisiana's annual oyster crop. Some of the oyster industry's immediate concerns are related to documenting damage caused by the spill and freshwater diversion and effects of the spill on consumer perceptions and oyster markets. Prior to the oil spill, long-term restoration proposals to divert the Mississippi River for wetlands restoration raised concerns because of likely impacts on the productivity of oyster grounds. Some in the oyster industry have questioned whether current restoration efforts may need to consider retiring oyster grounds and developing new areas that are less likely to be affected by river diversions associated with restoration activities. The Gulf oil spill has affected both the supply of Gulf seafood and the demand for Gulf seafood. Fishery closures constrained harvesters and disrupted seafood supplies for the region's processors, distributors, and buyers. The disruption of seafood supplies resulted in the loss of some of the region's seafood markets. Impacts on specific markets vary depending on the magnitude of changes in supply from the harvest sector, whether the market is local, regional, or national, and the availability of alternative supplies. The disruption in Gulf supplies is likely to have induced buyers to use substitutes such as products from other regions or imports. Many in the Gulf seafood industry are concerned that once seafood buyers switch seafood suppliers, it may be difficult to regain markets. Many in the Gulf seafood industry fear it also will be difficult to regain consumer trust in their products. A study conducted by MRops, a marketing research company commissioned by the Louisiana Seafood Promotion Board, reported that 70% of consumers polled expressed some level of concern about seafood safety following the Gulf oil spill and 23% have reduced their consumption of seafood. This study implies that consumer concerns with safety have caused a decrease in demand for Gulf seafood and seafood in general. Supply effects on prices depend on the scale of the reduction in supply relative to the total market supply. The decrease in supply and related price increases are likely to have been greater for fresh markets near the area of the spill and for local specialties such as oysters. With regard to demand, concerns with seafood safety are likely to put negative pressure on prices. Initially, prices of some Gulf seafood products increased because supplies were constrained by fishery closures. On average, reported Gulf shrimp prices have remained higher in 2010 than during 2009. Oysters have also increased in price, likely in part because of the decrease in Louisiana production which is over 37% of national production and 62% of production in the Gulf region. As areas have been reopened and supply has rebounded, there have been some reports that prices of some products have decreased relative to previous years. In addition to the effects related to the oil spill, prices also depend on additional factors such as the availability of substitutes, consumer income, and consumer tastes and preferences. The length of time it will take to regain markets and consumer trust remains an open question. The Deepwater Horizon oil spill has harmed living organisms that inhabit ocean and coastal areas of the Gulf of Mexico, although the magnitude of damages are subject to considerable uncertainty. Coastal areas are especially vulnerable because oil can be stranded in wetlands and other coastal ecosystems after being washed in by waves and tides. The uptake of dissolved components of oil is toxic for fish, shellfish, other invertebrates, and plankton. Oil also may coat small animals and plants that inhabit shoreline areas and suffocate them. Many scientists are concerned that oil suspended in the water column may have caused mortality of plankton, including eggs and larvae of many fish such as bluefin tuna. Oil also may have remained on or near the bottom of the Gulf and affected deep corals and other bottom-dwelling organisms. Sublethal effects reduce the overall health of organisms, resulting in decreased growth and reproduction. Initial harm to marine organisms, such as direct mortality and reduced health, decrease the reproductive capacity of marine populations and may reduce future abundance. Early life stages of many species develop in coastal areas such as estuaries and wetlands and move offshore as they grow to their adult stage. As a result, the health of coastal areas can have long-term implications for the fishery industry. Ninety-seven percent of commercial fish and shellfish landings by volume are composed of species that depend on estuaries and wetlands at some point in the life cycle, and landings from the Louisiana coastal zone account for nearly one-third of the fish volume harvested in the continental United States. The presence of oil in the environment may alter migration patterns, decrease food availability, and disrupt life cycles. According to a study of oil impacts on Louisiana fisheries, populations of shrimp, crab, and menhaden are most likely to be harmed by the effects of oil on their eggs and larvae. The impacts of oil in coastal areas affects more than individual fish species. The Gulf is composed of inter-related ecosystems that stretch from estuaries and coastal wetlands to the pelagic zone (open ocean). Species directly affected by the spill could affect other species because of ecological interactions. For example, oil in coastal areas has affected structure-forming organisms, such as marsh grasses and oysters. These organisms provide shelter and a surface for attachment by other marine organisms. Survey teams have documented 1,053 total linear miles of oiled shoreline in the Gulf. Robert Barham, Louisiana Wildlife and Fisheries Secretary, has reportedly voiced concerns over long-term implications of the oil spill on Gulf wildlife, such as effects on the food web. Fisheries surveys from Dauphin Island Sea Lab, conducted after the oil spill off the coasts of Mississippi and Alabama, have found that the abundance of some fish species appear to have increased in 2010. Some scientists have speculated that these populations have increased because of the oil spill-related fisheries closures and reduced harvest. Some scientists expressed concern that the effects of the fishing closures may make it difficult to determine the direct impact of the oil spill on marine populations. The complexity of coastal ecosystems and scale of the Gulf oil spill are likely to contribute to considerable uncertainty regarding the magnitude and duration of spill-related damages to living resources. Several mechanisms exist to provide short- and long-term assistance to the fishing industry. Financial assistance to compensate for economic injuries to individuals and businesses affected by an oil spill are defined in statute by the Oil Pollution Act. Another source of assistance can be provided in cases where a fishery failure is declared by the Secretary of Commerce under the Magnuson-Stevens Fishery Conservation and Management Act (MSFCMA, P.L. 109-479 ). Additional sources of assistance have been provided through BP grants, the Vessels of Opportunity Program, and the Small Business Administration. Following the Exxon Valdez oil spill in 1989, a compensation and claims process was established under OPA for costs/damages resulting from oil spills, including lost profits and earnings resulting from property loss or natural resource injury. In general, claims for damages must be presented first to the responsible party (e.g., BP). If the party to whom the claim is presented denies all liability, or if the claim is not settled by payment within 90 days after the claim was presented, the claimant may elect either to initiate an action in court against the responsible party or to present the claim directly to the Oil Spill Liability Trust Fund. In response to economic harm caused by the oil spill and to fulfill obligations as a responsible party, BP established a claims process and multiple claims centers. On May 3, 2010, BP began paying emergency compensation to individuals and businesses. BP stated that emergency payments would continue as long as individuals and businesses could show they were unable to earn a living because of injury to natural resources caused by the oil spill. Payments were based on one month of income and would be adjusted with additional documentation. On June 16, 2010, President Obama announced that BP had agreed to set aside $20 billion to pay economic damage claims caused by the oil spill. Some members of the fishing industry criticized BP's administration of the claims process because they maintained that the claims process was slow, some individual payments were inadequate, and required proof of past earnings might not reflect potential earnings (if the spill had not occurred) for 2010. On August 23, 2010, the Gulf Coast Claims Facility (GCCF) took over the administration of claims from BP to address the issues with BP's claims process. Up until the change, BP had paid out $395.6 million, of which approximately $111 million went to the fisheries industry. Although still funded by BP, GCCF was established by the Administration and BP to provide an independent claims process. Some have argued that the process is not independent because the GCCF is directly financed by BP. GCCF provides information on how to file a claim, how to check the current status of a claim, and other general information concerning the process. GCCF offered emergency payments equivalent to six months of lost income to claimants until November 23, 2010. As of February 12, 2011, the GCCF had made emergency payments of approximately $751 million to individuals and businesses in the fishing industry. Some claimants have voiced concerns with the transparency of the claims process, the lack of information in GCCF responses to claims, and the adequacy of payments, but the actual proportion of unsatisfied fishing industry claimants is not known at this time. Under GCCF procedures, claimants will have three years to estimate damages and submit claims for final payment. Acceptance of a final claim would resolve all claims by that party against BP including past and future alleged damages. Individuals and businesses that have received emergency payments from the GCCF are eligible for a quick payment final claim, which offers a fixed amount of $5,000 for individuals and $25,000 for businesses. Those who do not choose or are not eligible for the quick payment may submit a full review final payment claim for all documented losses and damages. The alternative to a final payment is to make an interim payment claim for past damages that have not been compensated. Individuals and businesses receiving interim payments are not required to sign a release of liability and may file a final claim at a later date. For many in the fishing industry, their dilemma is related to uncertainty in determining the extent and duration of damages to fisheries resources. Some have questioned whether three years is a sufficient period to fully determine the damages of the oil spill. Many individuals and businesses are faced with the decision on whether to take a final settlement or, as many have already done, to file a lawsuit, which may present uncertainty as to payment size and timing. On February 2, 2011, the GCCF released a draft proposal, Payment Options, Eligibility and Substantiation Criteria, and Final Payment Methodology , for public comment. The proposal establishes principles for governing final and interim claims for individuals and businesses. GCCF also released a report, An expert opinion of when the Gulf of Mexico will return to pre-spill harvest status following the BP Deepwater Horizon HC 252 oil spill , to provide supplemental information for the GCCF final payment methodology. The report predicts that regional catches for major Gulf fisheries will likely continue along the same harvest trends of recent years by 2011. However, the report recognized there may be exceptions for specific areas and fisheries, especially for some oyster beds that may not recover for 6 to 10 years. Furthermore, the report acknowledges that a definitive assessment of recovery time is impossible, and the true loss to ecosystems and fisheries may not be known for years or even decades. Some have criticized the report because it assesses recovery of Gulf fisheries without allegedly understanding the ecological and long-term affects of the oil spill. The BP Vessels of Opportunity Program was designed to provide local boat operators with the opportunity to assist with response activities such as transporting supplies, assisting with wildlife rescue, and deploying containment booms. Only captains and employees who completed training and met other conditions were allowed to participate in the program. Approximately 3,500 commercial and charter fishing boats were employed over the life of the program. As of January 20, 2011, the program had made payments of $594 million for vessels and crew in Louisiana, Mississippi, Alabama, and Florida. In September 2010, the program was concluded in Florida, Alabama, and Mississippi, but as of January 2011, a small number of vessels remained active in Louisiana. The GCCF has decided that the earnings from the Vessels of Opportunity Program would not be deducted from payments made to claimants. On November 1, 2010, BP agreed to provide Louisiana with $48 million for seafood safety (testing programs) and marketing. Testing for oil and dispersants in seafood will be funded at $6 million per year for three years and Louisiana seafood marketing will be funded at $10 million per year for three years. The three-year commitment would reset for both programs if oil triggers the closure of new fishing areas. Louisiana had proposed funding of $173 million for a long-term seafood testing and marketing campaign, but BP refused to fund the program. Previously, BP agreed to provide $20 million over three years to fund seafood inspections and marketing efforts in Florida. BP also has agreed to provide $13 million to Louisiana to fund a three year study to monitor effects of the oil spill on Gulf fisheries. On May 24, 2010, Secretary of Commerce Locke determined that the ongoing oil spill had caused a fishery failure in the states of Louisiana, Mississippi, and Alabama. On June 2, 2010, the Secretary added Florida to the earlier determination. Both determinations were made under Section 312(a) of the Magnuson-Stevens Fishery Conservation and Management Act (MSFCMA). Under this section of the act, states must provide a 25% match to federal funds. The Administration requested $15 million to address the fishery failure and $5 million in economic development assistance through the Economic Development Administration. The Supplemental Appropriations Act of 2010 ( P.L. 111-212 ) included a total of $28 million for fishery disaster assistance and $5 million for economic development assistance. NOAA is expected to allocate $15 million of the fishery disaster assistance for a strategic marketing plan and health and safety assurance program for Gulf coast seafood. The remaining $13 million of fishery disaster assistance is intended to address economic impacts on fishermen and fishery-dependent businesses only if resources provided under other authorities are insufficient. The Supplemental Appropriations Act of 2010 also included $10 million for expanded stock assessments for Gulf fish species and $1 million for a National Academy of Sciences study of the long-term effects of the oil spill. In addition, the Small Business Administration has offered economic injury disaster loans and has deferred required payments for some existing loans. Gulf fisheries production is dependent on healthy Gulf ecosystems, including the quantity and quality of fisheries habitat. Restoration of Gulf ecosystems would likely maintain and enhance current fisheries production. The two main restoration efforts focusing on oil spill damages are the Natural Resource Damage Assessment (NRDA) and the Administration's Gulf Coast Restoration Plan. The federal government's role in restoration is defined in statute by OPA and in NOAA regulations for developing a NRDA. NRDA addresses natural resource damages, restoration of resources that are injured, and lost services that result from an oil spill. The parties responsible for causing the oil spill are responsible for NRDA damages. In contrast to financial compensation for individuals and businesses, NRDA focuses on restoration and compensation for harm to public natural resources. Designated federal, state, tribal, and sometimes foreign trust agencies are responsible to act on behalf of the public. OPA directs trustees to undertake two main actions: (1) return injured natural resources to their baseline condition (the condition that existed prior to the spill), and (2) compensate for interim losses. Restoration actions focus on returning natural resources to the baseline level with as much certainty and as quickly as possible. Compensation covers actions to address interim losses of natural resources and services until resources have recovered. Compensatory actions provide services of the same type and quality and of comparable value as those lost or injured. Damage assessment is required to quantify the extent of injuries to natural resources and to determine the type and amount of restoration and compensatory actions needed. The process of recovery is broken down by the regulations into three main phases: Pre-assessment phase --determines whether natural resource injuries have occurred or are expected and whether to continue to the next phase. Restoration planning phase --evaluates potential injuries to natural resources. This phase includes an assessment of the nature and extent of natural resource injuries and development of plans for restoring resources and compensating the public for interim losses. Restoration phase --the final restoration plan is presented to responsible parties to implement or fund the plan. This provides the opportunity for settlement of damage claims without litigation. However, OPA authorizes trustees to bring civil action for damages. As of January 2011, trustees were continuing with the restoration planning phase of the process that was begun in August of 2010. Efforts required during this phase include defining the baseline condition of the ecosystem and damages caused by the oil spill. Quantifying these conditions and damages are often hindered by limited scientific understanding of physical and biological processes in coastal and marine areas, natural variability of marine systems, and a paucity of related scientific data. These factors are coupled with uncertainties about acute and chronic effects of oil on marine organisms. In the face of these uncertainties, it is possible that questions related to restoration and compensation will arise, including basic questions about what constitutes ecosystem recovery and how to determine when it has occurred. On June 15, 2010, the Administration committed to developing a long-term Gulf of Mexico restoration plan for post-spill recovery needs as well as long-term restoration. In contrast to the environmental damages addressed by NRDA, the Administration's plan would address a broader array of restoration needs, many of which pre-date the oil spill. In September 2010, the Administration released America's Gulf Coast ; A Long Term Recovery Plan A fter the Deepwater Horizon Oil Spill . The report put forward a plan to restore the environment, economy, and public health of residents. It stressed the need for inclusive engagement and collaboration among governmental, private, and non-profit organizations and for a significant sustained commitment of resources over many years. The report recommends that Congress dedicate a significant, amount of any civil penalties recovered from responsible parties under the Clean Water Act to restore the Gulf coast. Further, it recommends that Congress create a Gulf Coast Recovery Council to coordinate efforts taken by concerned parties. The report recommended that the Administration immediately establish a Gulf Coast Ecosystem Task Force to coordinate Gulf restoration efforts until the Council is established. In January 2011, the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling released its report to the President. Two of the Commission's recommendations for restoration focus on these points. Congress should dedicate 80 percent of the Clean Water Act penalties to long-term restoration of the Gulf of Mexico. Congress and federal and state agencies should build the organizational, financial, scientific, and public outreach capacities needed to put the restoration effort on a strong footing. On October 5, 2010, President Obama signed Executive Order 13554 to establish the Gulf Coast Ecosystem Restoration Task Force. The task force is chaired by the Administrator or representative of the Environmental Protection Agency and composed of representatives of the Departments of Defense, Justice, Interior, Agriculture, Commerce, and Transportation; and the Office of Management and Budget; the Council on Environmental Quality; the Office of Science and Technology Policy; the Domestic Policy Council; representatives appointed by the Governors of the Gulf states of Texas, Louisiana, Mississippi, Alabama, and Florida; and may include representatives of affected tribes. The task force's main goal is to develop a "Gulf of Mexico Regional Ecosystem Strategy." The strategy will set goals, develop performance indicators, and set up a process to coordinate intergovernmental restoration efforts. The Task Force first met on November 8, 2010. The 111 th Congress held 62 hearings related to the Gulf oil spill and at least 14 were directly related to natural resources and impacts on small businesses. The 112 th Congress may continue to conduct oversight of efforts on fishing industry recovery, adequate compensation, and Gulf restoration. Ongoing efforts by federal agencies and states to ensure seafood safety and to regain and maintain the reputation of Gulf seafood are the most immediate challenges. As the NRDA process moves from the planning to restoration phase, questions may arise regarding the level of the potential settlement and the types of restoration activities identified by the trustees. In contrast to restoration efforts developed under NRDA that are based on existing law, funding and governance of the Administration's comprehensive and long-term Gulf of Mexico restoration plan would require congressional action. To fully implement and fund the Administration's plan, Congress may consider whether to commit Clean Water Act civil penalties for this purpose as was recommended by the Administration's Gulf recovery plan and the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. Congress also may consider how the fund should be allocated and whether to establish a Gulf Restoration Council to coordinate restoration efforts. Several bills were introduced during the 111 th Congress that included these elements of the Administration's plan, but no action was taken on any of them. An ongoing issue, especially for Gulf states, is the allocation and permitted uses of funding under the Administration's restoration plan. Three bills have been introduced in the 112 th Congress that address elements of the Administration's restoration plan, including the Gulf Coast Restoration Act ( H.R. 56 ) and Title IV of Recommendations of the BP Oil Spill Commission Act of 2011 ( H.R. 501 ), which are identical, and the Gulf of Mexico Economic and Environmental Restoration Act of 2011 ( H.R. 480 ). All three bills would establish a Gulf Coast Ecosystem Restoration Fund and require 80% of any amounts collected by the United States as penalties, settlements, or fines under the Federal Water Pollution Control Act (33 U.S.C. SS 1319, SS 1321) to be deposited into the fund. They would also establish a governing body to distribute funding and coordinate restoration efforts such as a Gulf Coast Ecosystem Restoration Task Force ( H.R. 56 and H.R. 501 ) or a Gulf of Mexico Recovery Council ( H.R. 480 ). In contrast to H.R. 56 and H.R. 501 , H.R. 480 would provide a formula for allocating funding among Gulf states, and establish and fund four Gulf of Mexico programs, including an observation system, a grant program for Sea Grant colleges, a seafood marketing program, and a clean energy program.

On April 20, 2010, the Deepwater Horizon oil drilling rig was destroyed by an explosion and fire, and the oil well began releasing oil into the Gulf of Mexico. The oil spill caused significant economic harm to the Gulf fishing industry because of fishery closures and consumer concerns related to the safety of Gulf seafood. Intermediate and long-term concerns are related to impacts on marine populations and degradation of fisheries habitat necessary for spawning, development of early life stages, and growth. The closing and opening of fishing grounds has involved a tradeoff between ensuring public safety and providing fishing opportunities to recreational and commercial fishermen. In addition to public health concerns, uncertainties related to Gulf seafood safety could further compromise the reputation of Gulf seafood. Most areas have been reopened and landings of commercial and recreational species are recovering. For Gulf waters re-opened through November 15, 2010, sensory analyses of seafood samples have found no detectable oil or dispersant odors or flavors, and results of chemical analyses have been well below levels of concern. However, some scientists and the public remain skeptical of claims that Gulf seafood is safe. This may inhibit the recovery of Gulf recreational and commercial fisheries. Under the Oil Pollution Act (OPA), harmed individuals and businesses may make claims for economic injuries to the responsible party, in this case BP. Although many in the fishing industry have benefited from their damage claims and associated payments, ongoing issues include the legitimacy of some claims, lack of transparency in the claims review process, eligibility to make a claim, and level of payments. Other assistance to the fishing industry includes BP grants to states, National Oceanic and Atmospheric Administration (NOAA) fishery disaster assistance, the BP Vessels of Opportunity Program, and Small Business Administration efforts. Environmental restoration of fisheries habitat and Gulf ecosystems would support the long-term recovery and productivity of Gulf fisheries. The federal government's role in restoration is defined in statute by OPA and in NOAA regulations, which require development of a Natural Resource Damage Assessment (NRDA). NRDA restoration plans are currently being developed by state and federal trustees. The Obama Administration also has committed to developing a separate long-term Gulf of Mexico plan to restore the environment, economy, and public health of residents. Implementation of the plan will require sustained funding and a governance structure to oversee and coordinate restoration efforts. The 112th Congress may continue to conduct oversight of efforts to promote fishing industry recovery, adequate compensation to fishermen and businesses, and Gulf restoration. Ongoing efforts by federal agencies and states to ensure seafood safety and to regain and maintain the reputation of Gulf seafood are the most immediate challenges currently faced by the fishing industry. As the NRDA process moves from the planning to restoration phase, questions may arise regarding the level of the potential settlement and the types of restoration activities identified by the trustees. In contrast to NRDA, three bills have been introduced in the 112th Congress to address elements of the Administration's restoration plan. All three bills would establish a Gulf Coast Ecosystem Restoration Fund and require 80% of any amounts collected by the United States as penalties, settlements, or fines under the Federal Water Pollution Control Act to be deposited into the fund. They would also establish a governing body to distribute funding and coordinate restoration efforts. Potential issues involve the allocation of funds, focus of restoration projects, and coordination with other restoration efforts.

The No Child Left Behind Act of 2001 (NCLB), signed into law on January 8, 2002 ( H.R. 1 , P.L. 107-110 ), extended and amended the Elementary and Secondary Education Act (ESEA). ESEA programs are authorized through FY2008, and the 110 th Congress is considering whether to amend and extend the ESEA. This report outlines major highlights of the NCLB. Only the most basic provisions of this act are briefly described in this report; other CRS reports provide more specific and substantial analyses of the major provisions of the NCLB. Major features of the NCLB include the following: (a) states were required to implement standards-based assessments in reading and mathematics for pupils in each of grades 3-8 by the end of the 2005-2006 school year, and at three grade levels in science by the end of the 2007-2008 school year; (b) grants are provided to states for assessment development; (c) all states are required to participate in National Assessment of Educational Progress (NAEP) tests in 4 th and 8 th grade reading and mathematics every second year; (d) states must annually apply adequate yearly progress (AYP) standards, incorporating a goal of all pupils reaching a proficient or higher level of achievement by the end of the 2013-14 school year, to each public school, local education agency (LEA), and the state overall; (e) a sequence of consequences, including public school choice and supplemental services options, must be implemented for schools and LEAs that fail to meet AYP standards for two or more consecutive years; (f) ESEA Title I-A allocation formulas have been modified to increase targeting on high-poverty LEAs and to move Puerto Rico toward parity with the states; (g) by the end of the 2005-06 school year, all paraprofessionals paid with Title I-A funds were to have completed at least two years of higher education or met a "rigorous standard of quality"; (h) several new programs aimed at improving reading instruction have been initiated; (i) teacher programs have been consolidated into a state grant authorizing a wide range of activities including teacher recruitment, professional development, and hiring; (j) states and LEAs participating in Title I-A were to ensure that teachers meet the act's definition of "highly qualified" by the end of the 2005-2006 school year; (k) almost all states and LEAs are authorized to transfer a portion of the funds they receive among several programs; (l) federal support of public school choice has been expanded in several respects; (m) several previous programs have been consolidated into a state grant supporting integration of technology into K-12 education; (n) the Bilingual and Emergency Immigrant Education Acts have been consolidated into a single formula grant, with previous limits on the share of grants for specific instructional approaches eliminated; and (o) the 21 st Century Community Learning Center program has been converted into a formula grant with increased focus on after-school activities. Major provisions that were in the House- or Senate-passed versions of H.R. 1 (107 th Congress) but were not included in the final legislation include the Senate bill's provisions for mandatory funding at specified levels for Individuals with Disabilities Education Act (IDEA) Part B grants to states, discipline provisions for children with disabilities, authorization for up to seven states to eliminate a wide range of program requirements in return for increased accountability in terms of pupil outcomes, and pest management in schools; and the provisions in both the House- and Senate-passed versions for aggregate (i.e., not program-specific) performance bonuses or sanctions, especially for states. Major features of the NCLB, as well as brief references to relevant provisions of previous law, are compared in the following table.

On January 8, 2002, the No Child Left Behind Act of 2001, legislation to extend and revise the Elementary and Secondary Education Act (ESEA), was signed into law as P.L. 107-110. This legislation extensively amended and reauthorized most federal elementary and secondary education aid programs. Major features of the No Child Left Behind Act of 2001 include the following: (a) states were required to implement standards-based assessments in reading and mathematics for pupils in each of grades 3-8 by the end of the 2005-2006 school year, and at three grade levels in science by the end of the 2007-2008 school year; (b) grants are provided to states for assessment development; (c) all states are required to participate in National Assessment of Educational Progress (NAEP) tests in 4th and 8th grade reading and mathematics every second year; (d) states must annually apply adequate yearly progress (AYP) standards, incorporating a goal of all pupils reaching a proficient or higher level of achievement by the end of the 2013-14 school year, to each public school, local education agency (LEA), and the state overall; (e) a sequence of consequences, including public school choice and supplemental services options, must be implemented for schools and LEAs that fail to meet AYP standards for two or more consecutive years; (f) ESEA Title I-A allocation formulas have been modified to increase targeting on high-poverty LEAs and to move Puerto Rico toward parity with the states; (g) by the end of the 2005-06 school year, all paraprofessionals paid with Title I-A funds were to have completed at least two years of higher education or met a "rigorous standard of quality"; (h) several new programs aimed at improving reading instruction have been initiated; (i) teacher programs have been consolidated into a state grant authorizing a wide range of activities including teacher recruitment, professional development, and hiring; (j) states and LEAs participating in Title I-A were to ensure that teachers meet the act's definition of "highly qualified" by the end of the 2005-2006 school year; (k) almost all states and LEAs are authorized to transfer a portion of the funds they receive among several programs; (l) federal support of public school choice has been expanded in several respects; (m) several previous programs have been consolidated into a state grant supporting integration of technology into K-12 education; (n) the Bilingual and Emergency Immigrant Education Acts have been consolidated into a single formula grant, with previous limits on the share of grants for specific instructional approaches eliminated; and (o) the 21st Century Community Learning Center program has been converted into a formula grant with increased focus on after-school activities. ESEA programs are authorized through FY2008, and the 110th Congress is considering whether to amend and extend the ESEA.

The United States is a member of five multilateral development banks (MDBs): the World Bank, African Development Bank (AfDB), Asian Development Bank (AsDB), European Bank for Reconstruction and Development (EBRD), and Inter-American Development Bank (IDB). It also belongs to two similar organizations, the International Fund for Agricultural Development (IFAD) and the North American Development Bank (NADBank). The World Bank also administers trust funds, focused on particular global issues such as food security and the environment. The MDBs have similar programs, though they all differ somewhat in their institutional structure and emphasis. Each has a president and executive board that manages or supervises all of its programs and operations. Except for the EBRD, which makes only market-based loans, all the MDBs make both market-based loans to middle-income developing countries and concessional loans to the poorest countries. Their loans are made to governments or to organizations having government repayment guarantees. In each MDB, the same staff prepares both the market-based and the concessional loans, using the same standards and procedures for both. The main differences between them are the repayment terms and the countries which qualify for them. The MDBs also have specialized facilities which have their own operating staff and management but report to the bank's president and executive board. The World Bank's International Finance Corporation (IFC) and the IDB's Inter-American Investment Corporation (IIC) make loans to or equity investments in private-sector firms in developing countries (on commercial terms) without government repayment guarantees. The AsDB makes similar loans from its market-rate loan account. The World Bank's Multilateral Investment Guarantee Agency (MIGA) underwrites private investments in developing countries (on commercial terms) to protect against noneconomic risk. At the IDB, the Multilateral Investment Fund (MIF) helps Latin American countries institute policy reforms aimed at stimulating domestic and international investment. It also funds worker retraining and programs for small and micro-enterprises. The MIF originated as part of President Bush's 1990 Enterprise for the Americas Initiative (EAI). The NADBank was created by the North American Free Trade Agreement (NAFTA) to fund environmental infrastructure projects in the U.S.-Mexico border region. The International Fund for Agricultural Development (IFAD), created in 1977, focuses on reducing poverty and hunger in poor countries through agricultural development. Finally, the World Bank also serves as the trustee for several targeted multilateral development funds, for which the Administration has requested and Congress has appropriated funds. These multilateral funds include the Clean Technology Fund (CTF), the Strategic Climate Fund (SCF), the Global Environment Facility (GEF), and the Global Agriculture and Food Security Program (GAFSP). The MDBs' concessional aid programs are funded with money donated by their wealthier member country governments. Periodically, as the stock of uncommitted MDB funds begins to run low, the major donors negotiate a new funding plan that specifies their new contribution shares. Loans from the MDBs' market-rate loan facilities are funded with money borrowed in world capital markets. The IFC and IIC fund their loans and equity investments partly with money contributed by their members and partly with funds borrowed from commercial capital markets. The MDBs' borrowings are backed by the subscriptions of their member countries. They provide a small part of their capital subscriptions (3% to 5% of the total for most MDBs) in the form of paid-in capital. The rest they subscribe as callable capital. Callable capital is a contingent liability, payable only if an MDB becomes bankrupt and lacks sufficient funds to repay its own creditors. It cannot be called to provide the banks with additional loan funds. Countries' voting shares are determined mainly by the size of their contributions. The United States is the largest stockholder in most MDBs, and has maintained this position to preserve veto power in some institutions over major policy decisions. Figure 1 , Figure 2 , and Tables 1-4 show the amounts the Administration has requested and Congress has appropriated annually since FY2000 to the multilateral development banks. Note that the figures and tables do not include callable capital. Since the early 1980s, Congress has authorized but not appropriated callable capital. As Figure 1 illustrates, appropriations to the MDBs increased dramatically starting in 2009, from $1.28 billion in 2008 to a peak of $2.67 billion in FY2014. The uptick was driven largely by capital increases for the nonconcessional lending facilities at the MDBs in response to the global financial crisis, as well as the proliferation of trust funds administered by the World Bank focused on specific policy issues. As these commitments have been met, particularly in funding the capital increases at the MDBs, overall funding levels started declining. Appropriations have declined over the past three fiscal years to $1.52 billion in FY2018. President Trump campaigned on an "America First" platform and has signaled a reorientation of U.S. foreign policy. In March 2017, the Trump Administration proposed cutting $650 million over three years compared to the commitments made under the Obama Administration. For FY2019, the Trump Administration requested $1.42 billion for the MDBs, a 16% cut from the amount appropriated in FY2017. The bulk of the request--$1.32 billion, about 90%--would fund U.S. commitments to concessional lending facilities at the MDBs, particularly IDA. The request also includes funding toward the capital increase at the AfDB, multilateral trust funds focused on environmental issues, and international food security programs.

This report shows in tabular form how much the Administration requested and how much Congress appropriated for U.S. payments to the multilateral development banks (MDBs) since 2000. Multilateral development banks provide financial assistance to developing countries in order to promote economic and social development. The United States belongs to several multilateral development banks, including the World Bank and four regional development banks (the African Development Bank, the Asian Development Bank, the Inter-American Development Bank, and the European Bank for Reconstruction and Development). It also belongs to the North American Development Bank, which is a binational (U.S.-Mexico) development bank; the International Fund for Agricultural Development, which focuses on poverty and hunger in developing countries; and several trust funds administered by the World Bank, which focus on specific global issues, such as food security and the environment. The United States appropriates funding on an annual basis to various multilateral development banks and related funds. In FY2018, U.S. appropriations for MDB programs totaled $1.5 billion. Most of the FY2018 funding (about 90%) went to the concessional lending facilities at the MDBs, which provide grants and low-cost loans to the world's poorest countries. Congress also provided funding for the African Development Bank, IFAD, and the Global Environmental Facility (GEF), administered by the World Bank. The Treasury Department manages U.S. participation in the MDBs, and the Administration's request is submitted as part of Treasury International Programs. For FY2019, the Administration has requested $1.4 billion for the MDBs and related funds. Most of the funding would go to the concessional lending facilities at the World Bank, the African Development Bank, and the Asian Development Bank. It would also provide funding for the African Development Bank. The Administration has proposed cutting U.S. contributions to IFAD and reducing U.S. contributions to the GEF. For further information about the MDBs and relevant U.S. policy process, see the following CRS reports: CRS Report R41170, Multilateral Development Banks: Overview and Issues for Congress, by [author name scrubbed]; CRS Report R41537, Multilateral Development Banks: How the United States Makes and Implements Policy, by [author name scrubbed] and [author name scrubbed]; CRS In Focus IF10144, The Global Environment Facility (GEF), by [author name scrubbed]; and CRS Report R44890, Department of State, Foreign Operations, and Related Programs: FY2018 Budget and Appropriations, by [author name scrubbed], [author name scrubbed], and [author name scrubbed]

Recently, as Congress considers policies to foster economic growth, arguments have been made that some traditional expectations of fiscal policy should be revisited, namely that cutting spending will contract the economy in the short run. Under this view, what would normally be considered contractionary fiscal policy would instead be expansionary. Proponents of this view also argue that cutting spending rather than raising taxes would be a more effective means of increasing economic growth. These arguments often refer to recent empirical studies of deficit reductions across countries. This view contrasts with that held by most economists, which will be referred to as "mainstream economics." Mainstream economics relies on a basic theory regarding policies to expand the economy in a downturn. This theory can be found in economics textbooks and is used by government and private forecasters to project the path of the economy. This view has been the basis for fiscal and monetary policy interventions to stimulate the economy for many years, under both Republican and Democratic administrations. Chairman Bernanke of the Federal Reserve was referring to this view when he cautioned against large and immediate spending cuts. The basic thrust of the model for fiscal policy is that increasing the deficit (whether by increasing spending or cutting taxes) expands an underemployed economy, and decreasing the deficit (cutting spending or raising taxes) contracts it. Just as economists generally consider spending cuts to be contractionary in the short run in an underemployed economy, they believe that deficits can be harmful in the long run by crowding out private investment. There is widespread agreement that the continuation of current tax and spending policies will lead to an unsustainable path of the national debt. The fundamental cause of these long-run problems predates the Great Recession and the increase in debt relative to GDP from that recession, and arises from the aging of the population and the growth in health care costs. Thus, to most economists, the policy challenge is a trade-off between the benefits of starting to address the debt problem earlier versus risking damage to a still-fragile economy by engaging in contractionary fiscal policy, or failure to continue with expansionary fiscal policy. Although the unemployment rate has been falling, it remains high, and the growth rate, while strong in the third quarter of 2012 (3.1%), was 1.3% in the second quarter of 2012. This report begins with an overview of this mainstream theory. The next section of the report then examines the evidence that has been used to challenge this theory. Current fiscal policy theories began with a work published during the Great Depression by British economist John Maynard Keynes. As a result, this type of policy is often referred to as Keynesian, although there have been numerous refinements and developments in the theory. These developments include, among others, the standard model (referred to as IS-LM ) that includes both monetary and fiscal policy, the refinement of the tradeoff between inflation and unemployment, leading to the notion of a natural rate of unemployment (where policies tend to affect price rather than output), the incorporation of expectations, and modifications for an open economy (where goods and capital flow across borders). Some commentators contrast Keynesian economics with neoclassical economics. Neoclassical economics originated in the late 19 th century and theorizes that output and prices adjust to forces of supply and demand. Supply and demand are, in turn, driven by decisions made by economic agents (consumers, workers, and producers) who maximize their welfare. Most economists have both neoclassical and Keynesian-style views, one applied largely to questions of microeconomics and the other to questions of macroeconomics. Since World War II, government policy to address business cycles has generally been guided by some form of Keynesian theory. The fundamental concept behind this view of macroeconomics and fiscal policy is that prices in an economy do not immediately adjust to shocks, which can lead to unemployment of resources. Workers may become unemployed and capital may sit idle, due to a lack of sufficient demand. To reduce unemployment, expansionary fiscal policy (an increase in spending or a reduction in taxes to expand aggregate demand) can be employed. The magnitude of the effects of fiscal policy is measured by a multiplier. If the government spends a dollar, then someone in the economy receives a dollar. Part of that dollar might be saved and part might be spent; to the extent that it is spent, it increases aggregate demand in a second round. The recipients of that second round of spending will in turn spend part of their receipts. There are multiple rounds of spending, each diminishing a bit because part is saved, and the sum of all these rounds defines the multiplier. As demand increases, businesses hire additional workers and purchase more capital goods to satisfy demand. The strength of the multiplier depends not only on the share that is spent in the initial and subsequent rounds but also on the effect on interest rates and prices. As demand increases it places upward pressure on interest rates, reducing private sector spending on investment and consumer durables, and also, in an open economy, attracting capital flows into the United States, appreciating currency, and reducing net exports. When the economy is at full employment or close to full employment, the effects of a stimulus are more likely to lead to price increases rather than real output growth. In this case, the deficit spending crowds out investment and net exports. Thus, even for a particular type of spending or tax cut its short run effects are likely smaller at higher interest rates, smaller for small open economies with a large trade sector and flexible exchange rates, and smaller for economies at or close to full employment. Under current circumstances, there is little indication that deficits have significantly crowded out investment or exports, since interest rates have remained extremely low. They are also not likely to have led to price increases given significant unemployment in the U.S. economy and low inflation rates. The estimated size of the fiscal multiplier also depends on assumptions about monetary policy and its response to a fiscal stimulus. One might think of a neutral monetary response as one that permits the fiscal stimulus to increase interest rates, output, and prices (in the context of the IS-LM model, equivalent to keeping money supply fixed). The monetary authorities may, at one extreme, keep the interest rate fixed, which will enhance the fiscal stimulus, or, at the other, keep prices fixed, which will offset the fiscal stimulus. In the recent recession, both interest rates and inflation remain low. In a fully employed economy, fiscal stimulus will not affect output, but rather the composition of output. Without an offsetting change in the nominal money supply, prices will rise to reduce the real value of money. Alternatively, the money supply can be contracted to be consistent with total output without a price increase. As indicated in Figure 1 , which plots growth rates since 1821, the post-World War II period has been characterized by much more moderate business cycles (to the right of the vertical line), and limited instances of negative growth, as compared to those occurring in the latter half of the 19 th century and the first half of the 20 th century. (Note, however, that data for earlier years is less reliable.) Moreover, it is generally agreed one of the more significant contractions, in the early 1980s, was deliberately brought about by restrictive monetary policy (which may, however, have been more restrictive than initially planned). Along with the practice of countercyclical monetary and fiscal policy (or at least an understanding of what policies could make things worse, as they had in the past), business cycles may have been moderated by deposit insurance, automatic stabilizers (transfer and tax systems that automatically increase the deficit during downturns), and the expectation that the government will counter business cycles, which may help to reduce panics in the first place, though some believe they may also increase the risk of speculative bubbles. Some debates have centered on whether fiscal or monetary policy (or both) should be used as tools of discretionary policy. Both are susceptible to policy lags. Some economists came to believe that political lags made fiscal policy ill-timed, while monetary policy could be enacted quickly. Others became less enamored of fiscal policy because it becomes somewhat less effective in an open economy. At the same time, there are circumstances where traditional monetary policy does not work well (at very low interest rates, for example) or where a contraction appears to be serious enough to warrant both monetary and fiscal measures. During the 2007-2009 Great Recession there was broad bipartisan agreement that fiscal stimulus should be used, as it was in both the Bush and Obama Administrations. The textbook consensus is that spending increases are more effective than tax cuts, because the full amount of the initial increase is actually spent, while some of a tax cut is initially saved. Spending in the form of transfers could also be partially saved, although it is believed that most transfers benefit lower-income recipients who are likely to spend all or most of the transfer. Different types of tax or spending policies may also have different effects depending on the portion initially saved. At the same time, much federal government spending is funneled through the states and a portion of spending in the form of grants to states could also be saved. The spending funneled through the states could include both government purchases of goods and services or transfers. Table 1 shows a list of multipliers provided by a major private forecaster during mid-2008. It illustrates the different multipliers embedded in his forecasting model. Consistent with the theory above, the spending multipliers in this model are larger than tax cut multipliers. Among tax cuts, those that are likely to go to middle- and lower-income individuals (notably a refundable tax credit) have larger effects than those going to higher-income taxpayers (such as the alternative minimum tax or taxes on dividends or capital gains). This difference reflects different propensities to save: higher-income individuals tend to save more and cutting their taxes increases demand less per dollar of tax cut. The multipliers also indicate that tax cuts for businesses (such as accelerated depreciation and rate cuts) are less effective, again because they are unlikely to induce spending. These differential effects are consistent with the fundamental notion that the short-run problem is lack of demand and increased deficits are most effective when they induce spending. Table 2 shows a range of multipliers in a Congressional Budget Office document released in 2010. The range is intended to encompass the views of most economists on the magnitude of multipliers. They show a similar pattern to those in Table 1 , although the estimates, especially at the bottom of the range, are considerably smaller. In general, spending increases have a larger effect than tax cuts, and tax cuts directed to lower- and middle-income taxpayers have larger effects than those directed at high-income individuals or business investment. The Congressional Budget Office also provides multipliers for the first quarter of 2011 for specific provisions of the stimulus enacted in February 2009 ( P.L. 111-5 ) as the latest in a series of reports on the effect of the legislation. Their estimates indicated multipliers of 1.0 to 2.5 for government spending and transfers to the states for infrastructure, and 0.7 to 1.8 for transfers to the states for other purposes. For direct transfers to individuals (who have low incomes) the multipliers were between 0.8 and 2.1. Payments to retirees (largely Social Security beneficiaries) were 0.3 to 1.0. For taxes, tax cuts for lower- and middle-income taxpayers (mainly those claiming the making work pay tax credit) were 0.6 to 1.5, while the increase in the alternative minimum tax exemption for higher-income individuals was 0.2 to 0.6. Business tax cuts, mostly of a cash flow nature, were 0.0 to 0.4. These multipliers are consistent in general direction with those listed in Table 1 and Table 2 : larger for spending and larger for transfers and tax cuts for lower-income individuals than for higher-income ones. The report also shows the estimated impact on unemployment (at its peak in the third quarter of 2010, reducing the unemployment rate between 0.8 and 2.0 percentage points) and other variables on a quarter-by-quarter basis. The current arguments for expecting spending cuts to stimulate demand appeal to empirical observations. The proponents also offer an explanation of how their interpretation of these empirical findings could be correct despite their apparent contradiction with conventional theory. If agents in the economy believe that reducing the deficit reduces the likelihood of more costly adjustments in the future, such as possible disruptions associated with a fiscal crisis, they expect their future income to be larger and have increased confidence to spend in the present. Proponents also argue that in some countries, where default on the government debt is seen as possible, deficit reduction may lead to a reduction in risk premiums built into interest rates, thus increasing demand and perhaps inducing asset price increases. With current interest rates low in the United States, this second channel of effect seems unlikely to occur in the short run. Another argument that has been made, although not in close association with the empirical research, is that companies fear rising taxes in the future, which depresses investment. Alternatively, arguments are made that the deficit is directly crowding out investment. This argument contrasts with the mainstream view that business investment in cyclical downturns is heavily affected by current demand (this effect is called the accelerator), as well as being affected by interest rates, and signs of crowding out would be reflected in rising interest rates. Note that for the increase in expected future income to transform a contractionary fiscal policy into an expansionary one in the short-run, these results arising from expectations must not only arise but also be large enough to overwhelm the normal channels of contraction. Also, when the contraction involves government spending cuts that lead directly to a decrease in government employment, the demand effects must overcome this direct effect on unemployment. Several studies have examined the short run effects of fiscal consolidation or adjustments (that is, spending reductions and/or tax increases) on government debt and the economy. Two widely cited studies are discussed. The critical part of each analysis is the identification of discretionary fiscal policy. Government spending, tax revenue, and the budget deficit can change due to automatic stabilizers that react to economic changes or to discretionary (often legislated) changes. Typically transfer payments (e.g., unemployment compensation) increase and tax revenue decreases automatically when the economy enters a recession and, consequently, budget deficits increase. The reverse is true when the economy recovers. Two methods have typically been used to identify discretionary fiscal changes: (1) use of cyclically adjusted fiscal variables, and (2) the action-based approach. Most studies use cyclically adjusted fiscal variables to separate fluctuations due to the business cycle from those that are discretionary. The method used by Alberto Alesina and Silvia Ardagna was first proposed by Olivier Blanchard and has been described as simple and transparent. The cyclically adjusted variable is the estimated value of the variable that would have prevailed had the unemployment rate been the same as in the previous year. The adjustment only requires the value of the unemployment rate in the previous year and the elasticity (how the fiscal variable changes when the unemployment rate changes). Although this method is simple and transparent, it also has some limitations. First, the method assumes that the elasticities are constant over time (and the business cycle). Evidence suggests that the elasticities are not constant over time and may behave asymmetrically over the business cycle--changes in the elasticity may be different as the economy enters a recession than when it comes out of a recession. Second, the International Monetary Fund (IMF) notes that the method may suffer from measurement errors that are correlated with economic developments unrelated with the unemployment rate, such as asset price booms and busts. Lastly, the IMF further argues that the method "ignores the motivation behind fiscal actions." It is, therefore, possible that some identified instances of discretionary fiscal policy changes bear no relation to actual fiscal policy changes. The action-based approach to fiscal adjustment involves identifying specific policy actions to reduce budget deficits. The IMF, for example, examined various OECD, IMF, and country-specific sources to identify discretionary and deliberate fiscal policy actions. Christina Romer and David Romer compare the cyclical adjustment and action-based methods for the United States and find that while action-based changes show up as cyclically adjusted changes, there is substantial variation in cyclically adjusted changes that are not in the action-based changes. They conclude that "non-legislated factors are an important source of movements in cyclically adjusted measures." The study by Alberto Alesina and Silvia Ardagna examines fiscal adjustments using a panel of 21 OECD countries from 1970 to 2007. They use the cyclical adjustment method to separate automatic fiscal changes from discretionary policy driven changes. They define a fiscal adjustment as an improvement (i.e., decrease) in the cyclically adjusted primary balance of at least 1.5% of gross domestic product (GDP). Using this definition, they identify 107 episodes of fiscal adjustments. An expansionary fiscal adjustment is defined as an episode of fiscal adjustment in which the increase in the GDP growth rate is greater than the value at the 75 th percentile for all episodes of fiscal adjustment (26 episodes of fiscal adjustment--about 25% of the episodes of fiscal adjustment). They define a successful fiscal adjustment as one in which the three-year cumulative reduction in the debt-to-GDP ratio is greater than 4.5 percentage points, which selects 21 episodes of successful fiscal adjustment (about 21% of the total). Only nine episodes of fiscal adjustment were expansionary and successful (about 8% of the total). Alesina and Ardagna find that primary spending (total expenditures minus interest payments) declines by about 2% of GDP and government revenues fall by about 0.5% of GDP in successful fiscal adjustments. Primary spending falls by 0.7% of GDP and revenue increases by 1.4% of GDP in unsuccessful fiscal adjustments. According to their tabular analysis, however, economic growth improves during both successful and unsuccessful fiscal adjustments. They generally find that tax decreases are more likely to stimulate economic growth than spending increases. They conclude that "successful fiscal adjustments are completely based on spending cuts accompanied by modest tax cuts" and suggest that their results are relevant to the current U.S. fiscal situation (high debt-to-GDP ratio). Two other recent studies replicate the work of Alesina and Ardagna and reach the same conclusions. The authors also indicate that the nine episodes in which deficit reduction was associated with economic expansions rather than recessions involved spending cuts, which leads them to conclude that adjustments on the spending side are less likely to create recessions. Both this finding and their identification of the 26 episodes of debt reduction (which have simply been identified as being the top quarter of the growth distribution) have been pointed to as evidence that cutting spending in the United States will be expansionary rather than contractionary. These views, some explicitly in the study and some interpreting the study, are generally inconsistent with the mainstream view of fiscal policy where short-term multipliers for spending decreases are negative and also tend to be larger in absolute value than those for tax cuts. The IMF study examines the same types of contractions as those in the Alesina and Ardagna study, but with a different methodology. Rather than identifying episodes based on swings in the cyclically adjusted primary deficit, they identify them by policy-maker intent. They also do not restrict the changes to sustained (multiyear) deficit reductions. They suggest that the choices made by Alesina and Ardagna, as well as others, bias the results away from contractionary effects. For example, countries that embark on a deficit reduction program are more likely to continue with the plan if negative outcomes are not occurring. Thus, focusing on sustained deficit reductions tends to select instances where growth occurs. The IMF results are consistent with the mainstream view of fiscal policy. They find that deficit reduction has a contractionary effect on output, with deficit reduction equal to 1% of GDP reducing output by 0.5% of GDP and the unemployment rate by about 0.3 percentage points. These results are usually softened by offsetting monetary policy that reduces interest rates. They also find that a decline in the value of the currency has a cushioning effect, by increasing net exports. They find that spending cuts are less contractionary than tax increases, but attribute this effect in part to the greater offsetting monetary stimulus. They also note that monetary stimulus is especially limited when increases in indirect taxes (such as the value added tax) occur because of the pressure on prices. They find that deficit reduction in countries with a high default risk on debt tend to be less contractionary than in other countries, but even in these cases expansionary effects are unusual. Some recent analyses have questioned the applicability of Alesina and Ardagna's findings to the current U.S. fiscal situation. Most of the fiscal adjustments in advanced economies identified by Alesina and Ardagna were neither successful nor expansionary. Furthermore, most of their successful fiscal adjustments took place during fairly favorable economic conditions, which is illustrated in Figure 2 . The figure displays the output gap for the year that a successful fiscal adjustment started (as defined by Alesina and Ardagna) and for the United States. Of the 17 successful episodes of fiscal adjustment, 10 (about 60%) occurred when actual output was above potential output--resources were fully employed. Seven of the successes occurred when the output gap was negative, though most were only slightly negative. In comparison, the output gap for the United States in 2009 was about -6% of potential output and is projected to be almost -4% of potential output in 2011. The Congressional Budget Office (CBO) projects that the output gap will remain below 3% until 2013--well outside the range of output gaps of successful fiscal adjustments. The next figure, Figure 3 , compares the projected 2011 U.S. output gap with the average output gaps for successful and unsuccessful fiscal adjustments (as defined by Alesina and Ardagna). The output gap is shown for the year that the fiscal adjustment began (Period T) and for the year before it began (Period T-1). On average, the output gaps for successful fiscal adjustments were positive (+0.34% of potential output) in the year the adjustment began and slightly negative (0.30% of potential output) the year before. The average output was negative in the year the adjustment began as well as the year before for all unsuccessful fiscal adjustments (see the bars labeled "all unsuccessful" in the figure). The bars labeled "below potential" focus on the unsuccessful fiscal adjustments that began when actual output was below potential output. On average, the output gap was less than -2% of potential output in the year the adjustment began and the year before. The output gap for the United States is projected to be -3.7% of potential output in 2011 and was almost -5% of potential output in 2010 (see the bar labeled U.S. 2011 under period T-1 in Figure 3 ). The results suggest that successful fiscal adjustments (as defined by the cyclical adjustment method) occurred when the economy was at or near potential output, that is, labor and capital resources were fully employed. Unsuccessful fiscal adjustments generally occurred when actual output was below potential output. The U.S. output gap for 2011 is considerably more negative than the average output gap for all unsuccessful fiscal adjustments and even those that began when actual output was below potential output. Almost nine out of ten fiscal adjustments beginning when actual output was below potential output were unsuccessful--fiscal adjustments beginning in a slack economy (such as the current situation in the United States) appear to have a low probability of success. The discussion in the previous section relates to short-run effects. Long-term policy regarding budget deficits, their effects, and methods of addressing them raise different issues. The focus turns to the supply side of the economy, the rate of growth of potential output, the distributional implications of policy, and the desirability of various government programs. Short-tem policy focuses on job creation. Economic theory, however, suggests that there is no reason to view general job creation as a long-run objective of government policies. The economy can generate the jobs needed by the natural process of growth and market adjustment. In 1961 and in 1991 the unemployment rate was the same, 6.7%. Employment, however, rose from 66 million to 117 million. Employment tends to grow over the long run; the unemployment rate fluctuates. Long-term jobs policies, therefore, should not be aimed at increasing jobs (which at full employment will only lead to inflation), although they can be designed to reduce structural or frictional unemployment (such as improving the skills of disadvantaged workers). There is general agreement, however, that in the long-run, reducing the deficit will increase output, because government dissaving crowds out capital spending in a fully employed economy and slows the rate of economic growth. Some of this crowding out effect might be offset by reduced net capital inflows (arising from lower interest rates as the government's demands on capital markets decrease), but this increased private capital stock ownership, even if invested abroad, will accrue earnings and an increased standard of living to U.S. savers. Deficits place some of the burden of government on future generations. Deficits are not necessarily undesirable; in addition to their use for short-term fiscal stimulus, they may be appropriate for financing spending whose benefits accrue to future generations. For example, World War II was financed in large part by deficit spending. Furthermore, deficits that grow at a rate less than or equal to GDP growth can be sustainable in that the debt-to-GDP ratio does not increase. Addressing the deficit is important in the United States, however, because U.S. debt is on an unsustainable course, at least under current policies. A Congressional Budget Office document, published before the tax cuts enacted in 2001 and 2003 were extended at the end of December 2010, estimated that under current law the federal debt will rise from 62% of output to 80% by 2035, and interest payments would rise from 1% to 4% of GDP. Under an alternative, but perhaps more realistic scenario (which included permanent extension of the 2001 and 2003 tax cuts and growth in health costs) the debt would grow to 185% of GDP and interest payments to 9% by 2035. This interest cost is equal to the entire individual income tax estimated to be collected in 2013 assuming the tax cuts do not expire. Although the debt increased during the recession due to automatic reductions in taxes and increases in spending along with legislative stimulus, the unsustainability of the debt is generally due to the growth in entitlements (Social Security, Medicare, and other health spending). Indeed, CBO projects declines in other spending as a percent of GDP. Medicare, for example, grows from 3.6% of output in 2010 to 5.9% in 2035 (7% in the alternative scenario). These increases, combined to increased interest payments and little or no increase in revenues, lead to the unsustainable path. The major determinant of the effects on growth is the magnitude of deficit and debt reductions. Some arguments are made that increases in taxes will reduce growth more than cuts in spending, because they will have supply side effects that reduce labor supply and savings. Most evidence, however, suggests that these responses are small. Moreover some kinds of spending cuts, such as those that support investment in physical or human capital, could reduce growth. Fundamentally, however, the nature of measures taken to control the deficit depend on many factors, including the preferences of Americans for government programs. For example, Medicare costs are projected to grow because of the aging of the population and the increase in health care costs. Ultimately, however, the question is whether it is more desirable to cut Medicare benefits in half, double taxes used to finance Medicare, or make deep cuts in other government programs that are already being reduced relative to output (or some combination). The differential effect on growth of the alternative methods of reducing the deficit may well be a secondary issue. The claim based on the evidence of Alesina and Ardagna (and similar studies) that policies traditionally viewed as contractionary, such as cutting spending, will increase growth in the short run in the United States, can be questioned on at least two grounds. First, when a methodology that looks to intentions was used to select instances of deficit reduction, as in the IMF study, the empirical results were consistent with traditional fiscal policy. Second, the deficit reductions in the Alesina and Ardagna study that were successful by the authors' measures were associated with economies generally above, or close to, full employment in most cases. The United States is still operating considerably below potential output. Two major policy questions include when, and how, to reduce the deficit. Reducing the deficit while the economy is still fragile and well below full employment would likely involve further contraction that might not be desirable. At the same time, the sooner long-run debt problems are addressed, the more room there is for the adjustments to be implemented gradually. The mix of policies (tax increases, spending cuts, and the types of either) depend on many factors, including preferences for public programs and distributional objectives, as well as growth.

As Congress considers policies to foster economic growth, arguments have been made that the traditional expectations of fiscal policy, namely that cutting spending will contract the economy in the short run, should be reversed. Proponents of this view also argue that cutting spending rather than raising taxes would be a more effective means of increasing economic growth (or at least avoiding contractions). These arguments often refer to recent empirical studies of deficit reductions across countries. This view contrasts with that held by most economists and found in conventional models. In those models cutting spending will contract the economy. Chairman Bernanke of the Federal Reserve was referring to this view when he cautioned against large and immediate spending cuts. Most multipliers (measures of the effect of deficits on the economy) indicate that spending cuts contract the economy more than do similarly sized tax increases. Just as economists generally consider spending cuts to be contractionary in the short run in an underemployed economy, they believe that deficits can be harmful in the long run by crowding out private investment. There is considerable agreement that the continuation of current tax and spending policies will lead to an unsustainable path of the national debt, largely because of the growth of mandates arising from the aging of the population and the growth in health care costs. Thus, to most economists current macroeconomic policy challenges involve a trade-off between the benefits of starting to address the debt problem earlier versus risking damage to a still-fragile economy by engaging in contractionary fiscal policy, or failure to continue with expansionary fiscal policy. Alesina and Ardagna, in the study perhaps most commonly cited to support the view that cutting spending will not be contractionary, find that historical episodes across 21 countries when debt reduction was associated with growth used spending cuts rather than tax increases. Other studies that largely perform the same analysis find similar results. This research has been interpreted as suggesting that spending cuts are superior to tax increases and that such cuts would not necessarily contract the economy. Proponents of this view, to support these empirical findings with theory, argue that deficit reduction will increase confidence of consumers and business, resulting in increased current spending on consumption and investment. The International Monetary Fund, however, correcting problems they perceived in the Alesina and Ardagna study, found spending cuts to be contractionary, consistent with mainstream views. Moreover, while the IMF found cuts in spending to have smaller effects than tax increases, those effects were generally ascribed to offsetting monetary policy which was more significant with spending cuts than tax increases. The findings in the Alesina and Ardagna study that successful debt reductions were associated with higher growth when spending cuts were used was based on 9 observations out of 107 instances of deficit reduction, or less than 10% of the sample. In addition, most of the countries where debt reductions were successful were at or close to full employment, while the United States remains well below full employment, raising questions as to whether this evidence is applicable to current U.S. conditions. Thus, both methodological questions and questions of applicability to current circumstances can be raised for the Alesina and Ardagna, and similar, studies.

The U.S. Secret Service (USSS) within the Department of Homeland Security (DHS) has two missions--criminal investigations and protection. Criminal investigation activities encompass financial crimes, identity theft, counterfeiting, computer fraud, and computer-based attacks on the nation's financial, banking, and telecommunications infrastructure. The protection mission is the more publicly visible of the two, covering the President, Vice President, their families, former Presidents, and major candidates for those offices, along with the White House and the Vice President's residence (through the Service's Uniformed Division). Protective duties of the Service also extend to foreign missions (such as embassies, consulates, and foreign dignitary residences) in the District of Columbia and to designated individuals, such as the Homeland Security Secretary and visiting foreign dignitaries. Separate from these specific mandated assignments, USSS is responsible for certain security activities such as National Special Security Events (NSSEs), which include presidential inaugurations, the major party quadrennial national conventions, as well as international conferences and events held in the United States. The most recent congressional action (not including appropriations) on the Service is the Federal Restricted Buildings and Grounds Improvement Act of 2011 ( P.L. 112-98 ), enacted during the 112 th Congress, which amended 18 U.S.C. 1752 and made it a crime for unauthorized individuals to enter a building that is secured by USSS. Congress, arguably, has begun to focus its attention on legislation related to the Service's financial and computer crime investigation mission activities. Legislation in the 113 th Congress includes a House committee-referred bill on cyber privacy security; a House committee-referred bill on information technology security; a Senate committee-referred bill on data security and breaches; and a Senate committee-referred bill on personal data privacy and security. Additionally, the House Oversight and Government Reform Committee held a hearing entitled "White House Perimeter Breach: New Concerns about the Secret Service," on September 30, 2014, which addressed a security breach on September 19 th , where a person gained unauthorized entrance into the White House after climbing the perimeter fence, and previous incidents. The committee inquired if deficient protection procedures, insufficient training, inadequate funding, personnel shortages, or low morale contributed to these security breaches. Later, on the same day as the hearing, it became public knowledge that earlier in the year a private security contractor at a federal facility, while armed, was allowed to share an elevator with President Barack Obama during a site visit, in violation of U.S. Secret Service security protocols. The following day, October 1, 2014, USSS Director Julia Pierson resigned. This report discusses potential policy questions for the upcoming 114 th Congress concerning the Service's mission and organization through an examination of the USSS history and its statutory authorities, mission, and present activities within DHS. The policy questions presented in this report are only considerations, since the Service is widely perceived to be operating and performing its missions effectively for the past 11 years as part of DHS. Additionally, Appendix A provides a list of the direct assaults on and threats to Presidents, Presidents-Elect, and candidates. Appendix B provides a list of statutes addressing USSS activities. Since 1865, as part of the U.S. Treasury Department, USSS has evolved into a federal law enforcement agency with statutory authority to conduct criminal investigations and protect specific federal officials, individuals, and sites. Congress transferred USSS to the Department of Homeland Security (DHS) in 2002 legislation. The original mission of the Service was to investigate the counterfeiting of United States currency. This mission has been expanded throughout the agency's history through presidential, departmental, and congressional action. At times, early in the agency's history, Secret Service agents conducted investigations that were not related to financial system crimes. Examples include the investigation of the Ku Klux Klan in the late 1860s and counter-espionage activities in the United States during World War I. Today, USSS conducts criminal investigations into counterfeiting and financial crimes. Within the investigative mission area is the USSS's forensic services division. USSS forensic services personnel conduct analyses of evidence, some of which includes documents, fingerprints, false identification documents, and credit cards, to assist in USSS investigations. USSS's investigative support is also responsible for developing and implementing a criminal and investigative intelligence program. One of the components of this program is the Criminal Research Specialist Program, which provides intelligence analysis related to infrastructure protection, conducts forensic financial analysis, and provides research and analytical support to USSS criminal investigations. Additionally, in 1994, Congress mandated that USSS provide forensic and technical assistance to the National Center for Missing and Exploited Children. From protecting President Grover Cleveland in 1894 on a part-time basis to the constant protection of President Obama, the USSS history of protection has been directed by unofficial decisions (such as the protection of President Cleveland) and congressional mandate (such as the protection of major presidential candidates). USSS protection activities have expanded over the years as the number of individuals and events requiring USSS protection grows, with only one instance of a specified type of protectee being removed from the authorized list. For the first time, in 2008, USSS protected a spouse of a former President who was also a presidential candidate, and it protected a Vice President who was not running for his political party's nomination. The following are the current individuals authorized USSS protection in 18 U.S.C. Section 3056(a): President, Vice President, President- and Vice President-elect; the immediate families of those listed above; former Presidents and their spouses; former Presidents' children under the age of 16; visiting heads of foreign states or governments; distinguished foreign visitors and official United States representatives on special missions abroad; major presidential and vice presidential candidates, within 120 days of the general presidential elections, their spouses; and former Vice Presidents, their spouses, and their children under the age of 16. USSS protection operations have also evolved over the years. Originally, USSS protection entailed agents being, what could be described as "bodyguards." Now protection includes not only the presence of agents in close proximity to the protectee, but also advance security surveys of locations to be visited, coordination with state and local enforcement entities, and intelligence analysis of present and future threats. The USSS protection mission uses human resources and physical barriers, technology, and a review of critical infrastructures and their vulnerabilities to increase security to meet evolving threats. Statutes also authorize USSS to conduct such other activities as participating in the planning, coordination, and implementation of security operations at special events of national significance, and providing forensic and investigative assistance involving missing or exploited children. In recent years Congress has appropriated approximately $1.6 billion annually for the USSS. The following table provides the Service's FY2013 and FY2014 budget authority. The "Investigation Mission" and "Protection Mission" have distinctive characteristics and histories, and each has been affected by informal decisions and congressional action. Since USSS's transfer to DHS, any statute still in effect authorizing or requiring the Treasury Secretary to perform some function connected to the USSS's previous statutory responsibilities has now been assumed by the DHS Secretary. This report does not detail every law enacted that has affected USSS, but instead attempts to identify congressional actions that addressed the role and responsibility of the Service. Additionally, Appendix B in this report provides a list and brief description of the statutes identified in this report. Due to a plethora of currencies issued by states prior to the establishment of a federal banking system, counterfeiting was a major problem in the United States. In 1806, Congress passed the Enforcement of Counterfeiting Prevention Act, which enabled U.S. marshals and district attorneys to investigate and prosecute counterfeiters. The authority to investigate counterfeiting was later transferred to the Department of Treasury (TREAS) in 1860. In order to regulate U.S. currency and increase sanctions against counterfeiters, Congress passed the National Currency Act in 1863. Also in 1863, the Treasury Secretary directed the Office of the Solicitor of Treasury to assume the department's role in investigating counterfeiting. Counterfeiting continued to be a problem for the federal government throughout the Civil War; and by 1865, between one-third and one-half of all U.S. currency in circulation was counterfeit. As a result of this currency crisis, the Treasury Secretary established the Secret Service Division (SSD), within the Office of the Solicitor of Treasury in 1865. At the July 5, 1865, swearing in of the new chief of the SSD, William P. Wood, Treasury Secretary Hugh McCulloch stated "your main objective is to restore public confidence in the money of the country." SSD's primary responsibility was to investigate counterfeiting, forging, and the altering of United States' currency and securities. The Office of Solicitor of the Treasury administered the SSD until 1879. Statutory recognition was given to SSD in 1882 when the 47 th Congress appropriated funds when it continued to be administered by the Treasury Department, as follows. SECRET SERVICE DIVISION.--For one chief, three thousand five hundred dollars; one chief clerk, two thousand dollars; one clerk of class four; two clerks of class two; one clerk of class one; one clerk at one thousand dollars; and one attendant at six hundred and eighty dollars; in all, twelve thousand nine hundred and eighty dollars. In 1889, SSD's mission was expanded to include espionage activities during the Spanish-American War and World War I. This mission was phased out at the end of each war. In 1894, the Service informally acquired the protection function at the request of President Grover Cleveland. Additionally, the SSD began another task outside the purview of its original mandate: the investigation of land fraud in the western United States in the early 1900s. In the first half of the 20 th Century, Congress continued to authorize the Treasury Secretary to "direct and use" SSD to "detect, arrest, and deliver into custody of the United States marshal having jurisdiction any person or persons violating" counterfeit laws. In 1948, SSD was also authorized to investigate crimes against the Federal Deposit Insurance Corporation, federal land banks, joint-stock land banks, and national farm loan associations. As throughout USSS's history, Congress continued to amend the Service's investigation mission from 1950 to 1984. Some of this continued amending of the Service's mission included funding the USSS for its confiscating and purchasing of counterfeit currency. Due to the increased use of computers and electronic devices in financial crime, Congress, in 1984, authorized USSS to investigate violations related to credit card and computer fraud. In the 1990s, Congress continued to amend laws affecting the investigation, prosecution, and punishment of crimes against United States financial systems. One such amendment authorized USSS investigation of crimes against financial systems by authorizing the Service to conduct civil or criminal investigations of federally insured financial institutions. This investigation jurisdiction was concurrent with the Department of Justice's investigation authority. Another law was the Violent Crime Control and Law Enforcement Act of 1994 ( P.L. 103-322 ), which made international manufacturing, trafficking, and possessing of counterfeit United States currency a crime as if it were committed in the United States. Congress also enacted laws related to telemarketing fraud ( P.L. 105-184 ) and identity theft ( P.L. 105-318 ), both of which are used in committing financial fraud and crime. Following the terrorist attacks of September 11, 2001, Congress enacted the USA PATRIOT Act. Among numerous provisions addressing the protection of the United States financial systems and electronic device crimes, the act contains a provision that authorizes the Service to establish nationwide electronic crime task forces to assist law enforcement, private sector, and academic entities in detecting and suppressing computer-based crimes. In 1894, SSD began to protect President Grover Cleveland at his request on a part-time basis. USSS agents guarded him and his family at their vacation home in the summer of 1894. President William McKinley also received SSD protection during the Spanish-American War and limited protection following the end of the war. There were three SSD agents present when President McKinley was assassinated in Buffalo, NY, but reportedly they were not fully in charge of the protection mission. Following the assassination of President McKinley, in 1901, congressional leadership asked that the SSD protect the President. Five years later Congress, for the first time, appropriated funds for the protection of the President with the passage of the Sundry Civil Expenses Act for 1907 (enacted in 1906). In 1908, SSD's protection mission was expanded to include the President-elect. In that same year, President Theodore Roosevelt transferred a number of SSD agents to the Department of Justice, which served as the foundation for the Federal Bureau of Investigation. Annual congressional authorization of the mandate to protect the President and President-elect began in 1913. During World War I threats against the President began to arrive at the White House, which resulted in a 1917 law making it a crime to threaten the President. Additionally, later that same year, Congress authorized SSD to protect the President's immediate family. In addition to the expansion of the protection of the President and the President's family, the White House Police Force was created in 1922 to secure and patrol the Executive Mansion and grounds in Washington, DC. Initially, the White House Police Force was not supervised or administered by SSD; but rather by the President or his appointed representative. In 1930, however, Congress mandated that the White House Police Force be supervised by the SSD. For the first time, Congress, in 1943, appropriated funding for both the investigation and protection missions. The appropriation was specifically for "suppressing" counterfeiting and "other" crimes; protecting the President, the President-elect, and their immediate families; and providing funding for the White House Police Force. In 1951, Congress permanently authorized the "U.S. Secret Service" to protect the President, his immediate family, the President-elect, and the Vice President--if the Vice President so desired. In 1954, Congress used the title "U.S. Secret Service" in an appropriation act for the first time. Eleven years after permanently authorizing USSS's protection mission, Congress mandated the protection of the Vice President (or the next officer to succeed the President), the Vice President-elect, and each former President "at his request" for "a reasonable period after he leaves office." In 1963, following the assassination of President John F. Kennedy, Congress enacted legislation that authorized protection for Mrs. Jacqueline Kennedy and her children for two years. In 1965, Congress authorized permanent protection for former Presidents and their spouses for the duration of their lives, and protection of their children until age 16. Later that year, Congress increased USSS law enforcement responsibilities by authorizing the Service's agents to make arrests without warrant for crimes committed in their presence. The initial two-year protection of Mrs. Kennedy (a widow of a former President) was not immediately extended in 1965, but rather was deferred until 1967 when Congress authorized protection of former Presidents' widows and minor children until March 1, 1969. This protection became permanent in 1968. USSS's protection mission was furthered expanded in that same year following the assassination of Senator Robert F. Kennedy (a presidential candidate). Congress authorized the Treasury Secretary to determine which presidential and vice presidential candidates should receive USSS protection. An advisory committee was established to assist the Treasury Secretary in determining which candidates could receive protection. The committee included the Speaker of the House of Representatives, the minority leader of the House of Representatives, the Senate majority and minority leaders, and one additional member selected by the committee. Following a decade of expanding USSS's protection mission, Congress further amended this mission, and renamed the White House Police Force as the Executive Protection Service (EPS) in 1970. Congress authorized the USSS Director to administer the EPS's protection of the Executive Mansion and grounds in the District of Columbia (DC); any building with presidential offices; the President and immediate family; foreign diplomatic missions located in the metropolitan DC area; and foreign diplomatic missions located in the United States, its territories, and its possessions--as directed by the President. EPS was renamed the "Secret Service Uniformed Division" in 1977. In 1977, Congress expanded the USSS' existing protection of foreign diplomatic missions, to also protect visiting heads of foreign states, and other distinguished foreign visitors--at the direction of the President. Congress also authorized the President to direct the protection of United States' official representatives on special missions abroad. Additionally, in 1971, Congress established criminal penalties for a person who "knowingly and willfully obstructs, resists, or interferes with an agent of the United States engaged in the performance" of USSS's protection mission. In 1975, Congress expanded the Service's protection mission to include the Vice President's immediate family. Congress further refined the protection mission in the Presidential Protection Assistance Act of 1976 ( P.L. 94 - 524 ) by regulating the number and types of property to be protected by USSS. Also in 1976, Congress further expanded the list of who was eligible for USSS protection by adding presidential and vice presidential candidate spouses. The "protectee" list was again expanded in 1977, when Congress authorized the USSS to continue to protect specified federal officials and their families. In 1982, the list was increased again by Congress with the addition of former Vice Presidents and their spouses for a period to be determined by the President. Temporary residences of the President and Vice President were designated (as determined by the Treasury Secretary) as property that could be protected if occupied in 1982. Congress enacted a consolidated list--from earlier statutes--of individuals authorized USSS protection for the first time in 1984. The new statute amended 18 U.S.C. Section 3056, "Powers, authorities, and duties of United States Secret Service." This was significant, because for the first time, there was a single statutory list that identified all of the Service's protectees. In 1994 legislation, the protection of former Presidents and their spouses was limited to 10 years after the President leaves office. The list of "protectees" has also been affected by presidential directives. As an example, in 1986, the President directed USSS to protect the spouses of visiting heads of foreign states. Any protectee may decline USSS protection except the President, the Vice President, the President-elect, or the Vice President-elect. Also in 1986, the Treasury Police Force was merged into the Secret Service Uniformed Division as part of its protection mission. As the federal government began to address terrorist threats at the end of the 1990s, President William J. Clinton issued Presidential Decision Directive 62 (PDD 62)--"Protection Against Unconventional Threats to the Homeland and Americans Overseas" on May 22, 1998. As described by the White House, PDD 62 established a framework for federal department and agency counter-terrorism programs that addressed the issues of terrorist apprehension and prosecution, increased transportation security, enhanced emergency response, and enhanced cyber security. PDD 62 is said to designate specific federal departments and agencies as the "lead" agencies in the event of terrorist attacks. PDD 62 is said to designate the USSS as the lead agency with the leadership role in the planning, implementation, and coordination of operational security for events of national significance--as designated by the President. On December 19, 2000, President Clinton signed P.L. 106 - 544 , the Presidential Threat Protection Act of 2000, authorizing the USSS--when directed by the President--to plan, coordinate, and implement security operations at special events of national significance. The special events were entitled National Special Security Events. Some events categorized as NSSEs include presidential inaugurations, major international summits held in the United States, major sporting events, and presidential nominating conventions. Among other actions, this act also established the National Threat Assessment Center (NTAC) within USSS. Congress required NTAC to provide assistance to federal, state, and local law enforcement agencies through threat assessment training; consulting on complex threat assessment cases; researching threat assessment and potential targeted violence; promoting standardization of federal, state, and local threat assessments and investigations; and other threat assessment activities, as determined by the DHS Secretary. The most recent congressional action on the Service's protection mission was the enactment of the Federal Restricted Buildings and Grounds Improvement Act of 2011, which amended 18 U.S.C. 17522 and made it a crime for unauthorized individuals to enter a building that is secured by the USSS. In light of the historical information presented above on the evolution of the statutory foundation for the USSS and its present budget authority, Congress might wish to consider the following policy questions, among others. With the Service effectively operating and performing its missions within DHS since 2003, the policy questions presented in this report are potential future considerations. What is the optimum or preferred mission of the USSS and whether the mission should consist of both investigation and protection? Is the current allocation of resources ensuring one or both USSS missions are efficiently achieved? The two USSS missions--investigation and protection--have evolved over 143 years. The original and oldest mission, which began in 1865, is the investigation mission. Statutorily, the protection mission did not begin until 1906. In FY2014, however, the protection mission received approximately 63% of the agency's funding. In FY2014, the protection mission was appropriated approximately $920 million, and the investigation mission was appropriated $368 million. As described earlier in this report, USSS's protection mission employs the majority of the Service's agents and receives a larger share of the agency's resources. Additionally, the majority of congressional action concerning USSS has been related to its protection mission. This difference may be the result of the costs associated with an increase in protecting individuals, events, and facilities. The relevant statutes discussed above illustrate the Service's expanding protection mission which includes what federal officials are authorized, through statute, USSS protection; the role and responsibilities of the Secret Service Uniform Division; and the Service's role in security for NSSEs. While Congress has maintained USSS's role investigating financial crimes, congressional action primarily has addressed, and continues to address, the Service's protection mission. An example of this is Congress's enactment of P.L. 110 - 326 , the Former Vice President Protection Act of 2008, which requires the Service to protect former Vice Presidents, their spouses, and minor children for a period up to six months after leaving office. Another example of congressional interest in the Service's protection mission occurred in the FY2008 Consolidated Appropriations Act, when Congress specifically stated that the USSS could not use any funds to protect any federal department head, except the DHS Secretary, unless the Service is reimbursed. One could argue potential terrorist attacks and possible direct assaults have resulted in an increase in the need for the Service's protection activities. The Service's protection mission has expanded and become more "urgent" due to the increase in terrorist threats and the expanded arsenal of weapons that terrorists could use in an assassination attempt or attacks on facilities. The USSS transfer from the Treasury Department to DHS could be seen as a response to the changing nature of the terrorist threat. The establishment of a single mission, or a distinct primary and secondary mission, for the USSS is one option for Congress in light of this increased terrorist threat. One argument for this is that the majority of the Service's resources are used for its protection mission, and that Congress has raised the issue of the Service's competing missions of protection and investigation. It can be argued, however, that the Service trains its agents in both investigations and protection with no loss of a protectee in the last 52 years. Some have argued, however, that there needs to be an independent examination of the Service's dual mission to evaluate the effectiveness of USSS's training. If there were an evaluation of the Service's two missions, it might be determined that it is ineffective for the USSS to conduct its protection mission and investigate financial crimes. Specifically, in 2012, USSS was engaged in an increased protection workload, which included protection of major presidential candidates, ensuring security for the 2012 presidential nominating conventions, and preparing for the potential transfer of presidential administrations and the January 2013 inauguration. In March 2012, former USSS Director Sullivan stated that USSS candidate protection began in November 2011 when the DHS Secretary, in consultation with the congressional advisory committee, implemented a USSS protection detail for Herman Cain. Governor Mitt Romney, Senator Rick Santorum, and Representative Newt Gingrich also received protection details. This type of increased protection resulted in agents that are normally assigned to investigation missions being assigned to protection detail. From 1865 to the present, USSS has been investigating financial crimes, its only activity for the first three decades, and protecting senior executive branch officials, most notably the President. Recently the Service has increased its efforts in cybersecurity and its protection activities due to certain events, such as the terrorist attacks of September 2001 and the wars in Iraq and Afghanistan. The missions of the Service have evolved and conformed to presidential, departmental, and congressional requirements. Due to evolving technology and tactics used in crimes--including financial, cyber, terrorism, and attempted assassinations--USSS has had to evolve. As the cost of this law enforcement increases, and the number of protectees increases (at least during presidential campaign election years), the Service is continuing to balance and fulfill its two missions. Appendix A. Presidential Death Threats and Direct Assaults Against Presidents Presidential safety is and has been a concern throughout the nation's history. For example, fears of kidnapping and assassination threats to Abraham Lincoln began with his journey to Washington, DC, for the inauguration in 1861. A much more recent example is the breach of Secret Service security at a White House State Dinner on November 24, 2009, where two uninvited guests gained entry to the event. This resulted in a House Homeland Security Committee hearing on December 3, 2009, where the Director of the Secret Service, Mark J. Sullivan, admitted that the breach was a "human error" by Secret Service personnel manning a security checkpoint. At the 2009 hearing, Director Sullivan stated that there has been no increase of death threats to President Obama when compared to death threats against Presidents George W. Bush and William J. Clinton even though some media sources have reported otherwise. In 1917, Congress enacted legislation that made it a crime to threaten the President. CRS does not have access to information on presidential death threats due to the security classification of this information. The extent to which Presidents have been threatened or targeted remains a matter of conjecture. Concern for presidential safety is genuine due to the number of attempted and successful assaults against Presidents. Ten Presidents have been victims of direct assaults by assassins, with four resulting in death. Since the Secret Service started protecting Presidents in 1906, seven assaults have occurred, with one resulting in death (President John F. Kennedy). The following table provides information on assaults against Presidents who were protected by the Secret Service; it does not include information on assaults against Presidents prior to the Service assuming the responsibility of presidential safety. Appendix B. Statutes Addressing U.S. Secret Service Activities

The U.S. Secret Service has two missions--criminal investigations and protection. Criminal investigation activities have expanded since the inception of the Service from a small anti-counterfeiting operation at the end of the Civil War, to now encompassing financial crimes, identity theft, counterfeiting, computer fraud, and computer-based attacks on the nation's financial, banking, and telecommunications infrastructure, among other areas. Protection activities, which have expanded and evolved since the 1890s, include ensuring the safety and security of the President, Vice President, their families, and other identified individuals and locations. In March 2003, the U.S. Secret Service was transferred from the Department of the Treasury to the Department of Homeland Security. Prior to enactment of the Homeland Security Act of 2002 (P.L. 107-296), the U.S. Secret Service had been part of the Treasury Department for over 100 years. Since the September 2001 terrorist attacks, there have been consistent and continuing questions concerning the U.S. Secret Service. Are the two missions of the Service compatible and how should they be prioritized? Is the Department of Homeland Security the most appropriate organizational and administrative location for the Secret Service? These, and other policy issues such as the Secret Service's role in securing presidential inaugurations, have been raised and addressed at different times by Congress and various administrations during the long history of the Service. Additionally, there has been increased interest in the Service due to the inaugural security operations and the protection of President Barack Obama. Some may contend that these and other questions call for renewed attention given the recent increase in demand for the Service's protection function (for example, see P.L. 110-326 enacted by the 110th Congress) and the advent of new technology used in financial crimes. Numerous pieces of legislation related to the Service have been introduced and enacted by the 113th Congress, with all of the enacted legislation being appropriation bills. Introduced in the 113th Congress, H.R. 1121, Cyber Privacy Fortification Act of 2013; H.R. 1468, SECURE IT; S. 1193, Data Security and Breach Notification Act of 2013; and S. 1897, Personal Data Privacy and Security Act of 2014 are related to personal data privacy and security, and confidential informant security. Additionally, the House Oversight and Government Reform Committee held a hearing entitled "White House Perimeter Breach: New Concerns about the Secret Service," on September 30, 2014, which addressed a security breach on September 19th, where a person gained unauthorized entrance into the White House after climbing the perimeter fence, and previous incidents. The committee inquired if deficient protection procedures, insufficient training, inadequate funding, personnel shortages, or low morale contributed to these security breaches. Later, on the same day as the hearing, it became public knowledge that earlier in the year a private security contractor at a federal facility, while armed, was allowed to share an elevator with President Barack Obama during a site visit, in violation of U.S. Secret Service security protocols. The following day, October 1, 2014, USSS Director Julia Pierson resigned. This report discusses these issues and will be updated when congressional or executive branch actions warrant.

There are more than 9,000 local election jurisdictions in the United States. (3) In most states, they arecounties or major cities, but in some New England and Upper Midwest states, they are smalltownships -- for example, more than 1,800 townships in Wisconsin. (4) Given that diversity and otherdifferences among states -- such as wealth, population, and the role of state election officials --responsibilities and characteristics of LEOs are likely to vary among the states. Nevertheless, somepatterns emerged from the survey. The demographic characteristics of LEOs are unusual for a groupof government officials. According to the survey results, the typical LEO is a whitewoman between 50 and 60 years old who is a high school graduate. She was elected to her currentoffice, works full-time in election administration, has been in the profession for about 10 years, andearns under $50,000 per year. She belongs to a state-level professional organization but not anational one, and she believes that her training as an election official has been good to excellent. As with any such description, the one above does not capture the diversity within thecommunity surveyed. About one-quarter of LEOs are men, about 5% belong to minority groups,40% are college graduates, and 8% have graduate degrees. They range from 24 to 89 years of age,and have served from 1 to 50 years. About one-third were appointed rather than elected to theirposts. Reported salaries range from under $10,000 to more than $120,000. About one-third belongto regional, national, or international professional organizations. The demographic profile of LEOs is unusual, especially for a professional group. While itis possible that some of the above results were statistical artifacts, it is likely that overall they reflectthe demographic characteristics of LEOs in general. If so, those characteristics appear to differ fromthose of other local government employees. For example, according to U.S. Census figures, whilewomen comprise a higher proportion of the local government workforce than men overall, (5) men comprise a higherproportion of local government general and administrative managers. (6) About 20% of those managersbelong to minorities. (7) The causes of those differences are not apparent. The patterns do not appear to be a result ofthe fact that most LEOs are elected, as the demographic characteristics of legislators appear to belargely similar to those for local government managers. (8) Potential policy implications of the demographic characteristicsof LEOs are discussed later in this report. The kinds of voting systems used in the United States have been changing over the past 20years. In particular, the computerization of voting has climbed dramatically during that period. Increasingly, jurisdictions have turned to computer-assisted voting systems -- especially optical scanand direct recording electronic (DRE) systems. In 1980, fewer than one-quarter of jurisdictions usedcomputer-assisted systems, with under 5% using optical scan and DRE systems. In contrast, morethan 75% used computer-assisted systems in 2004, with more than half of those using opticalscan. (9) Over that 20-yearspan, the most dramatic changes have been the seven-fold increase in the use of optical scan byjurisdictions, from about 7% in 1990 to more than 45% in 2004, and the doubling in DRE usebetween the 2000 and 2004 elections, from 10% to 20%. The number of jurisdictions usingpunchcards, lever machines, and hand-counted paper ballots was declining even before theenactment of HAVA. Use of these systems fell by more than half between 1990, when they wereused by more than 80% of jurisdictions, and 2004, with about 30% usage. The major alternativevoting systems in use at present are therefore optical scan and DRE. About half of jurisdictions with optical scan systems use precinctcount. In general, the survey results reflect the patterns found in other studies. (10) However, those studies,unlike the survey, did not distinguish between central-count and precinct-count systems. Thedistinction may be important from a policy perspective because for optical scan voting systems, onlythe precinct-count version provides for detection of improperly marked ballots by machine beforethe ballot is cast, allowing voters to correct mistakes such as overvotes (this is often called second-chance voting ). Central-count systems rely entirely on visual inspection by the voter todetect errors. About half (49.9%) of the jurisdictions surveyed use optical scan voting systems. Ofthose, 44.9% are central-count systems. (11) HAVA promotes but does not require the use of voting machinesthat detect errors. (12) LEOs are highly satisfied with whatever voting systems they areusing now. Most LEOs (more than 85% altogether) reported that they are highlysatisfied with their current voting systems and that the systems performed very well during theNovember 2004 election (more than 90%). There was little variation in the degree of satisfactionwith different kinds of voting systems, but the differences are illuminating: The most highly rated systems were precinct-count optical scan and DREs,which are the most compatible of current systems with the goals and requirements of HAVA. Ratings for these systems were not significantly different from each other. Both precinct-count optical scan and DRE systems were rated significantlyhigher than lever machines, hand-counted paper systems, and central-count optical scan with respectto overall satisfaction. There were no significant differences in the performance ratings of differentsystems for the November 2004 election, except between DREs, which were rated highest, andcentral-count optical scan, which was rated lowest. (13) While generally satisfied with their current systems, LEOs also indicated areas whereimprovements are needed. In rating a set of desired qualities of voting systems and the degree towhich their current voting system has those characteristics, the four features rated highest for boththe current and desired system were accuracy in counting, reliability, security, and ease of use by voters. Current systems were rated lowest in comparison to desired features for prevention of voter errors, ease of use by persons with disabilities, and machine error. Two features were rated higher as characteristics of the current voting system than they were indesirability: speed in vote counting, and cost of acquisition. The characteristics rated lowest for both current and desired systems were impact on different socioeconomic groups, and alternative-language capability. Not surprisingly, users of DREs and precinct-count optical scan systems rated them higherfor prevention of voter error than users of other systems rated theirs. DRE users also rated theirsystems higher than users of other systems did theirs for ease of use by disabled persons and formultiple-language use. Most jurisdictions acquiring new voting systems choose those thathelp voters avoid errors. The length of time that jurisdictions reported using theircurrent voting systems varied widely, from one year or less to more than 200 years. The average is12 years. (14) About onein six jurisdictions reported that they had acquired a new voting system since 2000, and half of thoseobtained DREs, which prevent overvotes and can help voters minimize unintentional undervoting. The remainder chose optical-scan systems, and more than three-quarters of those acquiredprecinct-count versions. About 40% of respondents indicated that they are likely to replace theircurrent voting system within the next five years, with similar proportions as above expecting tochoose DREs, precinct-count, and central-count optical scan systems. Overall, 85% of recentlyacquired or planned voting systems assist voters in preventing or detecting many ballot-markingerrors. LEOs tend to choose new voting systems with similarcharacteristics to what they use at present. LEOs might be expected to choose newvoting systems that behave in a similar manner to those they have been using. In particular,jurisdictions replacing punch-card and hand-counted paper systems might be more likely to chooseoptical scan, which is also paper-based. Those replacing lever machines might be expected tochoose DREs, since neither system uses paper ballots. The survey results support that hypothesis: Lever machine users are four times more likely to switch to DREs than to optical scan. Levermachine users who switch to optical scan systems are five times more likely to choose precinct-countthan central-count, which might be expected, as lever machines are also precinct-count systems. Users of punchcards are more likely to switch to optical scan systems than to DREs and are morelikely to choose precinct-count than central-count. The results for LEOs using hand-counted papersystems are not conclusive but suggest a preference for optical scan over DRE systems. LEOs have more concerns about the security and performance ofvoting systems they are not using themselves. While LEOs tend to be very satisfiedwith the systems that they are using, they have more reservations about other kinds. Average supportfor other systems was substantially less than that for the system in use. Punchcards, lever machines,and hand-counted paper ballots all received negative average ratings from those LEOs not usingthose systems. DREs and the two types of optical scan received positive ratings on average, withprecinct-count rated the highest. Central-count optical scan was rated a bit higher than DREs, whichis perhaps surprising given the finding discussed above that most jurisdictions planning to obtainnew systems expect to adopt either DREs or precinct-count optical scan. This issue was also examined more specifically for DREs and optical scan users. DRE usersrated their systems higher than non-DRE users in all specific performance categories tested --including security, reliability, usability, and cost -- except for multiple-language capability. Thesame patterns held in comparisons of optical-scan users and nonusers. (15) The reasons why nonusersrated alternative-language capability higher than users is not clear. DRE users do not support the use of voter-verifiable paper audittrails (VVPAT), but nonusers do. One of the most striking differences betweenusers and nonusers of DREs is in their attitudes toward the proposal that DREs be required toproduce paper ballots on which voters can verify their choices before the ballot is cast (Fig. 1) -- asystem also called voter-verifiable paper audit trail (VVPAT) . (16) Most DRE users (70%)do not support the use of VVPAT and most do not plan to add them to their voting systems, whereasabout 70% of LEOs not using DREs do support VVPAT. DRE users opposing VVPAT mostcommonly cited risk to voter privacy, printer reliability, and cost as the reasons. While lack of utilitywas not listed as an option, it was written in by 9% of those respondents. However, even thoserespondents (DRE users and nonusers) who expressed support for VVPAT were generally willing(65%) to spend only $300 or less for the feature. Figure 1. Support for Voter-Verified Paper Audit Trails (VVPAT) among LocalElection Officials Who Use DREs and Other Voting Systems Source: Texas A&M University, in coordination with the Congressional Research Service. Both DRE and optical scan users do not generally believe that their voting system softwareis vulnerable to attack by viruses or hackers. They also believe that current state and federalcertification procedures for software and hardware are adequate and that any security concerns withtheir systems can be adequately addressed by good security procedures. For both systems, nonusersare less confident in security and certification and more concerned about software vulnerability. However, they had greater concerns about the vulnerability of DREs than optical scan systems. Table 1. Importance of Different Factors in the Recent andPlanned Acquisition of New Voting Systems by Local Election Jurisdictions Note: Respondents were asked to rate the importance of each factor from 0 (not at all important)to 10 (extremely important). Recent systems are those acquired within the last three years. Plannedsystems are those expected to be acquired within five years. The number reported is the medianresponse. Source: Texas A&M University, in coordination with the Congressional Research Service. HAVA requirements and funding have been a major factor in the adoption of new votingsystems by LEOs. Among the 17% of jurisdictions reporting that they acquired voting systems since2000, about half reported receiving federal funding for that purpose, with about one-third reportingthat most of the funding was from federal sources. About 40% of respondents expect to acquire newsystems within the next five years. HAVA and state requirements and funding were listed as themost important factors in those decisions (Table 1). (17) Concerns about the accuracy or cost of the previous or currentsystems were among the least important factors. Most respondents who plan to replace their currentsystems expect to change all voting machines in the jurisdiction, but 42% anticipate acquiring onenew system per precinct to meet HAVA accessibility requirements. (18) Most LEOs consider themselves familiar with and knowledgeableabout HAVA. The requirements and other provisions of HAVA have substantialimpacts on local jurisdictions, and some requirements, such as provisional balloting, are aimeddirectly at local officials. It would therefore be expected that most local election officials would befamiliar with HAVA provisions, and that is in fact the case. Only 10% of LEOs reported a lack offamiliarity with the act, and more than half consider themselves to be very familiar with itsrequirements. Most LEOs support HAVA provisions. Whenasked about the specific provisions of HAVA, LEOs on average rated each of them positively (Table2), with the highest support given to the provision of federal funding and the lowest to theprovisional voting requirement. However, even with respect to federal funding, there werecomplaints, many relating to a perceived slowness in distribution of funds. LEOs were alsoconcerned that federal requirements would lead to higher operating costs that local jurisdictionswould not be able to afford. The results suggest that support is associated to some degree with ease of implementation,although none of the provisions was rated especially difficult or especially easy to implement onaverage. For example, the two provisions requiring implementation that received the highest levelsof support -- facilitating participation for military or overseas voters, and provision of informationfor voters -- were also rated as the easiest to implement, and provisional voting was considered thesecond most difficult. However, the disability access requirement received a substantially higherlevel of support than the identification requirement for certain first-time voters, even though theformer was considered the most difficult to implement while the latter was among the least difficult. A common remark about the disability requirement was the perception that it is unnecessary oronerous for jurisdictions with small populations. This argument was also made before HAVA wasenacted. Proponents of the accessibility provision counter that the mobility of U.S. society and thepresence of "hidden" disabled persons, as well as other factors, make the uniform application of thisprovision necessary. The creation of the federal Election Assistance Commission (EAC), which has beensomewhat controversial, was seen as an advantage by most LEOs, with only one in seven seeing itas a disadvantage. During the debate on HAVA, some observers argued that the EAC should bepermanent, and others that it should exist only until all requirements payments authorized in the actare distributed. In February 2005, the National Association of Secretaries of State took the positionthat the EAC should be temporary, although that position was tempered in subsequent statements. Provisional voting received the highest percentage of negative assessments, with 35% ofrespondents considering it a disadvantage, and 48% an advantage. It was the only category for whichresponses were strongly polarized, with many LEOs rating it a strong advantage and almost as manya strong disadvantage. It was not possible to determine for this report what factors might accountfor the polarized response. Table 2. Ratings of Individual HAVA Provisions as Advantageor Disadvantage Note: Respondents were asked to rate each provision on a scale of 1 (disadvantage) to 7 (advantage). The disadvantage column lists the percentage who rated a provision at 1, 2, or 3; the neutral columnthe percentage who chose 4; and the advantage column those who chose 5, 6, or 7. Source: Texas A&M University, in coordination with the Congressional Research Service. LEOs believe that HAVA is making some improvements in theelectoral process. The survey asked LEOs to rate the degree to which HAVA hasresulted in improvements in elections in their jurisdictions -- from no improvement to majorimprovement. Only 12% of LEOs responded that it led to no improvement, but only 7% respondedthat it led to major improvement. The average response was halfway between those two extremes. A comparison of how LEOs rated HAVA overall with other characteristics of the officials suggeststhat younger officials who are comfortable with technology and familiar with HAVA tended to besupportive of the legislation. Not surprisingly, those who believe that there is too much federalinvolvement in the election process tended to be less supportive. Less obvious was the finding thatcollege-educated LEOs also tended to be less supportive, although the effect was smaller than forthe other factors . About 23% of respondents provided suggestions for improving HAVA. The threemost common areas for improvement listed were federal funding, registration and voteridentification, and provisional ballots. There has been some debate and uncertainty about the role and influence of voting systemmanufacturers and vendors in the selection of voting systems by local jurisdictions. Some observershave argued that vendors have undue influence in what voting systems jurisdictions choose. Othersbelieve that such concerns are unwarranted. But little has been known of how LEOs view vendorsand their relationships with them. The results of the survey were mixed with respect to theimportance of vendors. LEOs appear to have high trust and confidence in them but do not rate themas being especially influential with respect to decisions about voting systems. LEOs trust and have confidence in the voting system vendors theywork with. Most jurisdictions using computer-assisted voting reported that theyhad interacted with their voting-system vendors within the last four years. (19) More than 90% of LEOsconsidered their voting system vendors responsive and the quality of their goods and services to behigh. They felt equally strongly that the recommendations of those vendors can be trusted. However, about a fifth of respondents thought that vendors are willing to sacrifice security forgreater profit, although 60% disagreed. Also, a quarter felt that vendors provide too many aspectsof election administration. LEOs do not believe that vendors are very influential in decisionsabout acquiring new voting systems. When LEOs were asked what sources ofinformation they relied on with respect to voting systems, state election officials received the highestaverage rating, with about three-quarters of LEOs indicating that they rely on state officials a greatdeal. Next most important were other election officials, followed by the EAC and advocates for thedisabled. About one-third stated that they rely on vendors a great deal, a level similar to that forprofessional associations. Only 2% rated vendors higher than any other source, whereas 20% ratedstate officials highest. Interest groups were rated lower than vendors, and political parties and mediareceived the lowest ratings. When LEOs were asked about the influence of different actors on decisions about votingsystems, the overall pattern of response was similar to that for information sources. Once again,state, local, and federal officials were judged the most influential, (20) and political parties andthe media the least, with vendors in between. An exception was that local nonelected officials wereconsidered less influential on average than vendors. Both voters and advocates for the disabled wererated as more influential on average than vendors. No LEOs rated vendors as more influential thanany other source. In contrast, 12% listed themselves as the most influential. About two-thirds ofLEOs believe that local elected officials should have more influence, about one-third that stateelected officials should, and about half believe that the federal government has too much influence. Fewer than 10% of LEOs believe that there is insufficient oversight of vendors by the federalgovernment and states, but about one in six believe that local governments do not exercise enoughoversight. About half of LEOs believe that the federal government exercises too much oversight ofvendors, about a third believe that states do, and about one in six that local governments do. As with any survey, care needs to be taken in drawing inferences from the results discussedabove. One question that could arise is whether the sample is representative of LEOs as a whole. Steps were taken in the design of the study to minimize the risk that the sample would not berepresentative. For example, simply drawing the sample at random from the nationwide pool ofelection administrators would have resulted in a disproportionately large number of jurisdictionsfrom New England and the upper Midwest, where elections are administered by townships ratherthan counties. (21) Toprevent such regional overrepresentation in the sample, no more than 150 officials were chosen tobe surveyed from each state. For states with fewer than 150 election jurisdictions, all were includedin the sample; for other states, 150 LEOs were chosen at random to be included in the sample. Overall, neither the sample design nor the characteristics of the responses suggest that the results areunrepresentative of the views and characteristics of local election officials. (22) Another potential caution for interpretation relates to the inherent limits of surveys such asthis one. In particular, there is no way to guarantee that the responses of the election officialscorrespond to their actual beliefs. In addition, there is no way to be certain that any particular beliefcorresponds to reality. The question of vendor influence provides an illustration of the possibilityfor disparity. For several reasons, LEOs might be reluctant to rate vendors as having the level ofinfluence on decisions about voting systems that they actually believe is the case. Alternatively, theymight believe that vendors have only modest influence whereas in fact the influence is much greater. The possibility of a disparity is raised in this case because LEOs indicated a very high level of trustand confidence in vendors but indicated that their influence was comparatively minor. A final caution involves how survey results might be used to inform policy decisions. Onthe one hand, the results could be used to support the shaping of policy in directions expressed byLEOs in their responses. In many cases, such policy changes might be appropriate. On the otherhand, it is possible that at least some of those desired changes would not in fact yield the mosteffective or appropriate policies. In such cases, the results might more constructively be used to helppolicymakers identify issues for which improvements in communication and understanding areneeded. The survey results may have policy implications for several issues at the federal, state, andlocal levels of government. Some issues that may be relevant for congressional deliberations arehighlighted below. Election Officials. Many observers havecommented favorably on the experience and dedication of the nation's local election officials. Survey results are consistent with that view. At the same time, other observers, including someelection officials, have called for increased professionalism in election administration. Some surveyresults suggest areas of potential professional improvement, such as in education and in professionalinvolvement at the national level. Congress could address this potential need by means such asfacilitating educational and training programs for LEOs and promoting professional certification ofelection officials by entities accredited through the EAC. The seemingly unique demographic characteristics of LEOs as a group of governmentofficials may have other policy implications, but they are not altogether clear. However, someobservers may argue that efforts should be undertaken to ensure that LEOs reflect the diversity ofthe workforce or voting population as a whole, especially with respect to minority representation. Voting Systems. Since the enactment of HAVA,controversy has arisen over whether DRE voting systems are sufficiently secure and reliable. Thesurvey revealed that LEOs who have experience with DREs are very confident in them and do notgenerally support the addition of a voter-verified paper audit trail (VVPAT) to address securityconcerns. However, LEOs using other systems are much less confident in DREs and moresupportive of VVPAT. The strongly dichotomous results suggest that as Congress considers whetherto require the use of VVPAT or similar security mechanisms, it might be useful to determine whetherDRE users are overconfident in the security of their systems or, alternatively, whether nonusers needto be better educated about the reliability and security of DRE systems. (23) The Help America Vote Act (HAVA). Thesurvey results suggest that HAVA is in the process of achieving several of its policy goals. Thegeneral support of HAVA provisions -- including those such as the creation of the EAC and theprovisional ballot requirement that have been somewhat controversial -- implies that LEOs are inagreement with the goals of the act and are active partners in its implementation. The overwhelmingchoice of new voting systems that assist voters in avoiding errors indicates that the HAVA goal ofreducing avoidable voter error is in the process of being met. The areas of concern expressed byLEOs -- such as how to meet the costs of ongoing implementation of HAVA requirements -- raiseissues that Congress may wish to address as it considers HAVA appropriations and reauthorization. The close relationship between LEOs and the vendors of their voting systems seems unlikelyto change as a result of HAVA. However, with the codification by HAVA of the voting systemstandards and certification processes, the influence of the federal government in decisions about newvoting systems might be expected to increase in relation to that of vendors and others. However, theinfluence of state elected officials seems unlikely to decline, especially given the responsibilities thatHAVA places on state governments with respect to election administration. Research Needs. Scientific opinion surveys oflocal election officials are rare, (24) and additional research may be useful to address some of thematters raised by this study. For example, a survey of state election officials might provide usefulinformation and might additionally be helpful in assessing the most appropriate federal role inpromoting the effective implementation of HAVA goals at all levels of government. One common suggestion of LEOs for improving HAVA was to provide a means of adjustingrequirements to fit the needs of smaller jurisdictions. To determine what, if any, such adjustmentswould be appropriate, it may be useful to have specific information on how the needs andcharacteristics of different jurisdictions vary with size -- something that was beyond the scope of thissurvey. It could also be useful to identify how the duties of LEOs vary with size and othercharacteristics of the jurisdiction. In many jurisdictions, election administration is only part of theLEO's job. It is not known to what degree these other responsibilities might affect electionadministration -- negatively or positively. Finally, this survey provided only one snapshot of LEO characteristics and perceptions. Itmight be beneficial to perform similar surveys periodically to identify trends and explore newquestions and issues.

There are more than 9,000 local election jurisdictions in the United States. Local electionofficials (LEOs) are responsible for administering elections in those jurisdictions. LEOs aretherefore critical to the successful implementation of the Help America Vote Act of 2002 (HAVA, P.L. 107-252 ) and state election laws, but there has been little objective information on theperceptions and attitudes of those officials about election reform. This report, which will not beupdated, discusses the results of a recent scientific survey of LEOs. The findings may be useful toCongress in considering funding and possible reauthorization of HAVA. The demographic characteristics of LEOs are unusual for a group of government officials. Almost three-quarters are women, and 5% belong to minority groups. Most do not have a collegedegree, and most were elected to their positions. Some survey results suggest areas of potentialprofessional improvement, such as in education and in professional involvement at the national level. Over the past 20 years, jurisdictions have turned increasingly to computer-assisted votingsystems -- especially optical scan and direct recording electronic (DRE) systems. The mostimportant factors reported by LEOs in the acquisition of new systems are federal and staterequirements and funding. HAVA encourages but does not require systems that detect voter error,but it does require that voting machines be available that are fully accessible to persons withdisabilities. About half of jurisdictions with optical scan systems use central-count, which cannothelp voters to correct mistakes before casting the ballot. However, most jurisdictions acquiring newvoting systems are choosing either precinct-count optical scan or DREs, both of which can helpvoters avoid errors. LEOs are generally highly satisfied with whatever voting systems they are using now. Theyhave less confidence in the performance and security of other systems. DRE users generally opposethe use of voter-verified paper audit trails (VVPAT) for DREs, but users of other systems favor it. This result could mean that users are overconfident in DREs or that nonusers are insufficientlyknowledgeable about them. LEOs also tend to favor new systems that have characteristics similarto what they have been using -- for example, lever machine users tend to favor DREs. LEOs trustthe voting system vendors they work with but do not believe that those vendors are very influentialin decisions about acquiring new voting systems. LEOs consider themselves knowledgeable about and familiar with HAVA. They supportindividual provisions of the act, most strongly for federal funding and least strongly for provisionalballoting. To some extent, provisions rated more difficult to implement receive less support. MostLEOs believe that HAVA has resulted in some improvement in elections in their jurisdictions. Those rating HAVA higher overall tend to be younger, more comfortable with technology, and morefamiliar with the act. The areas for improvement of HAVA most commonly listed are federalfunding and the requirements for registration, voter identification, and provisional balloting.

Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term services and supports. Medicaid is jointly funded by the federal government and the states. Participation in Medicaid is voluntary for states, though all states, the District of Columbia, and the territories choose to participate. Each state designs and administers its own version of Medicaid under broad federal rules. While states that choose to participate in Medicaid must comply with all federal mandated requirements, state variability is the rule rather than the exception in terms of eligibility levels, covered services, and how those services are reimbursed and delivered. The federal government pays a share of each state's Medicaid expenditures. This report describes the federal medical assistance percentage (FMAP) calculation used to reimburse states for most Medicaid expenditures, and it lists the statutory exceptions to the regular FMAP rate. The federal government's share of most Medicaid service costs is determined by the FMAP rate, which varies by state and is determined by a formula set in statute. The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures, but exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services. The FMAP rate is also used in determining the phased-down state contribution ("clawback") for Medicare Part D, the federal share of certain child support enforcement collections, Temporary Assistance for Needy Families (TANF) contingency funds, a portion of the Child Care and Development Fund (CCDF), and foster care and adoption assistance under Title IV-E of the Social Security Act. An enhanced FMAP (E-FMAP) rate is provided for both services and administration under the State Children's Health Insurance Program (CHIP), subject to the availability of funds from a state's federal allotment for CHIP. The E-FMAP rate is calculated by reducing the state share under the regular FMAP rate by 30%. The FMAP formula compares each state's per capita income relative to U.S. per capita income. The formula provides higher reimbursement to states with lower incomes (with a statutory maximum of 83%) and lower reimbursement to states with higher incomes (with a statutory minimum of 50%). The formula for a given state is: FMAP state = 1 - ((Per capita income state ) 2 /(Per capita income U.S. ) 2 * 0.45) The use of the 0.45 factor in the formula is designed to ensure that a state with per capita income equal to the U.S. average receives an FMAP rate of 55% (i.e., state share of 45%). In addition, the formula's squaring of income provides higher FMAP rates to states with below-average incomes (and vice versa, subject to the 50% minimum). The Department of Health & Human Services (HHS) usually publishes FMAP rates for an upcoming fiscal year in the Federal Register during the preceding November. This time lag between announcement and implementation provides an opportunity for states to adjust to FMAP rate changes. The per capita income amounts used to calculate FMAP rates for a given fiscal year are several years old by the time the FMAP rates take effect because, as specified in Section 1905(b) of the Social Security Act, the per capita income amounts used in the FMAP formula are equal to the average of the three most recent calendar years of data available from the Department of Commerce. In its FY2019 FMAP calculations, HHS used state per capita personal income data for 2014, 2015, and 2016 that became available from the Department of Commerce's Bureau of Economic Analysis (BEA) in September 2017. The use of a three-year average helps to moderate fluctuations in a state's FMAP rate over time. BEA revises its most recent estimates of state per capita personal income on an annual basis to incorporate revised and newly available source data on population and income. It also undertakes a comprehensive data revision--reflecting methodological and other changes--every few years that may result in upward and downward revisions to each of the component parts of personal income. These components include the following: earnings (wages and salaries, employer contributions for employee pension and insurance funds, and proprietors' income); dividends, interest, and rent; and personal current transfer receipts (e.g., government social benefits such as Social Security, Medicare, Medicaid, state unemployment insurance). As a result of these annual and comprehensive revisions, it is often the case that the value of a state's per capita personal income for a given year will change over time. For example, the 2014 state per capita personal income data published by BEA in September 2013 (used in the calculation of FY2017 FMAP rates) differed from the 2014 state per capita personal income data published in September 2017 (used in the calculation of FY2019 FMAP rates). It should be noted that the definition of personal income used by BEA is not the same as the definition used for personal income tax purposes. Among other differences, BEA's personal income excludes capital gains (or losses) and includes transfer receipts (e.g., government social benefits), while income for tax purposes includes capital gains (or losses) and excludes most of these transfers. Several factors affect states' FMAP rates. The first is the nature of the state economy and, to the extent possible, a state's ability to respond to economic changes (i.e., downturns or upturns). The impact on a particular state of a national economic downturn or upturn will be related to the structure of the state economy and its business sectors. For example, a national decline in automobile sales, while having an impact on all state economies, will have a larger impact in states that manufacture automobiles as production is reduced and workers are laid off. Second, the FMAP formula relies on per capita personal income in relation to the U.S. average per capita personal income . The national economy is basically the sum of all state economies. As a result, the national response to an economic change is the sum of the state responses to economic change. If more states (or larger states) experience an economic decline, the national economy reflects this decline to some extent. However, the national decline will be lower than some states' declines because the total decline has been offset by states with small decreases or even increases (i.e., states with growing economies). The U.S. per capita personal income, because of this balancing of positive and negative, has only a small percentage change each year. Since the FMAP formula compares state changes in per capita personal income (which can have large changes each year) to the U.S. per capita personal income, this comparison can result in significant state FMAP rate changes. In addition to annual revisions of per capita personal income data, comprehensive revisions undertaken every four to five years may also influence regular FMAP rates (e.g., because of changes in the definition of personal income). The impact on FMAP rates will depend on whether the changes are broad (affecting all states) or more selective (affecting only certain states or industries). Regular FMAP rates for FY2019 (the federal fiscal year that begins on October 1, 2018) were calculated and published November 21, 2017, in the Federal Register . In the Appendix A to this report, Table A-1 shows regular FMAP rates for each of the 50 states and the District of Columbia for FY2014 through FY2019. Figure 1 shows the state distribution of regular FMAP rates for FY2019. Fourteen states are to have the statutory minimum FMAP rate of 50.00%, and Mississippi is to have the highest FMAP rate of 76.39%. As shown in Figure 2 , from FY2018 to FY2019, the regular FMAP rates for 36 states is to change, whereas the regular FMAP rates for the remaining 15 states (including the District of Columbia) is to remain the same. For most of the states experiencing an FMAP rate change from FY2018 to FY2019, the change is to be less than one percentage point. The regular FMAP rate for 14 states is to increase by as much as one percentage point, and the FMAP rate for 12 states is to decrease by as much as one percentage point. For states that are to experience an FMAP rate change greater than one percentage point from FY2018 to FY2019, nine states are to experience an FMAP rate increase of greater than one percentage point. Oklahoma is to have the largest FMAP rate increase of 3.81 percentage points, with the FMAP rate increasing from 58.57% to 62.38% Oregon is the only state that is to experience an FMAP rate decrease of greater than one percentage point, with the FMAP rate decreasing 1.06 percentage points from 63.62% to 62.56%. The District of Columbia's FY2019 FMAP rate was not calculated according to the regular FMAP formula because the FMAP rate for the District of Columbia has been set in statute at 70% since 1998 for the purposes of Title XIX and XXI of the Social Security Act. However, for other purposes, the percentage for the District of Columbia is 50%, unless otherwise specified by law. Although FMAP rates are generally determined by the formula described above, exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services. Table 1 lists current exceptions to the FMAP in Medicaid statute and regulations. Past FMAP exceptions are listed in Table B-1 . Some of these exceptions were included in the Social Security Amendments of 1965 (P.L. 89-97), which is the law that enacted the Medicaid program. Other exceptions have been added over the years. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) added a number of exceptions to the FMAP for "newly eligible" individuals, "expansion states," disaster-affected states, specified preventive services and immunizations, smoking cessation services for pregnant women, specified home and community-based services, health home services for certain people with chronic conditions, and home- and community-based attendant services and supports. The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures. In FY2019, 13 states are to have the statutory minimum FMAP rate of 50%, and Mississippi is to have the highest FMAP rate of 76.39%. From FY2018 to FY2019, the regular FMAP rates for 36 states is to change, while the regular FMAP rates for the remaining 15 states (including the District of Columbia) is to remain the same. Exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services. The ACA added a number of exceptions to the FMAP for "newly eligible" individuals, "expansion states," disaster-affected states, specified preventive services and immunizations, smoking cessation services for pregnant women, specified home and community-based services, health home services for certain people with chronic conditions, and home and community-based attendant services and supports. The federal share of Medicaid expenditures used to be about 57% in a typical year, which meant the state share was about 43%. However, with the exceptions to the FMAP added by the ACA (mainly the "newly eligible" matching rate), the federal share of Medicaid expenditures has increased. In FY2014, the federal share of Medicaid expenditures was 61% on average, and it is estimated to have increased to 63% for FY2015 and FY2016. The average federal share is expected to decrease to 61% by FY2020 as the "newly eligible" matching rate phases down to 90%. Appendix A. FMAP Rates for Medicaid, by State Table A-1 shows regular FY2014-FY2019 FMAP rates calculated according to the formula described in the text of the report (see " How FMAP Rates Are Calculated "). In FY2019, FMAP rates range from 50% (14 states) to 76% (Mississippi). From FY2018 to FY2019, regular FMAP rates are to decrease for 13 states, increase for 23 states, and remain the same for 15 states (including the District of Columbia). Most of the states (14 states) for which the FMAP rates do not change have the statutory minimum FMAP rate of 50%, and the FMAP rate for the District of Columbia is statutorily set at 70%. Appendix B. Past FMAP Rate Exceptions Although FMAP rates are generally determined by the statutory formula described above, Table 1 lists current exceptions that have been added to the Medicaid statute and regulations over the years, and Table B-1 lists past FMAP exceptions.

Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term services and supports. Medicaid is jointly funded by the federal government and the states. The federal government's share of most Medicaid expenditures is called the federal medical assistance percentage (FMAP). The remainder is referred to as the state share. Generally determined annually, the FMAP formula is designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita incomes relative to the national average (and vice versa for states with higher per capita incomes). FMAP rates have a statutory minimum of 50% and a statutory maximum of 83%. For FY2019, regular FMAP rates range from 50.00% to 76.39%. The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures, but exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services. This report describes the FMAP calculation used to reimburse states for most Medicaid expenditures, and it lists the statutory exceptions to the regular FMAP rate.

Over the course of three days in late September 2008, all three of Japan's major parties will hold leadership elections. The largest opposition party, the Democratic Party of Japan (DPJ) will go first, on September 21. Current party head Ichiro Ozawa, who is completing his two-year term as president, is running unopposed. The following day, the ruling Liberal Democratic Party (LDP) will hold its internal election, with the winner set to assume Japan's premiership by virtue of the LDP's majority in the Lower House, the more powerful of Japan's two parliamentary chambers. As discussed in more detail below, five LDP members have declared their candidacy. Finally, on September 23, the LDP's coalition partner, New Komeito, will hold its election, with incumbent Akihiro Ota widely expected to stay on. In late September or early October, the new prime minister is expected to dissolve the chamber and schedule an early general election for early November in order to renew the ruling party's mandate. By law, the Lower House election does not need to be held until September 2009. Various polls indicate that the race is likely to be competitive. Both the LDP and the DPJ's approval ratings generally are in the 20-30% range. Most observers predict that the LDP-led coalition is unlikely to maintain its two-thirds majority in the Lower House, which would deprive the LDP of its ability to override vetoes by the DPJ-led Upper House and potentially usher in a new era for Japanese politics. The economy is expected to be the major policy issue of the anticipated general election. Specifically, debate is expected to focus on four inter-related items: whether and how to revive Japan's sputtering economy, how to support Japan's social security system as it copes with the strain of a rapidly ageing society, whether and when to raise the consumption tax rate from its current level of 5%, and how aggressively to pursue structural economic reforms such as those championed by former Prime Minister Junichiro Koizumi, who served from 2001-2006. Hanging over all these questions is Japan's high level of government debt; the country's debt-to-GDP ratio is the highest among the world's industrialized countries. Thus far, five candidates have announced their intention to run for the LDP's presidency. Taro Aso (67 years old) is widely considered to be the front-runner. A former Foreign Minister and current Secretary General of the LDP, he is by far Japan's most popular politician. To temporarily reinvigorate the economy, he has emphasized the need to increase government spending, much as Tokyo did during the 1990s, and has said that raising the consumption tax should be postponed until the economy revives. Aso is known as a foreign policy hawk. He has strongly advocated revising the "peace clause" (Article 9) of the Japanese constitution to allow Japan to more easily deploy its Self-Defense Forces overseas. During his stint as Foreign Minister (2005-2006), he and then-Prime Minister Shinzo Abe tried to deepen Japan's alliance with the United States. They also touted a "values-based diplomacy" that called for expanded cooperation with democracies in Asia, particularly the United States, Australia, and India. Aso has a reputation as a "revisionist" on historical issues, which could lead to tensions with China and South Korea if he becomes prime minister. In the past, Aso has praised some aspects of Japan's colonization of Asian countries in the first part of the 20 th century and voiced support for official visits to Yasukuni Shrine. Visits by former leaders to the controversial Shinto shrine that honors Japan's war dead--including several convicted Class A war criminals--have severely strained relations with China and other Asian countries. Other candidates include current Economic and Fiscal Policy Minister Kaoru Yosano (70), a strong opponent of increased government spending who argues that the consumption tax must be raised in order to save the national pension system. Former Defense Minister and popular television anchor Yuriko Koike (56), a proponent of re-energizing the government's structural reforms championed by Koizumi, is the first woman to run for the LDP Presidency. Former Transportation Minister and LDP policy chief Nobuteru Ishihara (51), the son of the popular mayor of Tokyo, also favors structural reforms. Another former Defense Minister, Shigeru Ishiba (51), favors increased government spending and is emphasizing his plan to enact a permanent law enabling Japan to dispatch the Self-Defense Forces overseas whenever necessary. If Lower House elections are held in the near future, the DPJ is expected to use the same strategy of emphasizing economic and social issues that propelled it to victory in the July 2007 elections for the Upper House of Japan's Diet. Ozawa has unveiled a highly populist policy blueprint that includes items such as providing income support to farmers and fishermen; abolishing certain provisional taxes; and reforming the national pension and healthcare systems. He would offset the over 18 trillion yen (over $160 billion) in revenue shortfalls by eliminating or trimming what he has called "wasteful" government programs that are funded through various "special accounts." Ozawa also has outlined measures to reduce bureaucrats' influence over politicians and has called for Japanese troops to participate in U.N. peacekeeping operations. Though Ozawa is not popular in opinion polls, he is respected in his party for his campaign prowess. Analysts point to a number of possible outcomes from the ongoing political turbulence. One possibility is continued paralysis, particularly if the LDP wins the Lower House elections but loses its 2/3 majority. A DPJ victory, while signifying the emergence of a true two-party system in Japan, could usher in a period of fundamental adjustment to policies that have remained static for decades under the LDP. Two other scenarios are a "Grand Coalition" and a political realignment, in which members of either party defect to the other and form a new majority. Before the elections, however, most analysts are reluctant to speculate specifically on how these scenarios might unfold. A number of factors impeded Fukuda's ability to govern and will challenge whomever the LDP chooses as his successor. In July 2007, the DPJ won a majority in nationwide elections for the Upper House of the Diet. As a result, for the first time in Japanese history, Japan's two parliamentary chambers are controlled by different parties. Shortly after the DPJ's victory, then-prime minister Shinzo Abe resigned, leading the LDP to select Fukuda as premier. Concerned by Ozawa's threats to veto major legislation, Fukuda attempted to form a "Grand Coalition" with the DPJ. After the talks broke down, the DPJ adopted an aggressive policy of using its control of the Upper House to block or delay several of the Fukuda government's legislative initiatives. For more than a decade, the LDP generally has not been able to secure independent majorities in both Diet chambers, forcing it to rely upon coalitions with smaller parties. Since 1999, the LDP has formed a governing coalition with the New Komeito party, a pacifist-leaning party with strong ties to the Buddhist Soka Gakkai religious group. Komeito's clout in the coalition has increased over time, for at least two reasons. First, the LDP is reliant upon Komeito to obtain the 2/3 majority in the Lower House to override the DPJ-led vetoes in the Upper House. Second, LDP candidates in many electoral districts have become reliant upon support from Soka Gakkai followers. Although traditionally the LDP has dominated the coalition, during the summer of 2008, New Komeito became more assertive, for instance by resisting Fukuda's push to renew the authorization to provide fuel to coalition forces in Afghanistan (see later section for details). Former Prime Minister Junichiro Koizumi significantly weakened the LDP's old, opaque system, in which the leaders of the party's internal factions made major budgetary, policy, and personnel decisions (including deciding who would serve as prime minister). This system, although widely criticized as lacking transparency, helped the LDP to overcome significant internal divisions over policy. While he was breaking the faction-based system, Koizumi used his personal popularity and aggressiveness to enforce party discipline. However, his successors, Abe and Fukuda, often were unable to duplicate this feat. As a result, decision-making became increasingly difficult on contentious matters, such as the battles between the LDP's economic reformers and those favoring a return to the status quo of channeling government funds toward key interest groups. The DPJ was formed in 1998 as a merger of four smaller parties and was later joined by a fifth grouping. The amalgamated nature of the DPJ has led to considerable internal contradictions, primarily between the party's hawkish/conservative and passivist/liberal wings. In particular, the issues of deploying Japanese troops abroad and revising the war-renouncing Article 9 of the Japanese constitution have generated considerable internal debate in the DPJ. As a result, for much of its history, the DPJ has a reputation of not being able to formulate coherent alternative policies to the LDP. Additionally, battles between various party leaders have weakened the party. Since winning the Upper House, however, the party has appeared much more unified, at least on the strategy of using its veto power to try to force the LDP to hold early elections. This discipline is remarkable considering that, privately and publicly, many DPJ members chafe at Ozawa's top-down leadership style. If the DPJ does worse than expected in the next election, it is likely that he will be forced to step down. In general, U.S. interests are likely to be negatively affected by political gridlock in Tokyo. In the first term of the Bush Administration, Japan was lauded as the "pivot" of the U.S. strategic presence in Asia and a reliable partner in the global war on terrorism. Continued ineffective leadership, however, suggests that Japan will avoid taking political risks to support U.S. global efforts. Stalled or protracted decision-making may further frustrate U.S. managers working on a range of economic, diplomatic, and military coordination with Japan. Although most analysts view the U.S.-Japan security alliance as mutually beneficial and fundamentally sound, an erosion of trust between Washington and Tokyo could constrain both capitals from weathering occasional controversies. Regardless of which party or candidate takes power, Tokyo is likely to focus most attention on domestic issues in the near future. Little progress is expected on a suite of reforms that had been pursued by Abe and encouraged by U.S. officials to enhance Japan's ability to contribute to international security. These proposals include revision of Article 9 of Japan's constitution, reinterpretation of the constitution to allow collective self-defense, and a law that would allow the Self Defense Forces to deploy without passage of special legislation. Given the emphasis on reforming the pension and health care systems, the new leadership is unlikely to put its energy and resources into passage of controversial foreign policy legislation. The political gridlock in Tokyo does not bode well for the continuation of Japanese support of the U.S.-led Operation Enduring Freedom (OEF) in Afghanistan. Beginning in 2001, Japan's Marine Self Defense Force (MSDF) provided fuel (over 130 million gallons, according to the Japanese government) and water from its tankers in the Indian Ocean to coalition forces. After the DPJ took control of the Upper House in the July 2007 elections, it and the other opposition parties in the Upper House voted down the "Anti-terrorism Special Measures Law" authorization, creating a gap in MSDF participation. Eventually, the LDP-New Komeito coalition used its two-thirds majority in the Lower House, to overrule the Upper House's rejection of the bill. The current measure expires on January 15, 2009. Although all five LDP candidates have stated support for the measure's renewal, the parliamentary calendar and New Komeito's apparent reluctance to back the extension point to at least an interruption of the re-fueling. In summer 2008, the Japanese government explored and then appeared to rule out sending a team of Japanese ground troops to participate in humanitarian activities in Afghanistan. A deployment is likely to be controversial for the pacifist-leaning Japanese public and is particularly opposed by the New Komeito Party. Although the DPJ opposes the refueling operations, it does so on the grounds that the operations fall under the U.S.-led OEF and is not authorized by the United Nations. DPJ leader Ozawa in the past has voiced support for Japanese participation in a Provincial Reconstruction Team (PRT) in Afghanistan because it is specifically authorized by the United Nations. Some analysts have speculated that Japan may be waiting to see how much emphasis the new U.S. president puts on Afghanistan before taking the political risk of sending ground troops. Political shifts in Japan since 2006 appear to have slowed some of the increased cooperation in the U.S.-Japan alliance. Implementation of a series of bilateral agreements intended to upgrade the alliance (known as the "2+2" agreements) depends on Tokyo providing the necessary resources and political capital. Because the transformation and realignment initiatives involve elements that are unpopular in the localities affected, successful implementation hinges on leadership from the central government. The centerpiece of the realignment scheme involves the relocation of a controversial Marine Corps air station in Futenma to a less-congested part of Okinawa. The agreement faces significant public opposition and environmental concerns. If implementation falters, the planned move of 8,000 Marines from Okinawa to Guam may also disrupt the Pentagon's overall plans for realigning U.S. forces in Asia. Japan's relations with its neighbors, while mixed, appear to be the least likely area of concern to be affected by the current political turmoil. Leaders in the various political parties do not have explicitly distinct agendas for dealing with the Koreas and China. After a period of tension under Koizumi, politicians in both Tokyo and Beijing appear to have recognized the necessity of maintaining friendly relations in the interest of regional stability and continued robust trade. Most analysts think that even Aso, who is known as a nationalist politician, is likely to follow Abe and Fukuda's lead and avoid provoking China. After some positive trends, Japan-South Korean ties have faltered again due to delicate sovereignty issues and, according to many analysts, a lack of high-level attention to Seoul in Tokyo. North Korea-Japan relations may have been affected by Fukuda's resignation: soon after Fukuda's announcement, Pyongyang postponed its promised reinvestigation into the fates of Japanese citizens its agents had kidnapped in the 1970s and 1980s until a new prime minister is chosen. Progress on the abduction issue may have slowed even without the political uncertainty in Japan, as the Six-Party Talks over North Korea's nuclear program have struggled to make progress.

On September 1, 2008, Japanese Prime Minister Yasuo Fukuda stunned observers by resigning his post, saying that a new leader might be able to avoid the "political vacuum" that he faced in office. Fukuda's 11-month tenure was marked by low approval ratings, a sputtering economy, and virtual paralysis in policymaking, as the opposition Democratic Party of Japan (DPJ) used its control of the Upper House of Japan's parliament (the Diet) to delay or halt most government proposals. On September 22, the ruling Liberal Democratic Party (LDP) will elect a new president, who will become Japan's third prime minister in as many years. Ex-Foreign Minister Taro Aso, a popular figure known for his conservative foreign policy credentials and support for increased deficit spending, is widely expected to win. Many analysts expect that the new premier will dissolve the Lower House and call for parliamentary elections later in the fall. As a result, Japanese policymaking is likely to enter a period of disarray, which could negatively affect several items of interest to the United States, including the passage of budgets to support the realignment of U.S. forces in Japan and the renewal of legislation that authorizes the deployment of Japanese navy vessels that are refueling ships supporting U.S.-led operations in Afghanistan. This report analyzes the factors behind and implications of Japan's current political turmoil. It will be updated as warranted by events.

The Small Business Administration (SBA) administers several programs to support small businesses, including the 7(a), 504/CDC, and Microloan lending programs to enhance small business access to capital; the Small Business Investment Company (SBIC) program to enhance small business access to venture capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion. Congressional interest in these programs, and the SBA's assistance to small business startups in particular (defined as new businesses that meet the SBA's criteria as small), has increased in recent years, primarily because these programs are viewed by many as a means to stimulate economic activity and create jobs. The Small Business Act specifies four missions for the SBA: It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small-business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation. As part of its mission to maintain and strengthen the overall economy of the nation, the SBA has always been interested in promoting job creation and job retention. For example, the SBA currently gathers data from its clients concerning the number of jobs either created or retained as a result of the assistance they receive from the SBA. The SBA refers to these self-reported data as the number of "jobs supported." The SBA also regularly sponsors research on the role of small businesses in job creation and retention, and considers that research when designing its programs. Economists generally do not view job creation as a justification for providing federal assistance to small businesses. They argue that in the long term such assistance will likely reallocate jobs within the economy, not increase them. In their view, jobs arise primarily from the size of the labor force, which depends largely on population, demographics, and factors that affect the choice of home versus market production (e.g., the entry of women in the workforce). However, economic research does suggest that increased federal spending on small business assistance programs may result in additional jobs in the short term. The SBA's interest, and congressional interest, in providing assistance to small business startups is derived primarily from economic research indicating that startups play an important role in job creation. That research suggests that startups create many, and in some years almost all, net jobs in the national economy. Although there is a consensus that startups have an important role in job creation and retention, economic research suggests that startups have a more limited effect on net job creation over time because fewer than half of all startups are still in business after five years. That research also suggests that the influence of startups on net job creation varies by firm size. Startups with fewer than 20 employees tend to have a negligible effect on net job creation over time whereas startups with 20-499 employees tend to have a positive employment effect, as do surviving younger businesses of all sizes (in operation for one year to five years). Given the relatively high rate of firm deaths among startups, providing SBA assistance to startups, especially in the form of a SBA guaranteed loan or venture capital investment, is generally viewed as a relatively "high risk-high reward" endeavor, with advocates focusing on the possibility of job creation and opponents focusing on the risk of default. For example, opponents point to the SBA's experiences with its SBIC Participating Securities program as an example of the risk in providing venture capital to startups. The SBIC Participating Securities program was established in 1994, with congressional authorization, to encourage the formation of participating securities SBICs that would make equity investments in startup and early stage small businesses. The SBA created the program to fill a perceived investment gap created by the SBIC debenture program's focus on investments in mid- and later-stage small businesses. The SBA stopped issuing new commitments for participation securities on October 1, 2004, following relatively major losses (exceeding $2.7 billion in losses on investments of just over $6.0 billion) in the program following the burst of the "technology stock market bubble" from 2000 to 2002. The SBA's action began a process to end the program, which continues today. This report examines startups' experiences with the SBA's management and technical assistance training programs, focusing on Small Business Development Centers (SBDCs); Women Business Centers (WBCs); SCORE (formerly the Service Corps of Retired Executives); the SBA's 7(a), 504/CDC, and Microloan lending programs; and the SBA's SBIC venture capital program. The SBA's growth accelerators initiative, which targets entrepreneurs looking to "start and scale their business" by helping them access "seed capital, mentors, and networking opportunities for customers and partners," and the recently sunset SBIC early stage debenture program, which focused on providing venture capital to startups, are also discussed. With some notable exceptions, such as the Microloan lending program and SBA's growth accelerators initiative, these programs are designed to assist small businesses at all developmental stages, as opposed to targeting startups for special attention. Nonetheless, all of these programs provide assistance to startups, and report both outcome data (e.g., the number of small businesses receiving training and the number and amount of loans and venture capital provided) and performance data (e.g., the usefulness of the training and the number of jobs supported by the loan) based on the age of the business. As a result, the experiences of startups can be compared with the experiences of older firms both within and across the SBA's programs. For example, as will be shown, the SBA programs that specifically target startups for special attention provide a relatively larger share of its assistance to startups than other SBA programs. Although the data collected by the SBA concerning these programs' impact on economic activity and job creation are somewhat limited and subject to methodological challenges concerning their validity as reliable performance measures, most small business owners who have participated in these programs report in surveys sponsored by the SBA that the programs were useful. Given the data limitations, however, it is difficult to determine the cost effectiveness of these programs. The SBA has provided management and technical assistance training "to small-business concerns, by advising and counseling on matters in connection with government procurement and on policies, principles and practices of good management" since it began operations in 1953. Initially, the SBA provided its own management and technical assistance training programs. Over time, the SBA has relied increasingly on third parties to provide that training. The SBA reports that more than 1.5 million aspiring entrepreneurs and small business owners receive training from an SBA-supported resource partner each year. The SBA has argued that its support of management and technical assistance training for small businesses has contributed "to the long-term success of these businesses and their ability to grow and create jobs." It currently provides financial support to about "14,000 resource partners," including 63 lead SBDCs and nearly 1,000 SBDC local outreach locations, 116 WBCs, and over 300 chapters of the mentoring program, SCORE. The SBDC, WBC, and SCORE programs are the SBA's three largest management and technical assistance training programs. These programs provide training assistance to small businesses at all stages of development, and do not target their assistance exclusively at startups. All three of these programs provide assistance to small businesses, as defined by the SBA's size standards and regulations. However, there are some differences in the small businesses that tend to seek their services. For example, businesses owned by SBDC clients tend to be somewhat larger, both in terms of annual revenue and employment, than those owned by SCORE and WBC clients. Also, as expected given their mission, WBCs' clients are more likely to be female than SBDC and SCORE clients. SBDCs are "hosted by leading universities, colleges, and state economic development agencies" to deliver management and technical assistance training "to small businesses and nascent entrepreneurs (pre-venture) in order to promote growth, expansion, innovation, increased productivity and management improvement." These services are delivered, in most instances, on a nonfee, one-on-one confidential counseling basis and are administered by 63 lead service centers, with at least one located in each state (four in Texas and six in California), the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa. These lead centers manage nearly 1,000 service centers located throughout the United States and the territories. In FY2017, SBDCs provided technical assistance training services to 245,329 clients and counseling services to 188,225 clients. In addition, 14,491 new businesses were formed with assistance from SBDC counselors in FY2017. WBCs are private, nonprofit organizations that provide financial, management, and marketing assistance to small businesses, including startup businesses, owned and controlled by women. Since its inception, the program has targeted the needs of socially and economically disadvantaged women. In FY2017, WBCs provided technical assistance training services to 114,310 clients and counseling services to 26,318 clients. They also assisted in the formation of 17,438 new businesses in FY2017. SCORE is a national volunteer organization which provides management and technical assistance training to small business owners and prospective owners. In FY2017, SCORE's volunteer network of business professionals provided technical assistance training services to 519,368 clients and counseling services to 126,892 clients. They also assisted in the formation of 54,027 new businesses in FY2016 (FY2017 data are not yet available). In addition to compiling program output data, such as the number of clients served, since 2003 the SBA's Office of Entrepreneurial Development has commissioned an annual "multi-year time series study to assess the impact of the programs it offers to small businesses." The survey asks questions about several aspects of the client's experiences with these programs, including the impact of the programs on their staffing decisions and management practices. The survey is sent each year to a stratified random sample of clients participating in the SBDC, WBC, and SCORE programs. The SBA's 2012 survey included responses from nascent clients (individuals who have taken one or more steps to start a business), startup clients (individuals who have been in business one year or less), and in-business clients (individuals who have been in business more than one year and their business was classified as small by the SBA). The 2012 survey was released in February 2013. There were 8,263 SBDC client respondents (19% response rate), 7,217 SCORE client respondents (16% response rate), and 340 WBC client respondents (15% response rate). The survey data reported in Table 1 through Table 6 indicate that (1) these programs assisted small businesses at all stages of development, (2) most of the respondents reported that the assistance they received was useful, and (3) most of the respondents reported that the assistance they received resulted in them changing their management practices or strategies. However, relatively few of the respondents reported that the assistance they received resulted in them hiring new staff, retaining staff, or increasing their profit margin. A statistical analysis of the survey data conducted by the survey's authors suggested that clients receiving three or more hours of counseling, female clients, startups, and clients owning relatively large small businesses were more likely, at a statistically significant level, than clients receiving less than three hours of counseling, male clients, non-startups, and clients owning relatively smaller businesses to report positive results concerning the financial impact of the assistance they received. As shown in Table 1 , the survey indicated that SBDCs, WBCs, and SCORE served businesses at all three stages of development, with 44% of SBDC clients being either a nascent (25%) or startup (19%) client; 55% of SCORE clients being either a nascent (33%) or startup (22%) client; and 47% of WBC clients being either a nascent (32%) or startup (15%) client. The survey asked SBA management and training assistance participants if they thought that the information they received from counselors was extremely useful, useful, no opinion, somewhat useful, or not useful. As shown in Table 2 , most of the SBDC, WBC, and SCORE clients that responded to the survey, including both nascent and startup clients, rated the usefulness of the information provided during their face-to-face management and technical assistance training as either extremely useful or useful. The survey also asked SBA management and training assistance participants if they had changed their management practices or strategies as a result of the SBA management and technical assistance training they received. As shown in Table 3 , more than half of SBDC and SCORE startup clients that responded to the survey reported that they had changed their management practices or strategies as a result of the SBA management and technical assistance training they received, slightly less than the percentages reported by in-business clients. In comparison, three-quarters of WBC startup clients that responded to the survey reported that they changed their management practices or strategies as a result of the assistance they received, somewhat higher than the percentage reported by in-business clients. As shown in Table 4 , 14% of SBDC startup clients, 11% of SCORE startup clients, and 12% of WBC startup clients of survey respondents reported that they agreed or strongly agreed with the statement that the management and technical assistance training they received enabled them to retain current staff, somewhat less than the percentages reported by in-business clients. As shown in Table 5 , 13% of SBDC startup clients, 10% of SCORE startup clients, and 10% of WBC startup clients that responded to the survey reported that they either agreed or strongly agreed with the statement that the SBA management and technical assistance training they received enabled them to hire new staff, somewhat less than the percentages reported by in-business clients. As shown in Table 6 , 30% of SBDC startup clients, 24% of SCORE startup clients, and 31% of WBC startup clients that responded to the survey reported that they either agreed or strongly agreed with the statement that the SBA management and technical assistance training they received had a positive impact on their profit margin, somewhat less than the percentages reported by in-business clients. Growth accelerators are organizations that help entrepreneurs start and scale their business. Accelerators are typically run by experienced entrepreneurs and help small businesses, especially startups, "access seed capital, mentors, and networking opportunities" and provide "targeted advice on revenue growth, job growth, and sourcing outside funding." In 2012, the SBA hosted four regional events (Northeast, Midwest, South, and Mid-Atlantic), which were attended by representatives "from over 100 universities and accelerators to discuss working with high-growth entrepreneurs." These meetings "culminated in a White House event co-hosted by the SBA and the Department of Commerce which will help formalize the network of universities and accelerators, provide a series of 'train the trainer' events on various government programs that benefit high-growth entrepreneurs, and provide a playbook of best practices on engaging universities on innovation and entrepreneurship." The Obama Administration requested $5.0 million, and Congress recommended an appropriation of $2.5 million, for the SBA's growth accelerator initiative for FY2014. The SBA proposed to use the funding to provide matching grants to universities and private-sector accelerators "to start a new accelerator program (based on successful models) or scale an existing program." The SBA also indicated that it planned to request funding for five years ($25 million in total funding) and feature a required 4:1 private-sector match. However, because it received half of its budget request ($2.5 million), the SBA decided to reconsider the program's requirements. As part of that reconsideration, the SBA dropped the 4:1 private-sector match in an effort to enable the program to have a larger effect. On May 12, 2014, the SBA announced the availability of 50 growth accelerator grants of $50,000 each. It received more than 800 applications by the August 2, 2014, deadline. The 50 awards were announced in September 2014. Congress recommended that the program receive $4.0 million in FY2015, and $1.0 million in FY2016, FY2017, and FY2018. Congress also directed the SBA in its explanatory statements accompanying P.L. 113-235 and P.L. 114-113 to "require $4 of matching funds for every $1 awarded under the growth accelerators program." The SBA announced the award of 80 growth accelerator grants of $50,000 each on August 4, 2015 ($4.0 million), 68 growth accelerator grants of $50,000 each on August 31, 2016 ($3.4 million), and 20 growth accelerator grants of $50,000 each on October 30, 2017 ($1 million). Reports from the first round of awardees indicated that more than 1,000 small businesses graduated from the accelerators initiative, with each accelerator graduating about 10 small businesses per year. Award recipients also reported supporting the creation or retention of nearly 4,800 jobs. The Trump Administration requested that the initiative receive no funding in FY2018 and FY2019. The SBA's business lending programs are designed to encourage lenders to provide loans to small businesses "that might not otherwise obtain financing on reasonable terms and conditions." Historically, the SBA's lending programs have been justified on the grounds that small businesses can be at a disadvantage, compared with other businesses, when trying to obtain access to sufficient capital and credit. As an economist explained, Growing firms need resources, but many small firms may have a hard time obtaining loans because they are young and have little credit history. Lenders may also be reluctant to lend to small firms with innovative products because it might be difficult to collect enough reliable information to correctly estimate the risk for such products. If it's true that the lending process leaves worthy projects unfunded, some suggest that it would be good to fix this "market failure" with government programs aimed at improving small businesses' access to credit. In FY2018, the SBA enhanced small business access to capital by approving about $30.2 billion in loans to small businesses. The SBA's two largest loan guaranty programs are the 7(a) loan guaranty program (nearly $25.4 billion approved in FY2018) and the 504/CDC loan guaranty program (nearly $4.8 billion approved in FY2018). In addition, the SBA's Microloan program, which includes startups among its targeted audiences, provides direct loans to 144 active nonprofit intermediary Microloan lenders to provide "microloans" of up to $50,000 to small business owners, entrepreneurs, and nonprofit child care centers. The Microloan program provided $76.8 million in loans to small businesses in FY2018. The SBA's 7(a) loan guaranty program is considered the agency's flagship loan guaranty program. It is named from Section 7(a) of the Small Business Act of 1953 (P.L. 83-163, as amended), which authorizes the SBA to provide business loans to American small businesses. The SBA provides participating, certified lenders a guaranty of repayment in the case of a default of up to 85% of qualified loan amounts of $150,000 or less and up to 75% of qualified loan amounts exceeding $150,000 to the program's loan limit of $5 million. Proceeds from 7(a) loans may be used to establish a new business or to assist in the operation, acquisition, or expansion of an existing business. Specific uses include to acquire land (by purchase or lease); improve a site (e.g., grading, streets, parking lots, and landscaping); purchase, convert, expand, or renovate one or more existing buildings; construct one or more new buildings; acquire (by purchase or lease) and install fixed assets; purchase inventory, supplies, and raw materials; finance working capital; and refinance certain outstanding debts. The SBA's 504 Certified Development Company (504/CDC) loan guaranty program provides long-term fixed rate financing for major fixed assets, such as land, buildings, equipment, and machinery. A 504/CDC loan cannot be used for working capital or inventory. It is named from Section 504 of the Small Business Investment Act of 1958 (P.L. 85-699, as amended), which authorized the sale of debentures pursuant to Section 503 of the act, which previously authorized the program. The 504/CDC program is administered through nonprofit CDCs. Of the total project costs, a third-party lender must provide at least 50% of the financing, the CDC provides up to 40% of the financing backed by a 100% SBA-guaranteed debenture, and the applicant provides at least 10% of the financing. The SBA's debenture is backed with the full faith and credit of the United States and is sold to underwriters who form debenture pools. Investors purchase interests in the debenture pools and receive certificates representing ownership of all or part of the pool. The SBA and CDCs use various agents to facilitate the sale and service of the certificates and the orderly flow of funds among the parties. After a 504/CDC loan is approved and disbursed, accounting for the loan is set up at the Central Servicing Agent (CSA, currently PricewaterhouseCoopers Public Sector LLP), not the SBA. The SBA guarantees the timely payment of the debenture. If the small business is behind in its loan payments, the SBA pays the difference to the investor on every semiannual due date. The 504/CDC program is somewhat unique in that borrowers must meet one of two specified economic development objectives. First, borrowers, other than small manufacturers, must create or retain at least one job for every $75,000 of project debenture. Borrowers who are small manufacturers must create or retain one job per $120,000 of project debenture. The jobs created do not have to be at the project facility, but 75% of the jobs must be created in the community where the project is located. Using job retention to satisfy this requirement is allowed only if the CDC "can reasonably show that jobs would be lost to the community if the project was not done." Second, if the borrower does not meet the job creation or retention requirement, the borrower can retain eligibility by meeting any one of 5 community development goals or 10 public policy goals, provided the CDC's overall portfolio of outstanding debentures meets or exceeds the job creation or retention criteria of at least one job opportunity created or retained for every $75,000 in project debenture (or for every $85,000 in project debenture for projects located in special geographic areas such as Alaska, Hawaii, state-designated enterprise zones, empowerment zones, enterprise communities, labor surplus areas, or opportunity zones). Loans to small manufacturers are excluded from the calculation of this average. The SBA's Microloan program was authorized in 1991 ( P.L. 102-140 , the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1992) as a five-year demonstration program to address the perceived disadvantages faced by very small businesses in gaining access to capital. The program became operational in 1992, and it was made permanent, subject to reauthorization, in 1997 ( P.L. 105-135 , the Small Business Reauthorization Act of 1997). Its stated purpose is to assist women, low-income, veteran ... and minority entrepreneurs and business owners and other individuals possessing the capability to operate successful business concerns; to assist small business concerns in those areas suffering from a lack of credit due to economic downturns; ... to make loans to eligible intermediaries to enable such intermediaries to provide small-scale loans, particularly loans in amounts averaging not more than $10,000, to start-up, newly established, or growing small business concerns for working capital or the acquisition of materials, supplies, or equipment; [and] to make grants to eligible intermediaries that, together with non-Federal matching funds, will enable such intermediaries to provide intensive marketing, management, and technical assistance to microloan borrowers. The maximum Microloan amount is $50,000 and no borrower may owe an intermediary more than $50,000 at any one time. Microloan proceeds may be used only for working capital and acquisition of materials, supplies, furniture, fixtures, and equipment. Loans cannot be made to acquire land or property, and must be repaid within six years. Within these parameters, loan terms vary depending on the loan's size, the planned use of funds, the requirements of the intermediary lender, and the needs of the small business borrower. Interest rates are negotiated between the borrower and the intermediary (within statutory limits), and typically range from 7% to 9%. Each intermediary establishes its own lending and credit requirements. However, borrowers are generally required to provide some type of collateral, and a personal guarantee to repay the loan. The SBA does not review the loan for creditworthiness. The SBA maintains a relatively extensive output database for its business lending programs (e.g., number and amount of loans approved and disbursed by program and by year; number and amount of loans approved and disbursed by program and by year to various demographic groups, including startups; number and amount of loans approved and disbursed by program by state; amount of loan purchases and recoveries by program and by year). It also asks borrowers to report information concerning the impact the loans have on job creation and retention. As will be shown, these data suggest that the SBA provides lending support to small businesses at all stages of development, but to varying degrees, with the Microloan program providing a relatively higher share of its lending to startups than the 7(a) and 504/CDC programs. The data also suggest that these programs have a generally positive impact on job creation and retention, but, as will be discussed, the data are self-reported and subject to methodological limitations. As expected given their missions, the Microloan program provides a greater percentage of its loan proceeds to startups (38.0% of total loan disbursements in FY2018) than does the 7(a) program (16.6% of total loan approvals to date in FY2019) and the 504/CDC program (16.8% of total loan approvals to date in FY2019). The SBA has two venture capital programs. The SBIC program, authorized by P.L. 85-699, the Small Business Investment Act of 1958, as amended, is the SBA's flagship venture capital program. It is designed to "improve and stimulate the national economy in general and the small business segment thereof in particular" by stimulating and supplementing "the flow of private equity capital and long-term loan funds which small business concerns need for the sound financing of their business operations and for their growth, expansion, and modernization, and which are not available in adequate supply." The SBA also sponsors the much smaller New Markets Venture Capital Program, which is not discussed here given its relatively small size ($1.65 million in financing to four small businesses in FY2015, and no new financing since then). It is designed to promote economic development and the creation of wealth and job opportunities in low-income geographic areas by addressing the unmet equity investment needs of small businesses located in those areas. The SBA does not make direct investments in small businesses. It partners with privately owned and managed SBICs licensed by the SBA to provide financing to small businesses with private capital the SBIC has raised (called regulatory capital) and with funds (called leverage) the SBIC borrows at favorable rates because the SBA guarantees the debenture (loan obligation). As of September 30, 2018, there were 305 licensed SBICs participating in the SBIC program. A licensed debenture SBIC in good standing, with a demonstrated need for funds, may apply to the SBA for financial assistance (leverage) of up to 300% of its private capital. However, the SBA has traditionally approved debenture SBICs for a maximum of 200% of their private capital and no fund management team may exceed the allowable maximum amount of leverage of $175 million per SBIC and $350 million for two or more licenses under common control. SBICs pursue investments in a broad range of industries, geographic areas, and stages of investment. Some SBICs specialize in a particular field or industry, while others invest more generally. Most SBICs concentrate on a particular stage of investment (i.e., startup, expansion, or turnaround) and geographic area. SBICs provide equity capital to small businesses in various ways, including by purchasing small business equity securities (e.g., stock, stock options, warrants, limited partnership interests, membership interests in a limited liability company, or joint venture interests); making loans to small businesses, either independently or in cooperation with other private or public lenders, that have a maturity of no more than 20 years; purchasing debt securities from small businesses; and providing small businesses (subject to limitations) a guarantee of their monetary obligations to creditors not associated with the SBIC. The SBIC program currently has invested or committed about $30.1 billion in small businesses, with the SBA's share of capital at risk about $14.3 billion. In FY2018, the SBA committed to guarantee $2.52 billion in SBIC small business investments. SBICs invested another $2.98 billion from private capital for a total of $5.50 billion in financing for 1,151 small businesses. The SBIC program provides financing to small businesses at all developmental stages, with most of its financing provided to businesses that have been in operation for at least five years. The amount of SBIC financing provided to startups (defined as being in operation for one year or less) as a share of SBIC financing has increased somewhat since FY2014 (16.5% in FY2014, 17.9% in FY2015, 15.3% in FY2016, 19.3% in FY2017, and 23.0% in FY2018). In 2012, the Obama Administration established the early stage debenture SBIC initiative to encourage additional SBIC investments in startups (up to $150 million in SBIC leverage in FY2012, and up to $200 million in SBIC leverage per fiscal year thereafter until the initiative's $1 billion limit was reached). Early stage debenture SBICs are required to invest at least 50% of their financings in early stage small businesses, defined as small businesses that have never achieved positive cash flow from operations in any fiscal year. In recognition of the higher risk associated with investments in early stage small businesses, the initiative includes "several new regulatory provisions intended to reduce the risk that an early stage SBIC would default on its leverage and to improve SBA's recovery prospects should a default occur." For example, early stage debenture SBICs are required to raise more regulatory capital (at least $20 million) than debenture SBICs (at least $5 million). They are also subject to special distribution rules to require pro rata repayment of SBA leverage when making distributions of profits to their investors. In addition, early stage debenture SBICs are also provided less leverage (up to 100% of regulatory capital, $50 million maximum) than debenture SBICs (up to 200% of regulatory capital, $150 million maximum per SBIC and $225 million for two or more SBICs under common control). On May 1, 2012, the SBA announced its first annual call for venture capital fund managers to submit an application to become a licensed early stage debenture SBIC. Thirty-three venture capital funds submitted preliminary application materials. After these materials were examined and interviews held, the SBA announced on October 23, 2012, that it had issued Green Light letters to six funds, formally inviting them to file license applications. The SBA's second, third, fourth, and fifth annual calls for venture capital fund managers to submit an application to become a licensed early stage debenture SBIC took place on December 18, 2012, February 4, 2014, January 12, 2015, and February 2, 2016, respectively. To date, 5 of the 63 investment funds that have applied to participate in the program have been granted an early stage SBIC license. As of September 30, 2016, the 5 early stage SBICs had raised $246.9 million in private capital, received $78.0 million in SBA-guaranteed leverage, had $105.3 million in outstanding commitments, and invested $160.7 million in 62 small businesses. In FY2016, early stage SBICs invested $66.2 million in 45 small businesses. On September 19, 2016, the SBA published a notice of proposed rulemaking in the Federal Register , which included proposed changes to the early stage SBIC initiative to "make material improvements to the program" and "attract more qualified early stage fund managers." The SBA, at that time, indicated its intention to continue the initiative beyond its initial five-year term. However, the SBA, now under the Trump Administration, stopped accepting new applications for the early stage SBIC initiative in 2017. In addition, on June 11, 2018, the SBA withdrew the September 19, 2016, proposed rule that included provisions designed to encourage qualified SBICs to participate in the initiative. The SBA indicated that it took this action "because very few qualified funds applied to the Early Stage SBIC initiative, the costs were not commensurate with the results, and the comments to the proposed rule did not demonstrate broad support for a permanent Early Stage SBIC program." It is too early to determine the extent to which the SBA's decision to stop accepting new applications for the early stage debenture initiative may affect the share and amount of total SBA financing provided to startups. The SBA has indicated, from the very start of the agency, that assisting small businesses to create and retain jobs is part of its mission. However, the SBA also has a long-established tradition of providing assistance to all qualifying small businesses. With some exceptions, the SBA has generally not taken actions or requested authorization to focus its assistance solely onto those businesses, such as startups, that are judged to be the ones most likely to contribute to job growth or wealth creation. The tradition of providing SBA assistance to all qualified small businesses without regard to their potential for job growth or wealth creation is perhaps understandable given that the tradition aligns with one of the SBA's primary missions, which is to promote free markets--by limiting monopoly and oligarchy formation within all industries. In addition, the tradition of providing assistance to all qualified small businesses has, for the most part, never been challenged by Congress or interested small business organizations. The SBA's recent initiatives to focus increased attention to assisting startups (e.g., the Growth Accelerators initiative and the recently sunset early stage debenture SBIC initiative) are less of a challenge to the SBA's tradition of assisting all qualified small businesses than a recognition of the potential role of startups in job creation and concerns about the pace of job growth during the current economic recovery. For example, the SBA has offered the initiatives as supplements to, rather than replacements of, existing programs. As mentioned previously, the relatively "high risk-high reward" of targeting SBA assistance to startups makes it tempting for some and controversial for others. Most who have participated in these programs report in surveys sponsored by the SBA that the programs were useful. However, determining if the risk of financial losses associated with targeting SBA assistance to startups outweighs the startups' potential for job growth is difficult because the data collected by the SBA concerning these programs' impact on economic activity and job creation are somewhat limited and subject to methodological challenges concerning their validity as reliable performance measures.

The Small Business Administration (SBA) administers several programs to support small businesses, including loan guaranty and venture capital programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion. Congressional interest in these programs, and the SBA's assistance provided to small business startups in particular (defined as new businesses that meet the SBA's criteria as small), has increased in recent years, primarily because these programs are viewed by many as a means to stimulate economic activity and create jobs. Economists generally do not view job creation as a justification for providing federal assistance to small businesses. They argue that in the long term such assistance will likely reallocate jobs within the economy, not increase them. In their view, jobs arise primarily from the size of the labor force, which depends largely on population, demographics, and factors that affect the choice of home versus market production (e.g., the entry of women in the workforce). However, economic theory does suggest that increased federal spending on small business assistance programs may result in additional jobs in the short term. Congressional interest in assistance to business startups is derived primarily from economic research suggesting that startups play a very important role in job creation. That research suggests that business startups create many new jobs, but have a more limited effect on net job creation over time because fewer than half of all startups remain in business after five years. However, that research also suggests that the influence of small business startups on net job creation varies by firm size. Startups with fewer than 20 employees tend to have a negligible effect on net job creation over time whereas startups with 20-499 employees tend to have a positive employment effect, as do surviving younger businesses of all sizes (in operation for one year to five years). This report examines small business startups' experiences with the SBA's management and technical assistance training programs, focusing on Small Business Development Centers (SBDCs), Women Business Centers (WBCs), and SCORE (formerly the Service Corps of Retired Executives); the SBA's 7(a), 504/CDC, and Microloan lending programs; and the SBA's Small Business Investment Company (SBIC) venture capital program. Although data collected by the SBA concerning these programs' impact on economic activity and job creation are somewhat limited and subject to methodological challenges concerning their validity as reliable performance measures, most small business owners who have participated in these programs report in surveys sponsored by the SBA that the programs were useful. Given the data limitations, however, it is difficult to determine the cost effectiveness of these programs. The report also discusses the SBA's growth accelerators initiative, which targets entrepreneurs looking to "start and scale their business" by helping them access "seed capital, mentors, and networking opportunities for customers and partners," and the recently sunset SBIC early stage debenture program, which focused on providing venture capital to startups.

In March 2010, Congress passed P.L. 111-148 , the Patient Protection and Affordable Care Act of 2010 (PPACA) and amended it by passing P.L. 111-152 , the Health Care and Education Reconciliation Act of 2010 (HCERA). Subsequently, lawsuits were filed in multiple courts challenging various aspects of the new law. Many of these cases made their way through the judicial system and three petitions for certiorari were ultimately granted by the United States Supreme Court in one of these cases. The Court ultimately decided in favor of the law in June 2012. This collection of resources is intended to assist in responding to a broad range of research questions and requests for assistance related to the Affordable Care Act litigation before the Supreme Court. On November 14, 2011, the Supreme Court granted three petitions for certiorari to decide issues raised by the Affordable Care Act cases: (1) National Federation of Independent Business v. Sebelius , No. 11-393; (2) Florida v Department of Human Services , No. 11-400; and (3) Department of Health and Human Services v. Florida , No. 11-398. Please note, the Court agreed to hear four separate questions raised by the three petitions. Oral arguments for the cases took place March 26-28, 2012. On June 28, 2012, the Court issued its decision in the case, National Federation of Independent Business et al. v. Sebelius. Below are links to documents related to these cases before the Court. Many of the documents are available on the Supreme Court's Patient Protection and Affordable Care Act website at http://www.supremecourt.gov/docket/PPAACA.aspx . For further information from the Court, the public information officer can be reached at [phone number scrubbed]. The questions for the Court raised by this petition are whether Congress has the power under Article I of the Constitution to enact the minimum coverage provision of PPACA and whether the challenges to the minimum coverage provision itself are barred by the Anti-Injunction Act. Docket No. 11-398 http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/11-398.htm Petition for a Writ of Certiorari http://www.supremecourt.gov/docket/PDFs/11-398%20Cert%20Petititon.pdf Appendix to Petition http://www.supremecourt.gov/docket/PDFs/11-398%20appendix.pdf Brief of Private Respondents http://www.supremecourt.gov/docket/PDFs/11-398%20BIO%20Private.pdf Brief of State Respondents http://www.supremecourt.gov/docket/PDFs/11-398%20BIO%20States.pdf Reply Brief http://www.supremecourt.gov/docket/PDFs/11-398%20Reply.pdfAmicus Briefs (as compiled by the American Bar Association ) Anti-Injunction Ac t-- http://www.americanbar.org/publications/preview_home/11-398_Anti-InjuntionAct.html Minimum Coverage Provisio n-- http://www.americanbar.org/publications/preview_home/11-398.htmlTranscript of Oral Arguments March 26, 2012 -- http://www.supremecourt.gov/oral_arguments/argument_transcripts/11-398-Monday.pdf March 27, 2012-- http://www.supremecourt.gov/oral_arguments/argument_transcripts/11-398-Tuesday.pdfSlip Opinion http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf Florida v. United States HHS , 648 F.3d 1235 (11 th Cir. Fla. 2011) http://www.uscourts.gov/uscourts/courts/ca11/201111021.pdf Order Granting Summary Judgment, Florida v. United States HHS , 780 F. Supp. 2d 1256 (N.D. Fla. 2011) http://www.justice.gov/healthcare/docs/fl-sj-ruling.pdf The questions for the Court in this petition concern the severability of the minimum coverage provision from the rest of the Affordable Care Act if the minimum coverage provision is found to be unconstitutional. Docket No. 393 http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/11-393.htm Petition for Writ of Certiorari http://www.supremecourt.gov/docket/PDFs/11-393%20Cert%20Petition.pdf Appendix to Petition http://www.supremecourt.gov/docket/PDFs/11-393%20Appendix.pdf Brief in Opposition http://www.supremecourt.gov/docket/PDFs/11-393%20BIO.pdfAmicus Briefs (as compiled by the American Bar Association) Severability -- http://www.americanbar.org/publications/preview_home/11-393.htmlTranscript of Oral Arguments March 28, 2012 -- http://www.supremecourt.gov/oral_arguments/argument_transcripts/11-393.pdfSlip Opinion http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf The questions for the Court in this petition are limited to whether the individual mandate can be severed from the act, and whether the changes to Medicaid in the Affordable Care Act unconstitutionally coerce the states. Docket No. 11-400 http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/11-400.htm Petition for Writ of Certiorari http://www.supremecourt.gov/docket/PDFs/11-400%20Cert%20Petition.pdf Brief in Opposition http://www.supremecourt.gov/docket/PDFs/11-400%20BIO.pdf Reply Brief http://www.supremecourt.gov/docket/PDFs/11-400%20Reply.pdfAmicus Briefs (as compiled by the American Bar Association) Severability -- http://www.americanbar.org/publications/preview_home/11-393.html Medicaid -- http://www.americanbar.org/publications/preview_home/11-400_Medicaid.htmlTranscript of Oral Arguments March 28, 2012 -- http://www.supremecourt.gov/oral_arguments/argument_transcripts/11-400.pdfSlip Opinion http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf In addition to the cases referenced above, information is provided on three other cases in which a petition for a writ of certiorari has been filed and that contain notable legal arguments related to the Affordable Care Act cases. In this petition for certiorari, the petitioners present arguments on whether Congress had the power under Article I of the Constitution to enact the minimum coverage provision of PPACA. Docket No. 11-117 http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/11-117.htm Petition for Writ of Certiorari http://www.supremecourt.gov/docket/PDFs/11-117%20Cert%20Petition.pdf Brief in Opposition http://www.supremecourt.gov/docket/PDFs/11-117%20BIO.pdf Reply Brief http://www.supremecourt.gov/docket/PDFs/11-117%20%20Reply.pdf Opinion, Thomas More Law Ctr. v. Obama , 651 F.3d 529 (6 th Cir. Mich. 2011) http://www.ca6.uscourts.gov/opinions.pdf/11a0168p-06.pdf Order Denying Plaintiffs' Motion for Injunction and Dismissing Plaintiffs' First and Second Claims for Relief [Doc #7], Thomas More Law Ctr. v. Obama , 720 F. Supp. 2d 882 (E.D. Mich. 2010) http://www.mied.uscourts.gov/News/Docs/09714485866.pdf In this petition for certiorari, the petitioners present arguments on whether a state has standing to challenge the minimum coverage provision, whether Congress had the power under Article I of the Constitution to enact the minimum coverage provision, and whether the minimum coverage provision is severable from the rest of the Affordable Care Act. Docket No. 11-420 http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/11-420.htm Petition for Writ of Certiorari http://www.supremecourt.gov/docket/PDFs/11-420%20Cert%20Petition.pdf Brief in Opposition http://www.supremecourt.gov/docket/PDFs/11-420%20BIO.pdf Opinion, Virginia ex rel. Cuccinelli v. Sebelius , 656 F.3d 253 (4 th Cir. Va. 2011) http://pacer.ca4.uscourts.gov/opinion.pdf/111057.P.pdf Memorandum Opinion (Cross Motions for Summary Judgment), Commonwealth ex rel. Cuccinelli v. Sebelius , 728 F. Supp. 2d 768 (E.D. Va. 2010) http://www.justice.gov/healthcare/docs/cucinelli-v-sebelius-memo-opinion-summary-judgment.pdf In this petition for certiorari, the petitioners present arguments on whether the challenges to the minimum coverage provision itself are barred by the Anti-Injunction Act and whether Congress has the power under Article I of the Constitution to enact the minimum coverage provision of PPACA. Docket No. 11-438 http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/11-438.htm Petition for a Writ of Certiorari http://www.supremecourt.gov/docket/PDFs/11-438%20Cert%20Petition.pdf Brief in Opposition http://www.supremecourt.gov/docket/PDFs/11-438%20BIO.pdf Reply Brief http://www.supremecourt.gov/docket/PDFs/11-438%20Reply.pdf Opinion , Liberty Univ., Inc. v. Geithner , 2011 U.S. App. LEXIS 18618, 2011 WL 3962915 (4 th Cir. Va. 2011) http://www.justice.gov/healthcare/docs/liberty-university-4th-circuit-opinion.pdf Memorandum Opinion, Liberty Univ., Inc. v. Geithner , 753 F. Supp. 2d 611 (W.D. Va. 2010) http://www.vawd.uscourts.gov/OPINIONS/MOON/LIBERTYUNIVERSITYVGEITHNER.PDF The following are selected links to statutes, laws, and cases that are relevant to the issues before the Court. The Constitution of the United States of America: Analysis and Interpretation http://crs.gov/analysis/Pages/constitutionannotated.aspx?source=QuickLinks Also known as "The Constitution Annotated" or "CONAN", this resource contains legal analysis and interpretation of the United States Constitution, based primarily on Supreme Court case law. It is especially useful when researching the constitutional implications of a specific issue or topic. Some of the commonly referenced constitutional provisions related to PPACA are below: Constitution of the United States, Article I, Section 8, Clause 1. The "Power to Tax and Spend Clause" The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States. Constitution of the United States, Article I, Section 8, Clause 3. The "Commerce Clause" The Congress shall have Power *** To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes. Constitution of the United States, Article I, Section 8, Clause 18. The "Necessary and Proper Clause" The Congress shall have Power *** To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by the Constitution in the Government of the United States, or in any Department or Officer thereof. Constitution of the United States, Article VI, Clause 2 . The " Supremacy Clause " This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby; any Thing in the Constitution or Laws of any State to the Contrary notwithstanding. Compilation of the Patient Protection and Affordable Care Act http://housedocs.house.gov/energycommerce/ppacacon.pdf Compiled by the Office of Legislative Counsel, this committee print contains the text of P.L. 111-148 , the Patient Protection and Affordable Care Act (PPACA) consolidated with the amendments made by title X of P.L. 111-152 , the Health Care and Education Reconciliation Act of 2010 (HCERA). Links to the text of the codified version of two particular PPACA provisions at issue in the litigation are provided below: Maintenance of Minimum Essential Coverage , 26 U.S.C. SS5000A. http://www.gpo.gov/fdsys/pkg/USCODE-2010-title26/pdf/USCODE-2010-title26-subtitleD-chap48.pdf Enacted and amended as part of the health care reform legislation, this section of PPACA deals with minimum coverage. State Plans for Medical Assistance , 42 U.S.C. SS1396a http://www.gpo.gov/fdsys/pkg/USCODE-2010-title42/pdf/USCODE-2010-title42-chap7-subchapXIX-sec1396a.pdf PPACA amended existing laws related to the Medicaid program to require expanded coverage. Anti-Injunction Act , 26 U.S.C. SS7421 http://www.gpo.gov/fdsys/pkg/USCODE-2010-title26/pdf/USCODE-2010-title26-subtitleF-chap76-subchapB-sec7421.pdf Enacted in 1954, this act prohibits a court from hearing a case to prevent the assessment or collection of a tax (except in certain circumstances). Below are three cases often cited in the discussion of commerce clause issues. United States v. Lopez , 514 U.S. 549 (U.S. 1995) http://www.supremecourt.gov/opinions/boundvolumes/514bv.pdf In this Supreme Court case, a conviction under the Guns Free School Zone Act was overturned. The Court held the act was beyond the power of Congress under the commerce clause. United States v. Morrison , 529 U.S. 598 (U.S. 2000) http://www.supremecourt.gov/opinions/boundvolumes/529bv.pdf In this case, the Court held Congress lacked the authority to enact a statute because it did not involve commercial activity. Gonzalez v. Raich , 545 U.S. 1 (U.S. 2005) http://www.supremecourt.gov/opinions/boundvolumes/545bv.pdf The Court examined whether Congress could prohibit the cultivation of marijuana for personal, medicinal use, and held that such regulation was permissible under the Commerce Clause because these activities, when viewed in the aggregate, had a substantial effect on the interstate market for marijuana. Below are two cases cited in the discussion of the expansion of Medicaid coverage. South Dakota v. Dole , 483 U.S. 203 (U.S. 1987) http://www.law.cornell.edu/supremecourt/text/483/203 In this case, the Court held that the general welfare provision of the Taxing and Spending Clause to the Constitution gave Congress the power to condition federal funds on a state's establishment of a minimum drinking age. Garcia v. San Antonio Metro. Transit Auth ., 469 U.S. 528 (U.S. 1985) http://www.law.cornell.edu/supremecourt/text/469/528 In this case, the Court held that a public mass transit authority entity was not entitled to immunity from federal wage and overtime standards. In researching these cases, those less accustomed with court proceedings may encounter unfamiliar terms. Below are definitions, taken from Black's Law Dictionary, Ninth Edition , for some common words used in litigation. Listed below are existing CRS products on the Affordable Care Act litigation and related policy issues. Additional titles are available on the CRS.gov website, http://www.crs.gov , by searching or browsing the Health Care Issues Before Congress. CRS Report R40725, Requiring Individuals to Obtain Health Insurance: A Constitutional Analysis , by Jennifer Staman et al. CRS Report R40846, Health Care: Constitutional Rights and Legislative Powers , by [author name scrubbed]. CRS Report R42367, Medicaid and Federal Grant Conditions After NFIB v. Sebelius: Constitutional Issues and Analysis , by [author name scrubbed]. CRS Report RL34708, Religious Exemptions for Mandatory Health Care Programs: A Legal Analysis , by Cynthia Brougher. CRS Report R41664, ACA: A Brief Overview of the Law, Implementation, and Legal Challenges , coordinated by [author name scrubbed]. CRS Report R41331, Individual Mandate and Related Information Requirements under ACA , by [author name scrubbed] and [author name scrubbed]. CRS Report R41159, Summary of Potential Employer Penalties Under the Patient Protection and Affordable Care Act (PPACA) , by [author name scrubbed]. CRS Report R41210, Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in ACA: Summary and Timeline , by [author name scrubbed] et al. CRS Report R42431, Upcoming Rules Pursuant to the Patient Protection and Affordable Care Act: Fall 2011 Unified Agenda , by [author name scrubbed] and [author name scrubbed].

In March 2010, Congress passed P.L. 111-148, the Patient Protection and Affordable Care Act of 2010 (PPACA), and amended it by passing P.L. 111-152, the Health Care and Education Reconciliation Act of 2010 (HCERA). Subsequently, lawsuits were filed in multiple courts challenging various aspects of the new law. Many of these cases were heard in the district courts and a few were appealed to appellate courts. In November 2011, the Supreme Court granted three petitions for certiorari in one of these cases. On June 28, 2012, the Court issued its decision in the case, National Federation of Independent Business et al. v. Sebelius. This report contains resources for retrieving background information and selected legal material relevant to these cases. It also includes information on CRS experts and products to assist in understanding the legal and policy issues related to the act. This report will be updated as needed.

Key issues facing U.S. policy makers and members of Congress when considering U.S. security assistance in the context of U.S. policy toward Lebanon include: Assessing the effectiveness of U.S. assistance programs --Identifying the most urgent capabilities that are still lacking among the LAF and ISF and deciding whether to tailor pending assistance programs to create or improve them. Understanding the key political and organizational obstacles to the further expansion or improvement of Lebanon's security forces and developing strategies to overcome them. Assessing overall U.S. policy toward Lebanon --Prioritizing U.S. policy objectives in Lebanon including building state institutions, countering Sunni extremism, deterring Hezbollah, securing Lebanon's borders, limiting the influence of external actors on Lebanon's domestic political process, and mitigating the risk of instability in the Levant. Managing relations with other external actors --Preventing destabilizing actions by regional parties that could renew conflict. Limiting the threats against U.S. allies in the region, particularly Israel. Recognizing and seizing opportunities for the United States and its allies to influence the decisions of regional actors in support of U.S. objectives in Lebanon and the Levant. In 2005, after the Cedar Revolution in Lebanon prompted Syria to withdraw its occupation force and brought an anti-Syrian, pro-Western government to power, the United States increased its assistance to Lebanon. After the 2006 war between Israel and Hezbollah, the United States refocused its policy toward building state institutions including the Lebanese Armed Forces (LAF) and the Internal Security Forces (ISF) to enable them to fulfill the principals of U.N. Security Council resolutions. To that end, the Bush Administration requested and Congress appropriated an expanded amount of security assistance to the LAF and ISF. The Obama Administration and some members of the 111th Congress have supported the continuation of this program. They hope that continued support will help secure Lebanon's borders against smuggling and, in particular, against the flow of weapons to Hezbollah and other non-state actors. Over the long term, U.S. officials hope that building the security apparatus of the Lebanese state will improve internal stability and public confidence in the LAF and ISF, creating political space for the Lebanese government to address more complex, politically sensitive issues ranging from political reform to developing a national defense strategy. The Bush Administration's 2006 request for increased U.S. security assistance to Lebanon marked the third time in the last 25 years that the United States sought to expand military cooperation with the Lebanese government. In the early 1980s, the United States provided between $145 and $190 million in grants and loans to the LAF, primarily for training and equipment during the civil war. In the early 1990s, at the end of Lebanon's civil war, the United States again provided military aid in the form of non-lethal equipment (such as armored personnel carriers and transport helicopters) through the U.S. Department of Defense's sale of Excess Defense Articles (EDA). For the first time since 1984, President Bush requested Foreign Military Financing (FMF) grants to Lebanon in the FY2006 foreign affairs budget. Originally, his administration sought approximately $1.0 million in FMF for FY2006 and $4.8 million for FY2007 to help modernize the small and poorly equipped LAF following Syria's withdrawal of its 15,000-person occupation force in 2005. Then, the summer 2006 war between Israel and Hezbollah spurred Western donors to increase their assistance to the LAF. Drawing from multiple budget accounts, the Bush Administration ultimately reprogrammed an estimated $42 million to provide spare parts, technical training, and new equipment for the LAF. The FY2007 Emergency Supplemental Appropriations Act ( P.L. 110-28 ) included over $220 million in FMF for Lebanon, a significant increase from the previous year. The request also included $60 million in International Narcotics Control and Law Enforcement assistance (INCLE) to train and equip Lebanon's ISF. In addition, Section 1206 assistance to Lebanon increased in FY2007 to $30.6 million from the FY2006 level of $10.6 million (See " U.S. Defense Department-Administered Programs " below). According to the U.S. State Department, U.S. security assistance would: promote Lebanese control over southern Lebanon and Palestinian refugee camps to prevent them from being used as bases to attack Israel. The U.S. government's active military-to-military programs enhance the professionalism of the Lebanese Armed Forces, reinforcing the concept of Lebanese civilian control. To foster peace and security, the United States intends to build upon welcome and unprecedented Lebanese calls to control the influx of weapons. The Obama Administration has continued to support the long-standing goals of independence and stability for Lebanon through assistance to the LAF and ISF in the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) and in the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ). The FY2011 request also reflects this commitment. The mandate of the LAF includes defending Lebanon and its citizens against external aggression, maintaining internal stability and security, confronting threats against the country's vital interests, engaging in social development activities, and undertaking relief operations in coordination with public and humanitarian institutions. U.S. assistance to the LAF is based on a 5-year (2010-2014), $1.1 billion plan to modernize and equip it. To professionalize the LAF, the U.S. government will continue a comprehensive training program designed to provide basic and advanced skills to the LAF and to shape it into a leaner, more efficient force. FMF is the largest program through which the United States supports the LAF. According to the State Department, FMF supports LAF implementation of U.N. Security Council Resolution 1701 which, among other things, calls for the establishment of a weapons-free zone south of the Litani River and an end to weapons smuggling across the Lebanon-Syria border. Another primary objective of FMF is to support the Lebanese government in its fight against terrorist groups. Since 2006, FMF has been used to provide tires for tactical vehicles, spare parts for helicopters, small arms, small arms ammunition, and to improve the LAF's communications system. FY2009 funds were used to deliver more sophisticated equipment to the LAF. In April 2009, one Cessna Caravan armed with Hellfire missile was provided to the LAF to bolster close air support and surveillance capabilities. The LAF has requested two additional Caravans. Twelve Raven tactical unmanned aerial vehicles (UAVs) were delivered to the LAF in May 2009 and are currently being used to deter rocket launches from south Lebanon and monitor areas of militant activity. Ten M60 tanks also arrived in May 2009 via a third-party transfer from Jordan. The tanks are intended to fill a gap in the LAF's fire support capabilities, with a plan to upgrade and transfer an additional 56 tanks once donor support is solicited. The LAF has only recently acquired limited secure communications capability and is attempting to gradually expand this capability to all sectors and levels of the LAF. The LAF currently relies on obsolete systems for radio communications between its headquarters and units in the field. The tactical units of the LAF do not have communications systems compatible with other agencies of the government and the lack of reliable capability and interoperability with other governmental agencies drives most commanders and staff officers to use land line or cell phones as their primary means of communication. The purchase of new tactical communications equipment is intended to address these shortfalls. After two years of preparation, FY2009 supplemental funds will allow the launch of a CENTCOM-directed comprehensive training program that over the course of several years will provide basic and advanced skills, streamline the LAF hierarchy, and serve as an important first step toward comprehensive security sector reform in Lebanon. Supplemental funding will also fund trainers, basic training equipment, and supplies to support the program. The FY2010 FMF spending plan, as submitted to Congress, includes $10 million for sustainment and repair of current equipment, $14 million for acquisition of air, ground, and naval systems, $36 million for personal equipment, weapons, and ammunition and $40 million for close air support. The plan includes light attack/armed reconnaissance aircraft (LAAR) that, according to the Defense Department, "will provide the LAF with the capabilities to perform border security aerial surveillance and target acquisition." This platform will be able to carry light support weapons and capable of independent finding, fixing, tracking, and engaging targets. The International Military and Education Training (IMET) program funds military education and training activities on a grant basis to foreign military and civilian officials from allied and friendly nations. According to the Defense Security Cooperation Agency, IMET training in Lebanon is designed to reduce sectarianism in the LAF and develop the force as a unifying national institution. U.S. Professional Military Education (PME) courses help foster one-on-one relationships with U.S. counterparts to improve interoperability, access, coordination, cultural sensitivity, and mutual understanding. In 2005, Congress provided the Department of Defense (DOD) with authority and funds for a major DOD-run train and equip program. Established by Section 1206 of the National Defense Authorization Act ( P.L. 109-163 , adopted January 6, 2006) as a pilot program, this authority allows DOD to transfer funds to partner governments to train and equip foreign militaries. According to the Department of Defense, traditional security assistance can take three to four years from conception to execution. Section 1206 responds to urgent and emergent threats and opportunities in six months or less. In Lebanon, Section 1206 funds have been used to move rapidly vehicle spare parts, ammunition, and other basic supplies to the LAF. In particular, equipment provided under Section 1206 was used to restock the LAF arsenal with basic ammunition after the 2007 siege at Nahr al Bared Palestinian refugee camp and, more recently, to begin to build the LAF's first secure communication system. The Internal Security Forces (ISF) is the primary police agency in Lebanon and is responsible for law enforcement, physical security, crime prevention, and investigations. Much like the LAF, the ISF was neglected under Syrian occupation. In 2007, the Department of State's Bureau of International Narcotics and Law Enforcement Affairs (INL) launched an assistance program for the ISF to address these weaknesses. The program is funded through a combination of Section 1207 and INCLE accounts. Specifically, the program is designed to increase the operational capacity of the force to combat crime, prevent and respond to terror attacks, monitor Lebanon's borders, and combat the infiltration of weapons and terrorists into Lebanon as called for in United Nations Security Council resolutions 1559 and 1701. There are four primary components of INL support to the ISF: training, equipment and vehicles, community policing assistance, and communications. As of August 2010, INL has trained more than 4,300 ISF police, including 260 ISF trainers and more than 200 supervisors, in its 10 week basic training and other advanced courses. Additional specialized training has been provided in narcotics investigation, Intellectual Property Rights (IPR) protection, and executive leadership. INL funds are also used to refurbish ISF training facilities. INL has provided non-lethal equipment including 4000 sets of basic duty gear, 3000 sets of riot control gear, 480 police cars, 60 police SUVs, 35 handheld radios, 20 computers, 20 new and 24 repaired Harley Davidson motorcycles, and refurbished 21 Armored Personnel Vehicles. To prepare the ISF for a new security role in the Nahr al Bared refugee camp, INL began an extensive community policing training and assistance program in FY2010. Assistance includes training of ISF officers who will serve in the camp and assistance to support the adoption of a community policing strategy. INL has also begun construction of an ISF police station near the camp. INL is developing a program to provide a secure, nationwide command, control and communications system for the ISF. The program will be funded with FY2011 funds. U.S. assistance to the LAF and ISF has improved the capability of those forces to provide for Lebanon's internal security needs (See " Recent LAF Accomplishments " and " Recent ISF Accomplishments " below), but broader political questions are unanswered about the purpose and potential limits of U.S. assistance. Some Lebanese leaders continue to question the appropriateness of U.S. and other international security assistance and characterize LAF/ISF cooperation with external parties as an infringement on Lebanese sovereignty. Statements from Lebanese leaders across the political spectrum suggest that most perceive Israel to be the primary external threat to Lebanon's security, even as some who hold this view simultaneously argue that Hezbollah's weapons and Syrian and Iranian support for Hezbollah are significant if not comparable transnational threats. To the extent that U.S. security assistance is limited to training and items designed to improve Lebanese government capability to contain and potentially disarm Hezbollah and other internal threats, they may become incompatible with the evolving threat perceptions and political intentions of Lebanon's political leadership. Events continue to suggest that Lebanese leaders are prepared to seek security assistance and weapons from non-U.S. sources to meet their perceived needs. On August 3, 2010, the LAF opened fire on an Israeli Defense Force (IDF) unit engaged in routine brush-clearing maintenance along the Blue Line, alleging that it had crossed over into Lebanese territory. Two Lebanese soldiers, a journalist, and an Israeli officer were killed in the confrontation. Soon after the incident, UNIFIL issued a report confirming that the IDF had not been in Lebanese territory. Although incidents along the Blue Line are not uncommon, UNIFIL called this incident the "most serious" along the Israeli-Lebanese border since 2006. In response, Representative Nita Lowey, chair of the State Foreign Operations Subcommittee of the House Committee on Appropriations placed a hold on the FY2010 $100 million FMF appropriation for Lebanon citing the need to "determine whether equipment that the United States provided to the Lebanese Armed Forces was used against our ally, Israel." Prior to the incident on August 3, Representative Howard Berman, chair of the House Foreign Affairs Committee, also placed a hold on the FY2010 assistance, pending a better understanding from the State Department about the strategy for U.S. assistance to Lebanon and assurances that the LAF is a responsible actor. Other members also publicly expressed concerns. The hold was lifted in November 2010 after congressional consultations with the State Department. It is unclear how current concerns will impact congressional consideration of the Administration's FY2011 request for Lebanon. U.S. State Department and Defense Department officials praise both the LAF and ISF for their performance and laud both forces' End-Use Monitoring (EUM) record, but larger questions remain about long-term strategy and the overall effectiveness of U.S. assistance in meeting challenging U.S. policy objectives. LAF Ranger Regiment and Marine Commandos secured downtown Beirut during the February 14 commemoration of the 5 th anniversary of the assassination of former Prime Minister Rafiq Hariri. In January and February 2010, LAF Marine Commandoes responded to the crash of Ethiopian Airlines flight ET 409, recovering 80 victims in addition to the black box flight recorder. In July 2009, the LAF arrested a Syrian citizen trying to smuggle out of Lebanon several people wanted in connection to attacks against the LAF in Tripoli. In June 2009, the LAF thwarted an attempt to drive a vehicle-borne improvised explosive device into the Ayn al Hilweh refugee camp in Sidon. A Fatah al Islam member was arrested in connection with the incident. In April 2009, in response to an ambush of the 8 th Brigade, the Ranger Regiment conducted operations in the Bekaa Valley from Riyak Airbase north to the Syrian border, which resulted in the arrest of numerous wanted men, in addition to the seizure and destruction of illicit crops. The Lebanese government complies with end-use, security, and retransfer obligations concerning military equipment and training. Equipment and training are subject to regular EUM by the U.S. Embassy's Office of Defense Cooperation (ODC), including visual inspections of LAF depots, serial number checks for equipment, and close monitoring of in-country, U.S.-sponsored training. According the Department of State, the Lebanese government has readily agreed to extensive EUM procedures at the request of the U.S. government for sensitive equipment such as night vision devices and sniper rifles. According to the State Department, the government of Lebanon is a "model" in end-use monitoring cooperation. Candidates for U.S.-sponsored training are subject to the vetting process for human rights abuses specified in the Foreign Assistance Act of 1961. Recent ISF accomplishments include: Public confidence in the ISF as a non-sectarian institution committed to a united, stable Lebanon increased by 17% from 2008 to 2009. Unlike the LAF, the ISF has not historically had the reputation as a cross-sectarian, national institution. The ISF has expanded its area of operation in the traditionally Hezbollah-controlled areas of South Beirut and the Bekaa Valley. During the June, 2009 elections, the ISF helped maintain security in Lebanon and facilitated a safe and secure election environment. End use monitoring of INL provided equipment shows that the equipment is being properly used and maintained by the ISF. INL requires EUM agreements for all equipment delivered and facilities refurbished under the INCLE program. Monitoring is conducted by U.S. Embassy Beirut. All information is compiled into INL's annual end-use monitoring report which includes information on location, use, condition, and program impact of the equipment provided. The reports also contain information on any problems encountered during the monitoring period and any program changes implemented. INL secures relevant binding commitments from the government of Lebanon through Letters of Agreement, setting forth extensive end-use, retransfer, and human rights related commitments, which the Lebanese government undertakes as a condition for receiving assistance. All ISF candidates selected for U.S. sponsored training are first vetted for human rights abuses as specified in the Foreign Assistance Act of 1961 as well as for connections to Foreign Terrorist Organizations (FTOs) through a process coordinated by the Terrorist Screening Center. Current U.S. policy toward Lebanon and U.S. assistance to the LAF has been built around the implementation of United Nations Security Council resolutions, particularly UNSCR 1701, adopted on August 11, 2006. Section 14 and other language in the resolution that bans the delivery of weapons to "any entity or individual" in Lebanon, except the Lebanese Army, have been interpreted as a call for Hezbollah to disarm and a mandate for the Lebanese government to prevent the flow of weapons to Hezbollah. Over the long term, U.S. officials hope that building the security apparatus of the Lebanese state will improve internal stability and public confidence in the LAF and ISF, creating political space for the Lebanese government to address more complex, politically-sensitive issues ranging from political reform to developing a national defense strategy. Advocates of U.S. assistance to the LAF/ISF have argued that rooting out Sunni extremism, like in the case of Nahr al Bared, along with other advancements in counterterrorism and counternarcotics are important measures of success for assistance programs. They also argue that assistance to the LAF and ISF is symbolic as well as functional; it demonstrates the U.S. commitment to the Lebanon and to and countering the influence of Iran and Syria. Some of these advocates also argue that cutting off U.S. assistance would do greater harm to U.S. interests and greater harm to Israel's security, since it would allow Syria and Iran to fill the vacuum left by the United States. The skirmish between the LAF and IDF on August 3, 2010 raised fundamental questions about U.S. strategy in Lebanon. On one hand, the United States is committed to building state institutions in Lebanon, including enabling the LAF to extend its control over all areas of the state and take up the mantle of national defense from Hezbollah, which has historically claimed it. The LAF's willingness to engage the Israeli Defense Forces (IDF) indicates that it is assuming more responsibility along its shared border with Israel but also exposes what critics have identified as an inherent tension in current U.S. policy--the U.S. aims to build a force strong enough to provide national defense for Lebanon, but the LAF, and arguably most Lebanese, view Israel as the greatest potential threat to Lebanese sovereignty. The LAF enjoys a positive image among a wide spectrum of Lebanese citizens. Observers say that most Lebanese, regardless of their affiliation, perceive the army as defending the country against foreign elements, particularly Israel. Many Lebanese view the LAF as the only national institution left in the country. While the United States and other members of the international community have trained and equipped the LAF, the Lebanese government has worked to define the role of the LAF and other militias through a series of discussions on national defense policy known as the National Dialogue. Following the 2006 war between Hezbollah and Israel, and the months of political gridlock that followed, Hezbollah claimed victory over Israel, and gained popular support through its relief and reconstruction efforts following the war. If a goal of U.S. policy is to increase the capacity of the LAF to such a size that it could compel Hezbollah to give up its weapons, then the LAF would first need to pass the political test of convincing the Lebanese that it could credibly defend the country against regional threats. This political reality raises questions about whether U.S. security assistance to the LAF is consistent with expressed U.S. policy goals, and whether U.S. policy fully considers the political position of the Lebanese and their elected leaders on issues of national defense. U.S. policy toward Lebanon has been further complicated by the fact that Lebanon's political process is now intensely focused on Hezbollah's future role in the country's political system and security sector. Hezbollah politicians won 10 seats out of 128 in parliament in the 2009 national elections, and Hezbollah currently controls the Agriculture and Administrative Reform ministries within Lebanon's cabinet. This reality has called into question how Hezbollah's growing influence in the Lebanese government does or does not extend its influence in the day-to-day operation of government institutions, including the LAF. Some critics of U.S. assistance, including the American Israel Public Affairs Committee (AIPAC), have alleged that the LAF and even UNIFIL have "allowed" Hezbollah to restock its arsenal since 2006 in violation of 1701. These same critics also might argue that the LAF and Hezbollah are, to a certain degree, natural allies, bound by a common threat perception and a regional outlook that is not shared by the United States. Recently, Israeli media sources reported that Israel was launching a campaign to end U.S. support for the LAF. Israel has, at times, opposed the transfer of certain equipment and weapons to the LAF based on concerns that the equipment could fall into the hands of Hezbollah or adversely affect its Qualitative Military Edge (QME). U.S. officials have repeatedly expressed their commitment to Israel's QME when discussing U.S. assistance to the LAF. U.S. officials have repeatedly stated that U.S. assistance to the LAF is not intended to enable the force to militarily confront Hezbollah. Rather, U.S. assistance to the LAF and ISF are part of a larger assistance package designed to strengthen the government in an effort to create the political space necessary for Lebanon to address the question of Hezbollah's weapons in the context of a national defense strategy. At present, however, clear solutions to the challenges that Hezbollah poses to the governments of Lebanon, Israel, and the United States are not evident. Administration reports state that Hezbollah has rearmed and expanded its arsenal in defiance of United Nations Security Council resolutions and in spite of international efforts to prevent the smuggling of weaponry from Iran and Syria into Lebanon. Lebanese border and maritime security capabilities remain nascent, and longstanding political conflicts continue to prevent the clear delineation of boundaries between Lebanon, Syria, and Israel. Administration reports state that Iran continues to provide Hezbollah with weapons, training, and financing, thereby sustaining the organization's ability to field an effective military force that threatens Israel's security and the sovereignty of the Lebanese government. Hezbollah's electoral success in the 2009 national elections and its seats in Lebanon's cabinet complicate U.S. and other international efforts to engage with Beirut on security issues and a number of key reform questions. Lebanon's domestic political environment remains fractured by sectarian and political rivalries and its leaders remain at an impasse with regard to the overarching questions of the country's security needs and the future of Hezbollah's weapons.

The United States has provided security assistance to Lebanon in various forms since the 1980s, and the program has expanded considerably in recent years. Since fiscal year 2007, the United States has provided more than $700 million in security assistance to the Lebanese Armed Forces (LAF) and Internal Security Forces (ISF) to equip those forces to combat terrorism and secure Lebanon's borders against weapons smuggling to Hezbollah and other armed groups. U.S. security assistance is part of a broader assistance program designed to foster a stable, independent Lebanese government. Primary components of the assistance program include: More than $490 million in Foreign Military Financing (FMF) designed to support the LAF's implementation of United Nations Security Council resolutions. More than $6 million in International Military and Education Training (IMET) training to reduce sectarianism in the LAF and develop the force as a unifying national institution. More than $117 million in Section 1206 funds to move rapidly vehicle spare parts, ammunition, and other basic supplies to the LAF. More than $100 million in support for the ISF for training, equipment and vehicles, community policing assistance, and communications. In 2005, after the Cedar Revolution in Lebanon prompted Syria to withdraw its occupation force and brought an anti-Syrian, pro-Western government to power, the United States increased its assistance to Lebanon. After the 2006 war between Israel and Hezbollah, the United States refocused its policy toward building state security forces to enable them to assert control over the entire territory of the country and implement U.N. Security Council resolutions. To that end, the Bush Administration requested and Congress appropriated an expanded program of security assistance. The Obama Administration has maintained this commitment, requesting for FY2011 more than $132 million for the LAF and ISF. For Congress, there are broader political questions about the purpose and potential limits of U.S. assistance to Lebanon. Some lawmakers are concerned that U.S.-provided equipment will be channeled to Hezbollah, while others suggest that it could be used by the LAF against Israel. At the same time, U.S. leaders and some members of Congress have questioned whether U.S. policy fully considers the political position of the Lebanese and their elected leaders on issues of national defense. On August 3, 2010, the LAF opened fire on an Israeli Defense Force (IDF) unit engaged in routine maintenance along the Blue Line, alleging that it had crossed into Lebanese territory. Two Lebanese soldiers, a journalist, and an Israeli officer were killed. In response, Representative Nita Lowey placed a hold on the FY2010 $100 million FMF appropriation for Lebanon citing the need to "determine whether equipment that the United States provided to the Lebanese Armed Forces was used against our ally, Israel." The hold was lifted in November after consultations with the State Department. On January 13, 2011, Hezbollah and its opposition allies withdrew from the Lebanese government, forcing its collapse. It is unclear how these developments will impact congressional consideration of the Administration's FY2011 request for Lebanon. See also CRS Report R40054, Lebanon: Background and U.S. Relations, by [author name scrubbed].

97-291 -- NAFTA: Related Environmental Issues and Initiatives Updated September 28, 2004 Environmental issues emerged early in NAFTA negotiations, and linkages between trade and environmental issues were reflected inthe outcome of these negotiations more so than in any previous trade talks. While not a new issue, the question ofwhether acountry's stricter environmental measures could be found to pose non-tariff trade barriers received an unprecedentedlevel of attentionduring the NAFTA debate. Additionally, the question was raised whether a country's weaker environmentalprotection measures ortheir ineffective enforcement would create a competitive advantage and provide an added incentive for businessesto relocateproduction to the least regulated country. A related concern was that expected NAFTA-driven industrialization andpopulation growthin the U.S.-Mexico border region would worsen the severe pollution problems already present. Although tradeofficials argued thatenvironment was not a customary trade matter and that NAFTA talks were not the best forum for resolving theseissues, the level ofconcern over environmental issues in Congress prompted NAFTA negotiators to respond to them. Ultimately, the NAFTA parties included language to conditionally protect a party's stricter environmental,health, and safetystandards for products and produce (provided that, among other things, such measures are scientifically based). NAFTA also includeshortatory language to discourage parties from lowering standards to encourage investment. Other NAFTA provisionsencourageupward harmonization of standards and encourage parties to integrate environmental protection and sustainabledevelopment intoeconomic decision-making. NAFTA's standards provisions do not affect a country's ability to determine its levelsof environmentalprotection for manufacturing and other process standards (such as water pollution controls and resource harvestingpractices). NAFTA set a precedent in addressing its relationship to multilateral environmental agreements (MEAs). It identifies threetrade-related MEAs that may take precedence over NAFTA if implementation conflicts arise, provided that the MEAis implementedin the least NAFTA-inconsistent manner. The listed agreements include the Montreal Protocol on Substances thatDeplete the OzoneLayer; the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal;and theConvention on International Trade in Endangered Species. U.S.-Mexico and U.S.-Canada bilateral waste-tradeagreements also areincluded, and the parties may agree to add others. Despite the inclusion of the above provisions, some in Congress remained concerned that NAFTA's effect on environmental lawscould be unpredictable. For example, an issue during the debate on renewing trade promotion authority concernedthe effect thatNAFTA may have on state and federal environmental laws, because some investors have challenged environmentalmeasures asconstituting a form of expropriation for purposes of the NAFTA investment chapter. These provisions allowcompanies to challenge,and potentially be compensated for, governmental measures that are viewed as harming their investments. At least20 cases have beenfiled, including 6 against the United States, one of which involves California's ban on methyl tertiary butyl ether(MTBE) in gasoline. Environmental concerns persisted after completion of the NAFTA text. To facilitate NAFTA passage, two related agreements werenegotiated, which are discussed below. A matter not addressed in the NAFTA text was whether lax enforcement of environmental laws in Mexico would provide an addedincentive for U.S. industries to relocate, and thus increase U.S. job losses, and increase border-area pollution. Manyin Congresscalled for side agreements that included an enforcement mechanism to address failures to enforce environmental(and labor) laws.Opponents of a side agreement argued that NAFTA-related economic growth would increase Mexico's resourcesavailable forenvironmental protection, and that NAFTA would increase environmental cooperation in North America.Nonetheless, congressionalsupport for NAFTA remained uncertain. In 1993, the three NAFTA governments adopted the North American Agreement on Environmental Cooperation(NAAEC), whichincludes dispute settlement provisions to address a party's failure to enforce environmental laws. The side accord'sobjectives cover arange of goals, including avoiding the creation of trade distortions or new trade barriers; enhancing compliance with,and enforcementof, environmental laws and regulations; and fostering environmental protection and pollution prevention. The side agreement created the North American Commission for Environmental Cooperation (NACEC) which includes a Council, aJoint Advisory Committee, and an independent Secretariat. The Council consists of cabinet-level representativesof the parties and haskey responsibilities regarding the side agreement's dispute settlement provisions. The Joint Advisory Committeeadvises the Counciland is comprised of nongovernmental groups. The Secretariat's duties include preparing reports and serving as apoint of inquiry forpublic concerns about NAFTA's possible environmental effects. The NACEC's major goal is to broadenenvironmental cooperationamong the parties. It provides a forum for the parties to consider ways to address environmental issues, and providesan avenue fordispute settlement panels to obtain environmental expertise. Perhaps most notable is the side agreement's dispute settlement process that, as a last resort, may impose monetary assessments andsanctions to address a party's failure to enforce its environmental laws. To invoke the dispute settlement process,a complaint mustconcern a party's persistent, systematic failure to enforce its laws, and the alleged failure must be trade-related orinvolve competinggoods or services. Only the NAFTA parties can initiate a NAAEC dispute settlement proceeding, and none havedone so. However,the Secretariat may consider a submission from any person or nongovernmental organization asserting that a partyis failing to enforceits environmental law, and may request that party to respond. The Secretariat may prepare a factual record andsubmit it to the Councilfor its consideration. Since 1995, 47 citizen submissions have been filed, and 9 factual records have been finalizedand made publiclyavailable. Throughout the NAFTA debate, many proponents and opponents noted the need to identify funding sources for financingenvironmental improvements in the border area. Much of the pollution there had been attributed to the effects ofunregulatedindustrial development and related population growth associated with Mexico's maquiladora program, and bothgovernmentsanticipated that NAFTA could further concentrate economic activity in the border region, and that existingenvironmental conditionswould worsen without a binational effort to address infrastructure needs. The Administration estimated that $8billion would berequired to address needs for sewage treatment, drinking water, and municipal solid waste infrastructure projectsalong the borderover the next decade and that NAFTA-related industrialization would create additional needs. (1) For many in Congress, support forNAFTA was partially contingent on the identification of a mechanism for financing border environmental projects. In October 1993, the United States and Mexico agreed to a new institutional structure to promote borderenvironmental cleanup. TheBorder Environmental Cooperation Agreement authorized the establishment of the North American Development Bank (NADB) andthe Border Environment Cooperation Commission (BECC) to assist bordercommunities in financing environmental infrastructureprojects. The agreement noted the need for environmental infrastructure, especially in the areas of water pollution,wastewatertreatment, and municipal solid waste. The BECC is directed to help border states and communities coordinate, design, and mobilize financing for environmentalinfrastructure projects, and to certify projects for financing. The NADB evaluates the financial feasibility ofBECC-certified projectsand provides financing as appropriate. Public involvement is fostered through representation on the BECC Boardof Directors andAdvisory Council, and through a public comment process on proposed projects. The NADB was designed to generate between $2 billion and $3 billion in loans or guarantees for financing environmental projects oneither side of the border. (Ten percent of the NADB's resources may be used for NAFTA-related communityadjustment andinvestment projects.) To leverage financing, the United States and Mexico each contributed $225 million over fouryears, for a total of$450 million in paid-in capital. The NADB is authorized to make only market-rate loans, however, and this hasbeen a major obstacleto the Bank's ability to finance projects in low-income border communities. Despite the creation of the NADB to provide financing for border environmental infrastructure projects, grants from theEnvironmental Protection Agency (EPA) have accounted for the vast majority of funding provided through theBank. In 1997, theNADB entered into an agreement with EPA, under which EPA contributes much of its annual border infrastructureappropriation tothe Border Environment Infrastructure Fund (BEIF). (Over the past decade, Congress regularly has provided EPAwith $75 million or$50 million each year for border water and wastewater projects.) The NADB established the BEIF to use EPA grantresources fordrinking water and wastewater projects to make the projects affordable for border communities. The NADBdevelops financingpackages using its loan and guaranty programs, EPA grants, and other sources. EPA grant funds may be used forBECC-approvedprojects on either side of the border. As of June 30, 2004, the NADB had approved 22 loans worth a total of $97.1 million, and had fully disbursed 9 loans. Overall, theNADB had authorized $662.4 million in grants and/or loans to partially finance 80 infrastructure projects estimatedto cost a total of$2.26 billion. In addition to the 22 loans, this assistance included $490 million in EPA grants that had beencommitted for 52 waterand wastewater projects. (2) Because of the low activity level of the NADB, and because most infrastructure funding for NADB projects has been providedthrough EPA grants rather than NADB financing, considerable interest emerged in recent years for reforming theNADB. Bothfederal governments, the border states, and other interested parties discussed possible reforms for these institutions,including changesin institutional structure, types of financial assistance provided, and types of projects eligible for assistance. In 2000, the NADB established a Low Interest Rate Lending Facility using part of its paid-in capital to provide lower-than-market rateloans to communities. In 2001, President Bush and President Fox directed a binational working group to developrecommendations tostrengthen the performance of the NADB and the BECC. In 2002, both Presidents accepted the working group'srecommendationsand directed their respective administrations to work with their legislatures to effectuate them. Therecommendations includemaintaining the focus on environmental infrastructure projects; giving the NADB more flexibility to make grantsandbelow-market-rate loans to finance projects; and expanding the geographic scope of BECC/NADB operations toinclude the area inMexico within 300 kilometers of the border. In August 2002, the NADB Board of Directors approved creation ofa WaterConservation Investment Fund to finance water conservation projects. As discussed below, H.R. 254 ( P.L.108-215 ),enacted in April 2004, authorizes several operational reforms to the NADB. Corresponding legislation was approved by the Mexicanlegislature in 2003. The NAFTA Implementation Act directed the President to report to Congress in 1997 on the effects of NAFTA and implementationof the side agreements. The resulting study concluded that it was premature to assess any environmental effects ofNAFTA anddifficult to determine whether further environmental degradation at the U.S.-Mexico border was due to NAFTA orother economicdevelopment and events. More recent studies have attributed increased border pollution and other environmentalimpacts to NAFTA,although the studies generally identify a number of other contributing factors. A March 2001 NAAEC study, North American Tradeand Transportation Corridors: Environmental Impacts and Mitigation, concluded that air pollution fromincreased freight traffic inNAFTA transportation corridors is significant and could double or quadruple by 2020. (3) Relatedly, the number of assembly factoriesin Mexico near the border grew from 2,114 in 1993 to 3,182 in 2003, while employment at these plants more thandoubled to 1.07million. (4) A report by EPA in 2000, Protectingthe Environment of the U.S.-Mexico Border Area, noted that the concentration ofindustry and people at the border was exacerbating pollution and health problems, and that many border citiesexpected to experienceserious water constraints by 2005. A NAAEC committee recently completed a ten-year review of the environmentalside agreement,and concluded that the NAAEC has facilitated trinational environmental cooperation and capacity building overall,and specificallyhas fostered environmental progress in Mexico. In the 107th Congress, the environment-related provisions of NAFTA and its side accord received attention during consideration oftrade promotion authority legislation and the U.S.-Jordan Free Trade Agreement (FTA); both adapted environmentalprovisions fromthe NAAEC and NAFTA. (5) Some in Congressexpressed particular concern regarding the effect that NAFTA-like investmentprovisions may have on domestic environmental protection efforts, because various investors have challengedenvironmentalmeasures as constituting a form of expropriation under the NAFTA investment chapter. (6) Also in the 107th Congress, the Housepassed H.R. 5400 to authorize changes in NADB and BECC operations, with a goal of increasing theseinstitutions'effectiveness. In the 108th Congress, efforts to reform the BECC and NADB continued, and in April 2004, the President signed into law P.L.108-215 ( H.R. 254 , H.Rept. 108-17 ). This law authorizes the President to agree to a change in the NADB'scharter topermit the Bank to make below-market-rate loans and a limited amount of grants in order to increase the numberof projects theseinstitutions support. It directs the U.S. members of the NADB board of directors generally to oppose projectproposals if grantsaccount for more than 50% of the project financing or if a project is not financed in part by loans. The law alsoauthorizes extendingthe operational area of the BECC/NADB on the Mexican side of the border from 100 kilometers to 300 kilometers.It requires anannual report to Congress, and includes a sense of the Congress relating to U.S. support for water conservationprojects. In otherlegislation, the conference report to H.R. 6 , the Energy Bill (Section 146) would amend NAFTAimplementinglegislation to direct U.S. NADB board members to encourage the Bank to finance infrastructure projects related toclean energy andenergy conservation. Interest in the 108th Congress also has continued regarding the implications of NAFTA and the NAAEC for new trade agreements.The U.S.-Chile and U.S.-Singapore FTAs both include an obligation for parties to enforce their environmental laws,and make thisobligation subject to dispute settlement procedures. Moreover, both agreements include environmental cooperationandcapacity-building provisions. The U.S.-Chile FTA further calls for parties to negotiate a U.S.-Chile EnvironmentalCooperationAgreement. The U.S.-Central America FTA (CAFTA), which the President has signed but which requiresimplementing legislation,includes similar provisions and also adapts the NAAEC provisions that allow citizens to file submissions concerninga party's failureto effectively enforce its environmental laws. While welcoming the heightened consideration of environmental matters since the NAFTA debate, some Members of Congress andenvironmental groups remain concerned that the provisions in the current TPA law and in recently negotiated tradeagreements maynot be sufficient to safeguard legitimate environmental measures from challenges, particularly those involvinginvestor-state disputes.Consequently, while the debate over whether environmental matters should be a part of trade negotiations generallyhas been settled,the debate over how to address such issues is likely to continue. The effect of the environment-related provisionsin recent U.S.bilateral trade agreements, and thus the shape of the debate, may become clearer with the ongoing implementationof NAFTA andsubsequent agreements that have incorporated NAFTA and NAAEC-like provisions.

The North American Free Trade Agreement (NAFTA) includes severalenvironment-related provisions, that while limited, were unprecedented for their inclusion in a trade agreement. However, furtherenvironmental (and labor) assurances were needed to secure passage of NAFTA, and ultimately, the negotiatingparties agreed to aside accord that promotes cooperation on environmental matters and includes provisions to address a party's failureto enforceenvironmental laws. Additionally, the United States and Mexico entered into the Border EnvironmentalCooperation Agreement(BECA), which authorized the establishment of the Border Environment Cooperation Commission (BECC) and theNorth AmericanDevelopment Bank (NADB) to help border communities finance environmental infrastructure projects. In the 108th Congress, NAFTA's environmental provisions and related institutions have continuedto receive attention. A key issuehas concerned the effectiveness of the NADB and the BECC, and especially the Bank's ability to finance projects.Enacted on April5, 2004, P.L. 108-215 (H.R. 254) authorizes several operational reforms to the NADB. Other issues involvetheenvironmental impact of NAFTA, and the effect that NAFTA and its environmental side agreement have had onthe negotiation ofother U.S. trade agreements, including the U.S.-Central America Free Trade Agreement (CAFTA) and U.S.-ChileFTA. This reportbriefly reviews NAFTA's environmental provisions, associated agreements, and related issues and congressionalactions. It will beupdated.

Internet gambling is gambling on, or by means of, the Internet. It encompasses placing a bet online with a bookie, betting shop, or other gambling enterprise. It also encompasses wagering on a game played online. A few states ban Internet gambling per se. Most states, however, rely upon their generally applicable gambling laws. Gambling outlawed when conducted in person is ordinarily outlawed when conducted online. There are many federal gambling laws, most enacted to prevent unwelcome intrusions of interstate or international gambling into states where the activity in question has been outlawed. This is examination of principal federal criminal laws implicated by Internet gambling and of a few of the constitutional questions associated with their application. In very general terms, it is a federal crime (1) to use wire communications to place or receive bets or to transmit gambling information relating to sporting contests or events; (2) to conduct a gambling business in violation of state law; (3) to travel interstate or overseas, or to use any other facility of interstate or foreign commerce, to facilitate the operation of an illegal gambling business; (4) to conduct a gambling business and accept payment for illegal Internet gambling participation; (5) to systematically commit these crimes in order to acquire or operate a commercial enterprise; (6) to launder the proceeds of an illegal gambling business or to plow them back into the business; (7) to spend or deposit more than $10,000 of the proceeds of illegal gambling in any manner; or (8) to conspire with others, or to aid and abet them, in their violation of any of these federal laws. Commentators most often mention the Wire Act when discussing federal criminal laws that outlaw Internet gambling in one form or another. Early federal prosecutions of Internet gambling generally charged violations of the Wire Act. In fact, Cohen , perhaps the most widely known of federal Internet gambling prosecutions, involved the Wire Act conviction, upheld on appeal, of the operator of an offshore, online sports book. The courts have said that in order to prove a Wire Act violation, "the government must show that (1) 'the defendant regularly devoted time, attention and labor to betting or wagering for profit,' (2) the defendant used a wire communication facility: (a) to place bets or wagers on any sporting event or contest; or (b) to provide information to assist with the placing of bets or wagers on any sporting event or contest; or (c) to inform someone that he or she had won a bet or wager and was entitled to payment or credit, and (3) the transmission was made from one state to another state or foreign country." Offenders are subject to imprisonment for not more than two years and/or a fine of the greater of not more than twice the gain or loss associated with the offense or $250,000 (not more than $500,000 for organizations).They may also have their telephone service canceled at law enforcement request, and conduct that violates the Wire Act may help provide the basis for a prosecution under the money laundering statutes, the Travel Act, the Illegal Gambling Business Act, RICO, or the Unlawful Internet Gambling Enforcement Act. The Wire Act is addressed to those "engaged in the business of betting or wagering" and therefore apparently cannot be used to prosecute simple bettors. The government must prove that the defendant was aware of the fact he was using a wire facility to transmit a bet or gambling-related information; it need not prove that he knew that such use was unlawful. The courts have also rejected the contention that the prohibition applies only to those who transmit, concluding that "use for transmission" embraces both those who send and those who receive the transmission. As a practical matter, the Justice Department appears to have resolved the question of whether the section applies only to cases involving gambling on sporting events. The vast majority of prosecutions involve sports gambling, but cases involving other forms of gambling under the Wire Act are not unknown. One federal appellate panel concluded that the Wire Act applies only to sports gambling. A subsequent district court concluded that it applies to non-sports gambling as well. The Justice Department's Office of Legal Counsel, however, ultimately opined that "interstate transmissions of wire communications that do not relate to a 'sporting event or contest,' fall outside the reach of the Wire Act." An accomplice who aids and abets another in the commission of a federal crime may be treated as if he had committed the crime himself. The classic definition from Nye & Nissen explains that liability for aiding and abetting attaches when one "in some sort associates himself with the venture, participates in it as in something that he wishes to bring about, [and] seeks by his action to make it succeed." The Department of Justice advised the National Association of Broadcasters that its members risked prosecution for aiding and abetting when they provided advertising for the online gambling operations. In addition to such accomplice liability, a conspirator who contrives with another for the commission of a federal crime is likewise liable for conspiracy, any completed underlying crime, and for any additional, foreseeable offense committed by a confederate in furtherance of the common scheme. A complication in construction of the Wire Act arises in the context of horse racing. There are some suggestions that the Wire Act was amended sub silentio by an appropriations rider rewording a provision in the civil Interstate Horseracing Act. The Justice Department does not share this view. Uncertainty over the issue apparently led an Appellate Body of the World Trade Organization (WTO) to conclude that the United States permits domestic entities to offer Internet gambling on horse racing, but denies offshore entities such an opportunity. Section 1955, which outlaws conducting an illegal gambling business, appears on its face to reach any illegal gambling business conducted using the Internet. Commentators seem to concur. However, prosecutions under the Wire Act have been more prevalent, at least thus far. Violations of Section 1955 are punishable by imprisonment for not more than five years and/or fines of the greater of not more than twice the gain or loss associated with the offense or $250,000 ($500,000 for an organization). Moreover, the federal government may confiscate any money or other property used in violation of the section. The offense may also provide the foundation for a prosecution under the Travel Act, the money laundering statutes, and RICO. The courts have said that to prove a violation of the Illegal Gambling Business Act, "the government must show that the defendant conducted, financed, managed, supervised, directed, or owned a gambling business that: (1) violated state law; (2) involved five or more persons; and (3) was either in substantial continuous operation for more than 30 days or had gross revenue of $2,000 or more in a single day"). And they have noted that "numerous cases have recognized that 18 U.S.C. 1955 proscribes any degree of participation in an illegal gambling business except participation as a mere bettor." Or as more recently described, "'[c]onductors' extends to those on lower echelons, but with a function at their level necessary to the illegal gambling operation." The section bars only those activities that involve illegal gambling under applicable state law and that meet the statutory definition of such a business. Illegal gambling is at the threshold of any prosecution under the section, and cannot to be pursued if the underlying state law is unenforceable under either the United States Constitution, or the operative state constitution. The business element can be satisfied (for any endeavor involving five or more participants) either by continuity ("has been or remains in substantially continuous operation for period in excess of thirty days") or by volume ("has a gross revenue of $2,000 in any single day"). The volume prong is fairly self-explanatory, and the courts have been fairly generous in their assessment of continuity. They are divided, however, on the question of whether the jurisdictional five individuals and continuity/volume features must coincide. The accomplice and conspiratorial provisions attend violations of Section 1955 as they do violations of the Wire Act. Although frequently difficult to distinguish in a given case, the difference is essentially a matter of depth of involvement. "[T]o be guilty of aiding and abetting a Section 1955 illegal gambling business ... the defendant must have knowledge of the general scope and nature of the illegal gambling business and awareness of the general facts concerning the venture ... [and he] must take action which materially assists in 'conducting, financing, managing, supervising, directing or owning' the business for the purpose of making the business succeed." Unlike conspiracy, one may only be prosecuted for aiding and abetting the commission of a completed crime; "before a defendant can be found guilty of aiding and abetting a violation of Section 1955 a violation of Section 1955 must exist ... [and] aiders and abettors cannot be counted as one of the statutorily required five persons." As a general rule, a federal conspiracy exists when two or more individuals agree to commit a federal crime and one of them commits some overt act in furtherance of their common scheme. "A conspiracy may exist even if a conspirator does not agree to commit or facilitate each and every part of the substantive offense. The partners in the criminal plan must agree to pursue the same criminal objective and may divide up the work, yet each is responsible for acts of each other. If the conspirators have a plan which calls for some conspirators to perpetrate the crime and others to provide support, the supporters are as guilty as the perpetrators." Conspiracy is a separate crime and thus conspirators may be convicted of both substantive violations of Section 1955 and conspiracy to commit those violations. In fact, under the Pinkerton doctrine, co-conspirators are liable for conspiracy, the crime which is the object of the conspiracy (when it is committed), and any other reasonably foreseeable crimes of their confederates committed in furtherance of the conspiracy. The operation of an illegal gambling business using the Internet may easily involve violations of the Travel Act, as several writers have noted. Like Section 1955, Travel Act convictions result in imprisonment for not more than five years and/or fines of the greater of not more than twice the gain or loss associated with the offense or $250,000 ($500,000 for an organization). The act may serve as the foundation for a prosecution under the money laundering statutes and RICO. It has neither the service termination features of the Wire Act nor the forfeiture features of Section 1955. The courts often abbreviate their statement of the elements to: "The government must prove (1) interstate travel or use of an interstate facility; (2) with the intent to ... promote ... an unlawful activity and (3) followed by performance or attempted performance of acts in furtherance of the unlawful activity." The Supreme Court determined some time ago that the Travel Act does not apply to the simple customers of an illegal gambling business, although interstate solicitation of those customers may certainly be covered. When the act's jurisdictional element involves mail or facilities in interstate or foreign commerce, rather than interstate travel, evidence that a telephone was used, or an ATM, or the facilities of an interstate banking chain will suffice. The government is not required to show that the defendant used the facilities himself or that the use was critical to the success of the criminal venture. It is enough that he caused them to be used and that their employment was useful for his purposes. Moreover, intrastate telephone communications constitute the use of "facilities in interstate or foreign commerce." Thus in the case of Internet gambling, the jurisdictional element of the Travel Act might be established at a minimum either by reference to the telecommunications component of the Internet, to shipments in interstate or foreign commerce (in or from the United States) associated with establishing operations on the Internet, to any interstate or foreign nexus to the payment of the debts resulting from the gambling, or to any interstate or foreign distribution of the proceeds of such gambling. A criminal business enterprise, as understood in the Travel Act, "contemplates a continuous course of business--one that already exists at the time of the overt act or is intended thereafter. Evidence of an isolated criminal act, or even sporadic acts, will not suffice," and it must be shown to be involved in an unlawful activity outlawed by a specifically identified state or federal statute. Finally, the government must establish some overt act in furtherance of the illicit business committed after the interstate travel or the use of the interstate facility. Accomplice and co-conspirator liability, discussed earlier, apply with equal force to the Travel Act. The act would only apply to "business enterprises" involved in illegal gaming, so that e-mail gambling between individuals would likely not be covered. And Rewis seems to bar prosecution of an Internet gambling enterprise's customers as long as they remain mere customers. But an Internet gambling venture, that constitutes an illegal gambling business for purposes of Illegal Gambling Business Act and is engaged in some form of interstate or foreign commercial activity in furtherance of the business, will almost inevitably have included a Travel Act violation. The Wire Act, the Illegal Gambling Business Act, and the Travel Act implicitly outlaw Internet gambling and related activity. The Unlawful Internet Gambling Enforcement Act (UIGEA) does so explicitly. More exactly, it prohibits those who engage in a gambling business from accepting payments related to unlawful Internet gambling. Violations are punishable by imprisonment for not more than five years and/or a fine of not more than $250,000 (not more than $500,000 for organizations). Offenders may be subject to civil and regulatory enforcement actions as well. The Unlawful Internet Gambling Enforcement Act declares that (1) No person, (2) engaged in the business of betting or wagering, (3) may knowingly accept, (4) in connection with participation of another person in unlawful Internet gambling, (5)(a) credit, or the proceeds of credit, extended to or on behalf of such other person (including credit extended through the use of a credit card; or (b) an electronic fund transfer, or funds transmitted by or through a money transmitting business, or the proceeds of an electronic fund transfer or money transmitting service, from or on behalf of such other person; or (c) any check, draft, or similar instrument which is drawn by or on behalf of such other person and is drawn on or payable at or through any financial institution; or (d) the proceeds of any other form of financial transaction, as the Secretary and the Board of Governors of the Federal Reserve System may jointly prescribe by regulation, which involves a financial institution as a payor or financial intermediary on behalf of or for the benefit of such other person. UIGEA's proscription draws meaning from a host of definitions, exceptions, and exclusions--some stated, others implied. It does not define "person." Nevertheless, as elsewhere in the United States Code, "persons" for purposes of UIGEA means individuals as well as "corporations, companies, associations, firms, partnerships, societies, and joint stock companies." It does not define the "business of betting or wagering," although it defines what it is not and defines the terms that provide the grist for such a business: bets or wagers. The business of betting or wagering does not encompass the normal business activities of financial or communications service providers, unless they are participants in an unlawful Internet gambling enterprise. On the other hand, Congress chose the term "business of betting or wagering" rather than the term "illegal gambling business," found in the Illegal Gambling Business Act. This implies that UIGEA covers businesses regardless of whether they met the threshold requirements of Illegal Gambling Business Act, that is, (1) five participants and (2) continuous operations for at least thirty days or gross revenues in excess of $2,000 a day. To come within the statute's reach, a business must involve "bets or wagers" and must accept payment relating "unlawful Internet gambling." To bet or wager is to stake something on the outcome of a game or event. More exactly, "[t]he term 'bet or wager'--(A) means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome." Earlier in UIGEA's legislative history, the definition of "bet or wager" used the phrase "a game predominantly subject to chance" rather than simply "a game subject to chance." The Justice Department questioned whether the original phrase was "sufficient to cover card games, such as poker." The change in language appears to accommodate that concern by extending coverage to games that have an element of chance, even if not necessarily a predominant element. The definition also explicitly covers lotteries and information relating to the financial aspects of gambling. The list of other common activities exempted from the definition includes securities and commodities exchange activities, insurance, Internet games and promotions that do not involve betting, and certain fantasy sporting activities. "Unlawful Internet gambling" refers to an Internet bet or wage that is illegal in the place where it is placed, received, or transmitted. The term does not encompass various forms of Internet use by the horse racing industry, regardless of their legal status over other provisions of law. If certain conditions are met, the definition also exempts from UIGEA's prohibitions certain intrastate and intratribal forms of gambling, like state lotteries and Indian casinos that operate under state regulations or compacts. To qualify for the intrastate exception a bet must (1) be made and received in the same state; (2) comply with applicable state law that authorizes the gambling and the method of transmission including any age and location verification and security requirements; and (3) be in accord with various federal gambling laws. The intratribal exception is comparable, but a little different. Compliance with the various federal gambling laws remains a condition, 31 U.S.C. 5362(C)(iv). And there are comparable security as well as age and location verification demands. The intratribal gambling, however, may involve transmissions between the lands of two or more tribes and need not be within the same state. Definitions aside, UIGEA's prohibitions can only be breached by one who acts "knowingly." As a general rule, "the word 'knowingly' means that the defendant realized what she was doing and was aware of the nature of her conduct and did not act through ignorance, mistake or accident." However, "the term 'knowingly' does not necessarily have any reference to a culpable state of mind or to knowledge of the law." There is nothing to shield UIGEA defendants from the same general accomplice and conspirator liability provisions that apply in the case of any other federal felony. Those who aid or abet a violation, that is, those who knowingly embrace the criminal activity and assist in its commission with an eye to its success, are liable to the same extent as those who commit the offense directly. Conspirators are liable for conspiracy, for any completed crime that is the object of the plot, and for any additional, foreseeable offense committed by a confederate in furtherance of the common scheme. Section 5362(2) excludes the activities of financial institutions, communications and Internet service providers from the definition of "business of betting or wagering." Section 5367 declares that such entities may nonetheless incur liability under the act if they are directly engaged in the operation of an Internet gambling site. Neither section precludes their incurring liability as accomplices or co-conspirators. As noted earlier, whether a federal law applies to conduct committed entirely outside the United States is ordinarily a matter of congressional intent. The most obvious indicia of congressional intent is a statement within a particular statute that its provisions are to have extraterritorial application. UIGEA contains no such statement. Its legislative history of the act, however, leaves little doubt that Congress was at least as concerned with offshore illegal Internet gambling businesses as with those operated entirely within the United States. Offenders may also suffer civil constraints. UIGEA creates a limited federal civil cause of action to prevent and restrain violations of the act. It authorizes federal and state attorneys general to sue in federal court for injunctive relief to prevent and restrain violations of the act. It does not foreclose other causes of action on other provisions of state or federal law, but it does preclude suits in state court to enforce the act. It does not expressly authorize a private cause of action. It does not expressly offer attorneys general or anyone else any prospect of relief other than the federal court orders necessary to prevent and restrain. Moreover, it expressly limits the instances when the attorneys general may institute proceedings against Internet service providers and financial institutions. They may only proceed civilly against financial institutions to block transactions involving unlawful Internet gambling unless the institution is directly involved in an unlawful Internet gambling business. Barring application of the same direct involvement exception, the attorneys general may sue Internet service providers under the act only to block access to unlawful Internet gambling sites or to hyperlinks to such sites under limited circumstances. Subject to an exception that mirrors the direct involvement exception, the act also removes providers from the coverage of the Wire Act provision under which law enforcement officials may insist that communications providers block the wire communications of Wire Act violators. Neither of the provisions restricting the civil liability of financial institutions and of Internet service providers explicitly immunizes them from criminal prosecution for aiding or abetting or for conspiracy. Although UIGEA restricts the civil liability of financial institutions, it binds them under a regulatory enforcement scheme outlined in the act. The act calls upon the Secretary of the Treasury and the Governors of the Federal Reserve Board in conjunction with the Attorney General to create a regulatory mechanism that identifies and blocks financial transactions prohibited in the act. Among its other features, the mechanism must admit to practical exemptions and ensure that lawful Internet gambling transactions are not blocked. Good faith compliance insulates regulated entities from both regulatory and civil liability. Regulatory enforcement falls to the Federal Trade Commission and to the "federal functional regulators" within their areas of jurisdiction, that is, the Governors of the Federal Reserve, the Comptroller of the Currency, the Federal Deposit Insurance Commission, the Office of Thrift Supervision, the National Credit Union Administration, the Securities and Exchange Commission and the Commodities Exchange Commission. The Third Circuit has concluded that UIGEA is neither unconstitutionally vague nor unconstitutionally intrusive on any recognized right to privacy. Illegal Internet gambling may trigger the application of federal racketeering (RICO) provisions. Section 1955, the Wire Act, the Travel Act, and any state gambling felony are all RICO predicate offenses, which expose offenders to imprisonment for not more than twenty years and/or a fine of greater of not more than $250,000 (not more than $500,000 for an organization) or twice the gain or loss associated with the offense. An offender's crime-tainted property may be confiscated, and he may be liable to his victims for triple damages and subject to other sanctions upon the petition of the government. The courts have said that "to establish the elements of a substantive RICO offense, the government must prove (1) that an enterprise existed; (2) that the enterprise affected interstate or foreign commerce; (3) that the defendant associated with the enterprise; (4) that the defendant participated, directly or indirectly, in the conduct of the affairs of the enterprise; and (5) that the defendant participated in the enterprise through a pattern of racketeering activity by committing at least two racketeering (predicate) acts [ e.g ., 18 U.S.C. 1084 (Wire Act), 18 U.S.C. 1952 (Travel Act), 18 U.S.C. 1955 (illegal gambling business)]. To establish the charge of conspiracy to violate the RICO statute, the government must prove, in addition to elements one, two and three described immediately above, that the defendant objectively manifested an agreement to participate ... in the affairs of the enterprise." Congress has enacted several statutes to deal with money laundering. It would be difficult for an illegal Internet gambling business to avoid either of two of the more prominent, 18 U.S.C. 1956 and 1957, both of which involve financial disposition of the proceeds of various state and federal crimes, including violation of the Wire Act, the Illegal Gambling Business Act, the Travel Act, or any state gambling law (if punishable by imprisonment for more than one year). In fact, Santos , one of the landmark cases in the development of federal money laundering law, is a gambling case. In other instances, the lower federal courts have frequently upheld money laundering convictions predicated upon various gambling offenses. The crimes under Section 1956 are punishable by imprisonment for not more than twenty years or a fine of the greater of not more than twice the value of the property involved in the transaction or not more than $500,000; those under Section 1957 carry a prison term of not more than ten years or a fine of the greater of twice the amount involved in the offense or not more than $250,000 (not more than $500,000 for an organization). Any property involved in a violation of either section is subject to the civil and criminal forfeiture provisions of 18 U.S.C. 981, 982. Section 1956 creates several distinct crimes: (1) laundering with intent to promote an illicit activity such as an unlawful gambling business; (2) laundering to evade taxes; (3) laundering to conceal or disguise; (4) structuring financial transactions (smurfing) to avoid reporting requirements; (5) international laundering; and (6) "laundering" conduct by those caught in a law enforcement sting. In its most basic form the promotion offense essentially involves plowing the proceeds of crime back into an illegal enterprise. Section 1956 has two promotional offenses: those involving financial transactions and those involving international monetary transfers. The elements of the two are roughly comparable. The transaction offense applies to whoever "(1) knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, (2) conducts or attempts to conduct such a financial transaction, (3) which in fact involves the proceeds of specified unlawful activity, (4) with the intent to promote the carrying on of specified unlawful activity." The knowledge element is subject to a special definition which allows a conviction without the necessity of proving that the defendant knew the exact particulars of the underlying offense or even its nature. The "proceeds" may be tangible or intangible, for example, cash, things of value, or things with no intrinsic value, for example, checks written on depleted accounts. Nor need "proceeds" be confined to the profits realized from the predicate offense, i.e., the "specified unlawful activity." Section 1956 specifically defines "proceeds" as "any property derived from or obtained or retained, directly or indirectly through some form of unlawful activity, including the gross receipts of such activity." The "financial transaction" necessary to satisfy that element of the crime may take virtually any shape that involves the disposition of something represent the proceeds of an underlying crime, including a disposition as informal has handing cash over to someone else. The statutory definition of the necessary "financial transaction" provides the basis for federal jurisdiction. To qualify, the transaction must be one that affects interstate or foreign commerce or must involve a financial institution whose activities affect such commerce. The "intent to promote" element of the offense can be satisfied by proof that the defendant used the proceeds to continue a pattern of criminal activity or to enhance the prospect of future criminal activity. To establish an intent to promote, the courts have said, "the government must show the transaction at issue was conducted with the intent to promote the carrying on of a specified unlawful activity. It is not enough to show that a money launderer's actions resulted in promoting the carrying on of specified unlawful activity. Nor may the government rest on proof that the defendant engaged in 'knowing promotion' of the unlawful activity. Instead, there must be evidence of intentional promotion. In other words, the evidence must show that the defendant's conduct not only promoted a specified unlawful activity but that he engaged in it with the intent to further the progress of that activity." The government must also establish that proceeds of the transaction are derived from a predicate offense and that they are intended to promote a predicate offense. All RICO predicate offenses are automatically money laundering predicate offenses. The RICO predicate offense list includes state gambling felonies as well as violations of the Travel Act and the Illegal Gambling Business Act. The elements of the travel or transportation version of promotional money laundering are comparable, but distinctive. They apply to anyone who: "(1) transports, transmits, transfers, or attempts transport, transmit, or transfer, (2) a monetary instrument or funds, (3)(a) from a place in the United States to or through a place outside the United States or (b) to a place in the United States from a place outside the United States, (4) with the intent to promote the carrying on of an specified unlawful activity." One of the distinctive features of the transportation promotional money laundering provision is that the transported, transmitted, or transferred funds do not have to be the proceeds of a predicate offense. The defendant, however, must be shown to have transmitted, transferred, or transported the funds with the intent to promote a predicate offense. The measure by which that question will be judged is the same as that used in the case of a transactional promotion offense, discussed above. Section 1956 is subject to general federal law with regard to accomplice and conspirator liability, except that it permits the same punishment for conspirators as for simple launderers. The "concealment" offenses share several common elements with the promotion offenses. For instance, the courts have explained that transaction offenses, like the promotion transaction offenses in all but one aspect, apply to anyone who: "(1) knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity; (2) conducts or attempts to conduct such a financial transaction; (3) which in fact involves the proceeds of specified unlawful activity (A)(i); (4) knowing that the transaction is designed in whole or in part to conceal or disguise the nature, location, the source, the ownership, or the control of the proceed of specified unlawful activity ." The fourth and distinctive element of the transactional concealment offense covers more than simple spending and more than simple concealment of the proceeds. Concealment must be designed to concern, that is, it must be purposeful concealment. The courts have made it clear that conviction for the concealment offense requires proof of something more than simply spending the proceeds of a predicate offense. That having been said, the line between innocent spending and criminal laundering is not always easily discerned. "Evidence of a purpose to conceal can come in many forms including: [deceptive] statements by a defendant probative of intent to conceal; unusual secrecy surrounding the transactions; structuring the transaction to avoid attention; depositing illegal profits in the bank account of a legitimate business; highly irregular features of the transaction; using third parties to conceal the real owner; a series of unusual financial moves cumulating in the transaction; or expert testimony on practices of criminals." The transportation concealment offense tracks both the transportation promotional and the transaction concealment offenses. Like promotional offenses and unlike the transaction offenses, the government must prove that the defendant knew of the tainted nature of the transported funds. The transportation concealment offense covers anyone who: "(1) transports, transmits, transfers, or attempts transport, transmit, or transfer; (2) a monetary instrument or funds; (3)(a) from a place in the United States to or through a place outside the United States or (b) to a place in the United States from a place outside the United States; (4) knowing that the monetary instrument or funds represent the proceeds of unlawful activity; (5) knowing the transportation, transmission, or transfer is designed in whole or in part to conceal or disguise the nature, location, the source, the ownership, or the control of the proceed of specified unlawful activity." The concealment clause requires that concealment be the motivating force, at least in part, for the transportation. Subsection 1956(h) imposes the same penalties for conspiracy as for substantive violations of the section. Otherwise, the general accomplice and conspiracy principles of law apply throughout the section. The tax evasion and structured transactions or report evasion offenses shadow the promotion and concealment offenses. A tax evasion, laundering prosecution requires the government to show that the defendant acted intentionally rather than inadvertently, but not that the defendant knew that his conduct violated the tax laws. Similarly, conviction for the structuring offense does not require a showing that the defendant knew that his conduct was criminal as long as the government establishes that the defendant acted with the intent to frustrate a reporting requirement. Here too, the general principles of law applying to accomplices and conspirators apply. The final crime found in Section 1956 is a "sting" offense, the proscription drafted to permit the prosecution of money launderers taken in by undercover officers claiming they have proceeds in need of cleansing from illegal gambling or other predicate offenses. The provision has promotional, concealment, and report evasion components. Section 1956 does not make spending tainted money a crime, but Section 1957 does. Using most of the same definitions as Section 1956, the elements of 1957 cover anyone who: "(1) (a) in the United States, (b) in the special maritime or territorial jurisdiction of the United States, or (b) outside the United States if the defendant is an American, (2) knowingly engages or attempts to engage in a monetary transaction, (3) [in or affecting interstate commerce], (4) in criminally derived property that is of a greater value than $10,000 and derived from specified unlawful activity." The requisite monetary transaction may involve any number of "financial institutions"--a bank, credit union, any of the statutorily designated high-cash flow businesses, or any comparable business designated by the Secretary of the Treasury. The statute, however, expressly exempts monetary transactions of the accused, necessary to secure legal representation in criminal proceedings.

This is a summary of the federal criminal statutes implicated by conducting illegal gambling using the Internet. Gambling is primarily a matter of state law, reinforced by federal law in instances where the presence of an interstate or foreign element might otherwise frustrate the enforcement policies of state law. State officials and others have expressed concern that the Internet may be used to bring illegal gambling into their jurisdictions. Illicit Internet gambling implicates at least seven federal criminal statutes. It is a federal crime (1) to conduct an illegal gambling business under the Illegal Gambling Business Act, 18 U.S.C. 1955; (2) to use the telephone or telecommunications to conduct an illegal gambling business involving sporting events or contests under the Wire Act, 18 U.S.C. 1084; (3) to use the facilities of interstate commerce to conduct an illegal gambling business under the Travel Act, 18 U.S.C. 1952; (4) to conduct the activities of an illegal gambling business involving either the collection of an unlawful debt or a pattern of gambling offenses, the Racketeer Influenced and Corrupt Organizations (RICO) provisions, 18 U.S.C. 1962; (5) to launder the proceeds from an illegal gambling business or to plow them back into such a business under money laundering provisions of 18 U.S.C. 1956; (6) to spend more than $10,000 of the proceeds from an illegal gambling operation at any one time and place under the money laundering provisions, 18 U.S.C. 1957; or (7) for a gambling business to accept payment for illegal Internet gambling under the Unlawful Internet Gambling Enforcement Act (UIGEA), 31 U.S.C. 5361-5367. Enforcement of these provisions has been challenged on constitutional grounds. Attacks based on the Commerce Clause, the First Amendment's guarantee of free speech, and the Due Process Clause have enjoyed little success. The commercial nature of a gambling business seems to satisfy doubts under the Commerce Clause. The limited First Amendment protection afforded crime facilitating speech encumbers free speech objections. The due process arguments raised in contemplation of federal prosecution of offshore Internet gambling operations suffer when financial transactions with individuals in the United States are involved. This report is an abridged form, without footnotes, full citations, or supplementary material, of CRS Report 97-619, Internet Gambling: Overview of Federal Criminal Law. Related CRS reports include CRS Report RS22749, Unlawful Internet Gambling Enforcement Act (UIGEA) and Its Implementing Regulations, and CRS Report R41614, Remote Gaming and the Gambling Industry.

Lack of regular dental care can result in pain, infection, and delayed diagnosis of oral diseases. During the 2001-2004 period, one-fourth to one-third of children ages 2 to 19 in families with income below 200% of the federal poverty level (FPL) experienced untreated dental caries (decay), a sign that needed dental care was not received. In 2005, about one-third of all children living below 200% FPL did not have a recent dental visit. In a related study, GAO found that during the 1999-2004 period, roughly one in three Medicaid children ages 2 through 18 had untreated tooth decay, and data from 2004 through 2005 indicated that only 37% received any dental care over a one-year period. With respect to receipt of dental services, insurance matters. In 2006, 50.9% of individuals under the age of 21 in the United States had private dental coverage, another 30.4% had public dental coverage (primarily Medicaid and SCHIP), and 18.7% had no dental coverage. The percentage of individuals under age 21 that had a dental visit in 2006 varied by type of coverage--58.0% with private dental coverage had a dental visit that year, compared with 35.1% of those with public dental coverage and 26.3% of the subgroup with no dental coverage. The American Academy of Pediatric Dentistry (AAPD) recommends that every child be seen by a dentist following the eruption of the first tooth, but not later than 12 months of age. All other children should have additional periodic dental exams every six months (i.e., twice a year). Under Medicaid, states must adopt a dental periodicity schedule, which can be state-specific based on consultation with dental groups, or may be based on nationally recognized dental periodicity schedules, such as the AAPD's guidelines. One goal of the Healthy People 2010 initiative, a federal effort to increase quality and years of healthy life and eliminate health disparities, is that at least 66% of low-income children receive a preventive dental visit each year. Most Medicaid children under age 21 are entitled to Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services. The Medicaid statute (Section 1905(r)) defines required EPSDT screening services to include dental services that, at a minimum, include relief of pain and infections, restoration of teeth, and maintenance of dental health. In addition, care that is necessary to correct or ameliorate identified problems must also be provided, including services that states do not otherwise cover in their Medicaid programs. Beneficiary cost-sharing for services such as dental care is prohibited for children under age 18, and is optional for those ages 18-20. Federal law is intended to eliminate or significantly reduce major barriers to dental services for Medicaid children. Nonetheless, the research literature has identified several factors that affect the use of dental services among children. From a beneficiary perspective, barriers include, for example, ability to pay for care, navigating government assistance programs, finding a dentist who will accept Medicaid, locating a dentist close to home (especially in inner-city and rural areas), getting to a dentist office, cultural or language barriers, and lack of knowledge about the need for periodic oral health care. Most of the dental care provided in the United States is delivered by private dentists. In contrast to physician services, about half of all payments for dental services are made out-of-pocket, rather than through insurance. In addition, overhead in dental practices is high, averaging about 60 cents for every dollar earned, due in part to the need for expensive equipment. New dentists also face substantial debt because of the high cost of dental education. While there are questions about whether there is an overall shortage of dentists in the United States, there is general agreement that too few provide services to those who are publicly funded and those with special needs. Federal Medicaid law and regulations require that payment rates be sufficient to enlist enough providers so that services are available at least to the same extent that such services are available to the general population in the geographic area. Nonetheless, reimbursement rates are an obstacle to such participation. In addition to reimbursement rates, dentists typically cite two other reasons for their low participation rates in Medicaid: burdensome administrative requirements and patient behavior (e.g., infrequent care-seeking behavior and high no-show rates for dental appointments). A recent study of physicians also shows a negative relationship between administrative issues (delays in receiving payments) and participation in Medicaid. The Medicaid statute (Section 1902(a)(43)) requires states to inform and arrange for the delivery of EPSDT services to eligible children, and also includes annual reporting requirements for states. The tool used to capture these required EPSDT data is called the CMS-416 form. The current CMS-416 form (effective as of FY1999) includes the unduplicated count of EPSDT eligibles by age and basis of eligibility who receive (1) any dental services, (2) preventive dental services, and (3) dental treatment services. Classification into one of these measures is based on specific dental procedure codes recorded on provider claims. Across states in FY2006, use of dental services among Medicaid children was generally low, as shown in Table 1 . Receipt of any dental services among Medicaid children eligible for EPSDT ranged from 18.9% (in North Dakota) to 55.7% (in West Virginia). Receipt of preventive dental services ranged from 6.7% (in Utah) to 51.0% (in Vermont). Finally, receipt of dental treatment services ranged from 6.4% (in Nevada) to 40.8% (in West Virginia). During routine immunization and well-child visits, there are a number of opportunities for physicians to inform parents about the need for dental services for their children. Guidance from the American Academy of Pediatrics for well-child visits during 2006 (in effect since 2000) called for initial dental referrals at age three years, or as early as one year of age when indicated. Table 2 provides a more detailed analysis of the receipt of preventive dental services by age in FY2006. Across age groups within each state and for all reporting states as a whole, utilization patterns resembled a bell-shaped curve (see Figure 1 ). That is, children at the age extremes tended to receive fewer preventive dental services than children in the middle of the age range. Among nearly all states, the highest rates of preventive dental care were observed for the six- to nine-year-old age group. For this age group, 10 states had preventive dental rates over 50%, and one state (Vermont) met the Healthy People 2010 goal that at least 66% of such children receive a preventive dental visit. The higher rates of preventive dental care among children aged six to nine may be related in part to school entry requirements for childhood immunizations. In order to attend kindergarten at ages five and six, for example, all states require that children have received common childhood immunizations (e.g., vaccinations for diphtheria, tetanus, and acellular pertussis, or DTaP; measles, mumps, and rubella, or MMR; and polio). When children receive those immunizations, health care providers may make referrals for other health services, including dental care. Many states recognize that dental care is underutilized across most Medicaid sub-populations. In a September 2008 hearing before the Domestic Policy Subcommittee of the House Committee on Oversight and Government Reform, state officials and other representatives from Maryland, Virginia, North Carolina, and Georgia, and from the dental profession, described recent state actions to improve dental care for Medicaid children. Their recommendations included the following: increase dental reimbursement rates to make them more in line with private market-based rates; remove administrative barriers (e.g., prior authorization for certain procedures, simplified claims, and use of electronic billing); carve out dental benefits from managed care contracts and use a single dental vendor to establish a more stream-lined approach to processing claims and paying providers; when designing new dental program features, involve dentists and professional dental organizations; establish dedicated dental units in state governments to help guide policy decisions; and establish "dental extenders" to increase service capacity, including for example, (1) primary care medical professionals to provide oral evaluation and risk assessment, counseling for parents about oral hygiene, and application of fluorides, and (2) other allied dental providers that can do community outreach and education, and perform preventive services such as fluoride and sealant application, potentially expanding to additional dental treatment services. Other states may draw lessons from these experiences and recommendations. With respect to the final point above, provider groups hold varying opinions about the extent to which non-dentists can and should provide certain dental services. States may need to address such issues if they wish to expand access to dental care under Medicaid for children and other sub-groups.

According to guidelines published by the American Academy of Pediatric Dentistry, all youth should see a dentist for routine dental screening and preventive care twice a year. Dental care is a mandatory benefit for most Medicaid eligibles under the age of 21, however, nationwide, the majority of low-income children enrolled in Medicaid do not receive any dental services in a given year. There are many beneficiary and provider-related issues that contribute to inadequate access to and delivery of dental care. To address this problem, some states have undertaken new Medicaid initiatives to attract and retain dental providers that may serve as models for other state Medicaid programs.

On September 20, 2017, Hurricane Maria made landfall in Puerto Rico as a Category 4 storm with sustained wind speeds of over 155 miles per hour. At that time, the Commonwealth of Puerto Rico (the Commonwealth) was already in recovery mode following the glancing blow struck by Hurricane Irma on September 6, 2017, which left 70% of electricity customers without power. Puerto Rico's office of emergency management reported that Hurricane Maria had incapacitated the central el ectric power system, leaving the entire island without power as the island's grid was essentially destroyed. After Maria, officials were estimating that many of Puerto Rico's 3.5 million people could be without electricity for up to six months. Even before the 2017 hurricane season, Puerto Rico's electric power infrastructure was known to be in poor condition, due largely to underinvestment and the perceived deficient maintenance practices of the Puerto Rico Electric Power Authority (PREPA). With the poor state of the electricity system (physically, organizationally, and financially), and a perceived lack of transparency with regard to decisions (both before and since Hurricane Maria), discussions have already started about how the electricity system in Puerto Rico would be rebuilt, and under what regulatory regime it will operate. The primary focus thus far has largely been on restoring electric power in Puerto Rico, while the task of rebuilding the grid in Puerto Rico to modern standards is expected to follow. The new hurricane season in the Atlantic Basin (comprised of the Atlantic Ocean, the Caribbean Sea, and the Gulf of Mexico) began June 1, 2018, and will last until November 30. Congress continues to follow the recovery of Puerto Rico from the 2017 hurricanes, and the restoration of power. The electric power infrastructure for transmission and delivery of power was largely destroyed by the hurricanes, and PREPA's aging power generation facilities have been struggling to provide electricity. Whether, and how, Puerto Rico rebuilds its system into a reliable, efficient, and resilient electricity system will be of key interest to Congress. A large part of the Federal Emergency Management Agency's (FEMA's) role in Puerto Rico was centered on coordinating the restoration of electric power. For this task, FEMA brought about 900 portable generators (including several generation units providing over 50 Megawatts (MW) of capacity at the partially operating Palo Seco electric power generation station in San Juan), and tasked the U.S. Army Corps of Engineers (USACE) to oversee restoration of the electric transmission system, which was damaged extensively. PREPA itself has largely been focused on the restoration of the electric distribution system, and service connections to its customers. Both USACE and PREPA have used contractors to do much of the transmission and distribution system repairs. With the end of the grid repair part of USACE's mission assignment on May 18, 2018, almost 99% of PREPA's customers have seen their electric service restored. However, over 16,000 customers (in mostly rural parts of the island) were still without electricity after eight months. The power restoration mission has been described as incomplete by the USACE, with much of the work to date essentially to patch up the electric system to bring power back to the people of Puerto Rico. FEMA has agreed to leave over 700 portable generators on Puerto Rico past the end of the USACE's grid repair mission. PREPA is a public power utility owned by the Commonwealth of Puerto Rico, and is the largest supplier of electricity in the Commonwealth. As a public utility, PREPA is an eligible applicant that can receive federal assistance through the Federal Emergency Management Agency (FEMA). In particular, FEMA provides grant assistance through the Public Assistance Grant Program (PA Program) for the repair, restoration, and replacement of public facilities, as defined by law, in states and communities that have received major or emergency disaster declarations through the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act, P.L. 93-288 , as amended). USACE supports the Department of Homeland Security in carrying out the National Response Framework. If requested by the President and the affected governors under the Stafford Act, USACE's primary role under the framework is to provide emergency support in areas of public works and engineering. These USACE activities are funded through the Disaster Relief Fund and not through direct appropriations to the agency. In Puerto Rico, USACE not only restored emergency power but also led initial grid repair. USACE leadership in grid repair as part of domestic disaster recovery is a novel development. On September 30, 2017, the FEMA Administrator also tasked USACE to work with PREPA, Department of Energy (DOE), and FEMA to provide a unified effort to repair Puerto Rico's power grid. USACE was tasked with leading the planning, coordination, and integration of the electric power grid repair. The Unified Command Group (comprised of the Corps, FEMA, PREPA, and Puerto Rico's Restoration Coordinator) was organized to evaluate and coordinate efforts for the work of restoring power to prestorm electricity customers (i.e., not new customers, poststorm). PREPA's electric power generation plant at Palo Seco in San Juan is not operating at full power due to the condition of the facility. FEMA installed two "mega" 30 MW mobile diesel-fueled generators to stabilize power generation in the heavily populated region around San Juan. FEMA also installed several smaller mobile generators at Palo Seco to provide additional power at times of peak electric demand. Another large mobile 30 MW generator is installed at the Yabucoa Power Plant to help stabilize power generation in the southeastern region of Puerto Rico. USACE personnel are assisting with the operation and maintenance of the mobile generators. In light of the hurricanes and other disasters in 2017, Congress passed three supplemental appropriations bills in response to Administration requests made in September, October, and November 2017. Amounts for electric grid restoration in Puerto Rico were not specified, even though the third supplemental does allow for $2 billion in funding for "enhanced or improved electrical power systems" for all areas affected by Hurricane Maria. On September 1, 2017, the Trump Administration requested $7.85 billion in supplemental funding. On September 6, the House passed the relief package requested by the Administration as an amendment to H.R. 601 . On September 7, the Senate passed the bill further amended to include an additional $7.4 billion for disaster relief through the Department of Housing and Urban Development's (HUD's) Community Development Fund. The House subsequently passed the Senate-amended version of the bill on September 8, 2017, and it was signed into law by President Trump the same day ( P.L. 115-56 ), authorizing $15.3 billion in funding. On October 4, 2017, the Trump Administration requested an additional $12.7 billion for the Disaster Relief Fund (DRF). On October 12, the House passed H.R. 2266 with a further House amendment including $18.67 billion for the DRF (to the DHS Office of Inspector General for disaster audits), and also allowed some of that funding to be transferred to two other programs: $4.9 billion would go to FEMA's Disaster Assistance Direct Loan Program account, and $10 million to the Department of Homeland Security (DHS) Office of Inspector General for oversight of disaster-related activities. The bill subsequently was signed into law as P.L. 115-72 on October 26, 2017, authorizing $36.5 billion in funding. Of the $4.9 billion, up to $150 million is available for the cost of providing loans through the Advance of Non-Federal Share Program for the cost shares for Puerto Rico and the U.S. Virgin Islands related to Hurricanes Irma and Maria, and $1 million is for administrative expenses for the program. The Trump Administration made a third supplemental appropriations request for disaster relief and recovery funding on November 17, 2017, seeking roughly $44.0 billion in additional funding. On February 7, 2018, the Senate took up H.R. 1892 , with the Senate leadership adding S.Amdt. 1930 . This became the Bipartisan Budget Act of 2018 ( P.L. 115-123 ). Subdivision I of Division B of the amendment was titled "Further Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2018" and included more than $84 billion in additional disaster assistance funding. The amended bill passed the House and was signed into law by President Trump as P.L. 115-123 , authorizing $84.3 billion in funding . Out of that amount, FEMA received an additional $23.5 billion in funding authority for the DRF. P.L. 115-123 transferred up to $150 million of the $23.5 billion for DRF to the Disaster Assistance Direct Loan Program for costs related to Hurricanes Irma and Maria, of which $1 million may be used for administrative expenses for the program. In the Appendix, Table A-1 shows FEMA's estimate of the allocations for the approximately $3.2 billion in funding for various electric power restoration activities in Puerto Rico under federal disaster supplemental appropriations. According to FEMA, disaster charges related to Hurricanes Irma and Maria are being charged to P.L. 115-56 and P.L. 115-72 . Thus, Disaster Declaration 4339 is being charged to P.L. 115-56 and P.L. 115-72 . Once those funds are exhausted, funds from P.L. 115-123 will be used. However, FEMA has also stated that there has been discussion about which supplemental will be eventually charged with the various activities, and it is possible that the allocation of funds could change in the future. In recognition of the current fragility of the electric system in Puerto Rico, FEMA has left behind three large mobile power generation units, and charged the cost of the units to Disaster Declaration 4339. FEMA has also left behind a number of peaking generation units to support power demands on the grid, and these are also charged to the same disaster declaration account. The USACE's power restoration mission in Puerto Rico essentially ended on May 18, 2018, with approximately 99% of electric power customers having their power restored. Some USACE personnel remain to maintain the temporary generators still providing power on the island. The grid emergency in Puerto Rico led to triage-type decisions, resulting in electric distribution poles and transmission towers that were marginally structurally sound being left in place in some instances. These poles and towers will almost certainly have to be replaced, as the focus of the Commonwealth and the federal government turns from power restoration to rebuilding what has been described in the media as a "teetering" grid. While USACE's initial power restoration efforts were focused on repairing Puerto Rico's grid to "pre-storm" conditions, the poor state of the electrical system soon led to FEMA realizing that improvements would have to involve mobilizing the USACE to "rebuild the grid to U.S. code standards." When asked to what extent were improvements made to Puerto Rico's grid under authority granted by the Restoration of Damaged Facilities, 44 C.F.R. SS206.226(d), FEMA responded as follows: To date, power restoration has been completed as "Emergency work." The materials used for emergency power restoration were designed to current codes and standards. Many areas received materials that will ultimately strengthen the system. For example, some towers that toppled over (that were rusted and not maintained) were replaced with new towers. While some infrastructure was replaced and even upgraded to code, Puerto Rico Electric Power Authority (PREPA) was not able to use the optimal materials or design to maximize resilience, because it was focused on emergency work. That will be done in the permanent work phase. Approximately $2 billion in CDBG funds were made available to "enhance or improve" any electric power systems damaged by Hurricane Maria. To help guide the process of rebuilding Puerto Rico's grid, DOE reports that five national laboratories have collaboratively built a model of Puerto Rico's electricity system to test how to place microgrids, determine where to place power lines underground, and test siting of renewable energy projects where they can be sheltered from damage by extreme weather events. DOE believes its modeling efforts can therefore help guide HUD and FEMA CDBG investments to improve the power grid in Puerto Rico. In June 2018, DOE issued a report focused on enhancing the resilience of Puerto Rico's electric grid with recommendations that it believes may help prioritize investments for transmission, distribution, new generation, energy storage, microgrids, and strategic power reserves. This would allow potential impacts on other critical infrastructure such as the petroleum, natural gas, and telecommunications sectors to be estimated. An enhanced and improved electricity system in Puerto Rico would likely include Smart Grid technologies to allow incorporation of more varied energy choices, both at consumer and electric utility levels. DOE describes the Smart Grid as "an intelligent electricity grid--one that uses digital communications technology, information systems, and automation to detect and react to local changes in usage, improve system operating efficiency, and, in turn, reduce operating costs while maintaining high system reliability." However, the extent to which a Smart Grid would be fully deployed in Puerto Rico would likely depend on an evaluation of the potential benefits and costs of projected applications. Cyber- and physical security would have to be a consideration in the design, construction, and operations of a modern grid incorporating Smart Grid technologies. Section 21101 of the Bipartisan Budget Act of 2018 ( P.L. 115-123 ) provided $28 billion in supplemental appropriations to HUD, under the Community Development Fund. Under the appropriation, $16 billion of the appropriation was to be available for declared disasters in 2017, with $11 billion for state and local governments affected by Hurricane Maria. Of this amount, up to $2 billion was made available (until expended) for "enhanced or improved electrical power systems." Puerto Rico and the U.S. Virgin Islands are not specifically named as the intended recipients, and other states or local governments are also likely eligible for the grants. Section 21210 of the act also places a requirement for FEMA (with assistance from DOE and the Governor of Puerto Rico, among others) to report on a 12- and 24-month economic and disaster recovery plan for electric power systems and grid restoration. Puerto Rico's Governor Rossello initially proposed privatizing and selling PREPA's assets in January 2018. This was followed in March 2018 with a plan submitted to Puerto Rico's Legislative Assembly with details of how the privatization of the utility would proceed. One of the goals of the plan was to use public-private partnerships to stabilize the electric system and lessen prices for electricity customers. Details of how the privatization effort could accomplish these goals are unclear at this time. There have been two previous efforts at privatization of a public utility in Puerto Rico. Efforts were made in the 1990s and early 2000s to privatize the Puerto Rico Aqueduct and Sewer Authority (PRASA), but "service quality deteriorated and prices for consumers increased, as did the agency's operational deficit." Power recovery efforts in Puerto Rico have focused primarily on restoring power to electricity customers. However, according to reports in the media, the speed of emergency restoration has taken precedent over "basic quality standards" for the work. Puerto Rico is taking steps to adopt guidelines for electric systems maintenance used on the mainland. DOE has recommended that Puerto Rico follow guidelines for electric industry standards suggested by the Rural Utilities Service of the U.S. Department of Agriculture. However, the extent to which the restored infrastructure in Puerto Rico is rebuilt to current electrical standards will be important to the modernization efforts that would follow, and much of this work may have to be redone. Among the recommendations by DOE for improving electric reliability in Puerto Rico was the recommendation for an effective mutual assistance agreement to be in place. Mutual aid agreements help utilities recover from power outage situations often caused by severe weather events, and are typically negotiated in anticipation of a future need. Under mutual assistance agreements for electric utilities, the utility receiving aid generally pays for the costs incurred by the utility providing aid in accordance with the assistance agreement. Congress gave the Federal Energy Regulatory Commission (FERC) authority to oversee the reliability of the bulk-power system under the Energy Policy Act of 2005 ( P.L. 109-58 ). Reliability standards were added as Section 215 of the Federal Power Act to help ensure the reliable operation of the bulk power system so that "instability, uncontrolled separation, or cascading failures" will not occur as a result of a sudden disturbance. FERC-approved reliability standards address programs ranging from vegetation clearances in electric transmission line rights-of-way, to policies and procedures for critical infrastructure protection of power plants and supporting facilities. However, FERC-approved reliability standards are only applicable to the continental United States, and not to U.S. territories such as Puerto Rico. To date, no legislation has been proposed to change this. With the power restoration effort almost finished, the next focus for authorities will likely be on rebuilding Puerto Rico's electricity transmission and distribution systems, as a modern system built to U.S. industry standards is more likely to survive extreme weather events. According to DOE, vegetation trimming and clearance requirements for utilities on the U.S. mainland for reliability purposes should be enforced on Puerto Rico, and are likely to reduce power outages caused by weather-related events. While electric system reliability and system resiliency are related, they differ both in scope and regulatory requirement. Reliability, according to the U.S. Department of Energy (DOE), is the ability of the system or its components to withstand instability, uncontrolled events, cascading failures, or unanticipated loss of system components. Resilience, as defined by DOE, is the ability of a system or its components to adapt to changing conditions and withstand and rapidly recover from disruptions. Authorities in Puerto Rico were encouraged by DOE to define what system resilience entails for the island's power system. This may combine elements of power generation modernization, incorporating microgrids with hardening of infrastructure for the island's grid and communications systems. Once the backbone of Puerto Rico's electric system infrastructure is in place, then the major effort of making the system more resilient can follow. Enhancing resilience would likely require improvements that go beyond even rebuilding the electric power system according to standards in effect for U.S. mainland power utilities. Resilience may require additional improvements to the system aimed at better withstanding the effects of extreme weather events. According to the DOE, there are no commonly used metrics for measuring grid resilience. Electric system resilience is not mandated by federal law, but the ability of the system to adapt to changing conditions and recover rapidly from disruptions is a key attribute of electric system reliability. A 2016 report from several of DOE's national laboratories focused on the potential for a changing environment, and the need to maintain a resilient power system. The report identified risks ranging from weather events that disrupt transmission or distribution, to high impact, low frequency (HILF) risks such as catastrophic hurricanes. The report also built upon previous developments identified by DOE in the energy sector including growing potential threats from climate change, energy security, transitions from coal to natural gas generation, increased deployment of distributed and renewable generation, and rising investments to modernize the energy grid. While the report acknowledged that electric power systems "are currently well-equipped to effectively manage a broad range of threats," it recognized that some risks remain challenging and that "resilience efforts should shift toward these more complex risk management challenges." Some of the key risks to resilience identified in the study include the following: HILF threats associated with natural hazards (particularly weather or space weather) of historic intensity or large-scale physical, cyber, or electromagnetic attacks. Combined or blended threats associated with simultaneous exposure of the electric grid to one or more natural threats in combination with a physical or cyberattack. Threats that affect vulnerable components of the electricity system or that exceed critical thresholds. For example, distribution networks are often a weak link in the electric grid, but disruptions and outages associated with distribution are often localized. The report provided a number of recommendations "to guide future decision-making to enhance resilience of the U.S. electricity system." These recommendations included the following: Build a greater understanding of HILF events and capability to incorporate HILF threats into risk assessment. Scenario-based planning to explore multiple contingencies can be used to stress test the system and identify gaps in resilience. Develop a robust and scalable system of resilience metrics for the electricity system. Increase capacity to assess and manage risks and their uncertainties which may change over time and geographic areas. Future changes in not only the climate, but also population, technology, and societal preferences have important implications for resilience. Institute policies and practices that can help to streamline assessment and decisionmaking while enhancing coordination and communication can be just as important to resilience as the development of robust infrastructure and assets. How electric power systems incorporate resiliency into reliability planning will depend on their evaluation of risk to the system, and the financial and other resources available to system planners. Given the potential consequences of long-term electric power failures in Puerto Rico, Congress may consider further how various electric power systems incorporate resilience into reliability planning. Puerto Rico's reliance on fossil fuels for power generation raises cost, reliability, and potential health issues going forward. Before the 2017 hurricane season, coal and diesel fuel represented approximately 64% of fuel used for power generation. And the mega- and peaking electric combustion turbine generators left behind on Puerto Rico by FEMA are currently powered by burning diesel fuel. Coal and diesel fuel are expensive to import to Puerto Rico, and the reliance on diesel fuel for almost 50% of electricity on the islands has resulted in high prices, about 24 cents per Kilowatt-hour (kWh) for residential customers for power when compared to an average price of 13 cents per KWh on the U.S. mainland. On the financial side, PREPA's inability to pay for fuel for power generation was a major complicating factor following Hurricane Maria. On the health side, among other factors (such as an increase in mold spores), emissions from diesel- and gasoline-fueled power generators of all sizes have been reported in the media as being linked to rising asthma rates in Puerto Rico since the 2017 storm season. Puerto Rico adopted a Renewable Portfolio Standard (RPS) in July 2010 (Act 82 of 2010) which mandated that PREPA supply increasing amounts of retail electricity sales from eligible "green energy" resources, peaking at 20% of retail sales by 2035. In 2014, concerns about PREPA's ability to follow through with this goal led to new legislation (Act 57 of 2014) that established a Puerto Rico Energy Commission and an office of consumer advocacy. The Puerto Rico Energy Commission must have an independent regulatory role if RPS goals are to be met. Increasing renewable electric generation and requiring more energy storage may potentially reduce electricity costs, since most renewable electric technologies do not directly require a fossil fuel to produce power. However, the variability and intermittency of renewable generation means that energy storage, and traditional power generation capable of flexible, efficient operation (to increase or decrease power generation to support renewables) to provide reliable electricity would likely be needed. Increasing natural gas generation has been discussed by some as an option for Puerto Rico, since it is generally considered a cleaner-burning option to diesel fuel. But given Jones Act restrictions on importing liquefied natural gas to Puerto Rico, whether and how authorities may follow through with this option is unclear. In the 115 th Congress, S. 1894 was introduced in September 2017, as a bill to exempt Puerto Rico from the coastwise laws of the United States. The bill would revise the coastwise laws, commonly known as the Jones Act, that govern domestic transportation of merchandise or passengers by vessels. The Jones Act requires that vessels transporting merchandise or passengers between Puerto Rico and other U.S. ports be built in the United States, at least 75% owned by U.S. citizens, and mostly crewed by U.S. citizens. Jones Act requirements are currently waived with respect to vessels transporting passengers between Puerto Rico and U.S. ports. This bill would permanently exempt vessels transporting merchandise between Puerto Rico and other U.S. ports from those requirements. In the 115 th Congress, the "Puerto Rico and Virgin Islands Equitable Rebuild Act of 2017" ( S. 2165 ), introduced in November 2017, would provide for additional disaster-recovery assistance and other assistance to Puerto Rico and the U.S. Virgin Islands with respect to infrastructure, health care, agriculture, education, economic development, and environmental remediation, among other sectors. Specifically, regarding energy use in both territories, the bill would provide for the use of certain emergency assistance to rebuild electric grids, and would establish grant programs to promote energy efficiency and renewable energy. In the 115 th Congress, the "Puerto Rico and Virgin Islands Equitable Rebuild Act of 2018" ( H.R. 4782 ), introduced in January 2018, would provide additional disaster-recovery assistance and other assistance to Puerto Rico and the U.S. Virgin Islands with respect to infrastructure, health care, agriculture, education, economic development, and environmental remediation, among other sectors. Specifically, regarding energy use in both territories, the bill would provide for the use of certain emergency assistance to rebuild electric grids, and would establish grant programs to promote energy efficiency and renewable energy. Funds listed under "Project Worksheet" in Table A-1 are amounts associated with FEMA's Public Assistance program. Funds listed under Mission Assignment refer to the work orders issued by FEMA to another federal agency directing the completion of a specific task.

On September 20, 2017, Hurricane Maria made landfall in Puerto Rico as a Category 4 storm with sustained wind speeds of over 155 miles per hour. At that time, the Commonwealth of Puerto Rico was already in recovery mode following the glancing blow struck by Hurricane Irma on September 6, 2017, which left 70% of electricity customers without power. Puerto Rico's office of emergency management reported that Hurricane Maria had incapacitated the central electric power system, leaving the entire island without power as the island's grid was essentially destroyed. Even before the 2017 hurricane season, Puerto Rico's electric power infrastructure was known to be in poor condition, due largely to underinvestment and the perceived poor maintenance practices of the Puerto Rico Electric Power Authority (PREPA). The primary focus of territorial and federal efforts thus far has largely been on restoring electric power in Puerto Rico. The new hurricane season in the Atlantic Basin (comprised of the Atlantic Ocean, the Caribbean Sea, and the Gulf of Mexico) began on June 1, 2018, and will last until November 30. A large part of the Federal Emergency Management Agency's (FEMA's) role in Puerto Rico was centered on coordinating the restoration of electric power. For this task, FEMA made available about 900 portable generators (including several generation units providing over 50 Megawatts of capacity at the partially operating Palo Seco station in San Juan), and contracted with the U.S. Army Corps of Engineers (USACE) to oversee restoration of the electric transmission system, which was damaged extensively. PREPA itself has largely been focused on the restoration of the electric distribution system, and service connections to its customers. In Puerto Rico, USACE is not only restoring emergency power but also leading initial grid repair. With the end of the grid repair part of USACE's mission assignment on May 18, 2018, almost 99% of PREPA's customers have seen their electric service restored. Section 21101 of the Bipartisan Budget Act of 2018 (P.L. 115-123) provided $28 billion in supplemental appropriations to the U.S. Department of Housing and Urban Development (HUD), under the Community Development Block Grant (CDBG) fund. Of this amount, up to $2 billion was made available (until expended) for "enhanced or improved electrical power systems." Approximately $2 billion in CDBG funds were made available to "enhance or improve" any electric power systems damaged by Hurricane Maria. To help guide the process of rebuilding Puerto Rico's grid, the U.S. Department of Energy (DOE) reports that five national laboratories have collaboratively built a model of Puerto Rico's electricity system to test how to place microgrids, determine where to place power lines underground, and test siting of renewable energy projects where they can be sheltered from damage by extreme weather events. DOE believes its modeling efforts can therefore help guide HUD and FEMA CDBG investments to improve the power grid in Puerto Rico. DOE says that it plans to complete a "resilient grid model" to prioritize investments for "transmission, distribution, new generation, energy storage, microgrids, and strategic power reserves." This would allow potential impacts on other critical infrastructure such as the petroleum, natural gas, and telecommunications sectors to be estimated. With the power restoration effort almost finished, the next focus for authorities will likely be on rebuilding Puerto Rico's electricity transmission and distribution systems, as a modern system built to U.S. industry standards is more likely to survive extreme weather events. Once the backbone of the infrastructure is in place, then the major effort of making the electricity system of Puerto Rico more resilient can follow in earnest. Building resilience would likely require improvements that go beyond even modernization and rebuilding. Resilience may require additional improvements to the system aimed at better withstanding the effects of extreme weather events.

In general, there is no single, accepted, and specific definition of the term earmark for thecongressional appropriations process, nor is there a standard practice for earmarks. (1) However, for fundingprovided by Energy and Water Development (E&W) Appropriations laws to the Department ofEnergy (DOE), this report defines an earmark as "funds set aside within an account for individualprojects, locations, or institutions." In the FY2006 E&W appropriation law, earmarks were labeledas "congressionally directed projects" (2) and most often appeared in the joint explanatory statement of theconference report. (3) Accordingly, DOE budget request documents usually refer to earmarks as "congressionally directedactivities" and often report on them in separate account lines under the functional energy area towhich the earmarks are applied. (4) There is a general debate in Congress over earmarks, in which a key concern is thetransparency of earmark activities in the deliberative process. Critics of the current earmarkingprocess argue that it is not the subject of open debate and that the number of earmarks has grownrapidly. A "dear colleague letter" that seeks to change the process says, We believe the process of earmarking undermines theconfidence of the American public in Congress because the practice is not open, fair, or competitiveand tends to reward the politically well-connected. (5) Opponents further contend, as noted in the letter above, that it is wrong to take an earmark provisionthat survives neither the House or the Senate version of a bill and, nevertheless, have it inserted intoa conference report. This, they say, "stifles debate" and unfairly empowers well-financed lobbyists. Supporters of earmarking generally agree on the need for more transparency, but theycounter-argue that earmarks are not inherently wrong, nor should they be forbidden by rules ofcongressional process. At a February 2006 hearing on the subject, one proponent said, [The Constitution] placed the responsibility for makingspending decisions, not in the Executive Branch, but in the Congress.... Congress has always had thefinal say on that issue. Some would say that the earmarking process has been abused in recent yearsand I would agree, especially in cases where earmarks are inserted into Conference Reports that havenot been scrutinized by either body. (6) In general, proponents agree that some modification of the process may be needed, but otherwisecontend that earmarking is legitimate under the Constitution and is justified because elected officialsare better able to make decisions about funding for local needs than program managers in theexecutive branch. (7) In a review of the FY2006 DOE budget, the American Academy for the Advancement ofScience (AAAS) examined earmarks for DOE energy research and development (R&D) programsand found that ... earmarks eat up whatever increases there are for mostenergy programs and cut deeply into core R&D programs. Energy R&D earmarks total $266 millionin 2006, more than double the previous record from last year, and make up one out of every fiveR&D dollars. But they are especially concentrated in some areas, including biomass R&D wherethey make up more than 50% of total program funds, hydrogen (27%), and wind energy (33%), ratiosfar higher than in previous years. As a result, there will be enormous cuts to competitively awardedR&D grants in those areas. (8) Table 1 , below, shows the funding trends for earmarks under programs in DOE's Office ofEnergy Efficiency and Renewable Energy (EERE) and DOE's Office of Electricity Delivery andEnergy Reliability (OE). These trends are illustrated in Figure 1 , at the end of this report. The tableshows that EERE funding earmarks have more than tripled, from $46.0 million in FY2003 to $159.0million in FY2006. Table 1: Earmark Funding Trends for EERE andOE ($ millions) Sources: DOE Budget Requests FY2005, FY2006, and FY2007 and H. Rept. 109-275 . For FY2006, Table 3 (below) shows a $30.7 million increase in renewable energy R&Dearmarks, including increases of $16.4 million for Biomass & Biorefinery, $8.3 million for WindEnergy, and $4.1 million for Solar Energy. Of the $42.5 million increase for energy efficiency R&Dearmarks, nearly half ($20.3 million) was for Vehicle Technologies. Also, Table 3 shows a $28.8million increase for Electricity R&D earmarks under the Office of Electricity (OE). In early February 2006, the National Renewable Energy Laboratory (NREL) issued a pressrelease stating that FY2006 earmarks for EERE programs had left it with a $28 million gap in itsoperating funds, forcing NREL to cut 32 staff positions in hydrogen, biomass, and basic researchprograms. (9) The FY2007DOE Budget Request shows that the EERE share of NREL's budget was reduced from $182.5million in FY2005 to $161.6 million in FY2006, a $21 million (or 13%) reduction. (10) However, in late February 2006, DOE announced that an additional $5 million had been sentto NREL to immediately restore all 32 positions. DOE transferred the funding from other accountsand announced that it was working with Congress to restore funds to those accounts through severalmeans, including the "deobligation of funds provided to several congressionally directed projects in2001 and 2002 that have failed to make progress." DOE further noted, "Should Congress fully fundthe President's FY2007 request, unencumbered by earmarks, NREL should be able to maintain avibrant and stable workforce in the future." (11) In the State of the Union Speech given in January 2006, President Bush announced the launchof the American Competitiveness Initiative (ACI), which would increase support for R&D andtechnological innovation, including certain energy initiatives, (12) to help stimulate economicgrowth. The Administration's ACI document expresses concern about the potential for earmarks toimpede the proposed initiatives. Consistent with the previously noted definition, it defines earmarksas "the assignment of science funding through the legislative process for use by a specificorganization or project." It says, ... the practice signals to potential researchers that thereare acceptable alternatives to creating quality research proposals for merit-based consideration,including the use of political influence or appeals to parochial interests. The rapidly growing levelof legislatively directed funds undermines America's research productivity. (13) ACI contends that this type of funding is "rarely the most effective use of taxpayer funds." On the other hand, some proponents argue that R&D earmarks help spread the researchmoney to states and institutions that would receive less research funding through other means. Also,some supporters of earmarking contend that earmarks provide a means for funding unique projectsthat would not be recognized by the conventional peer-review system. (14) A key component of ACI, the Advanced Energy Initiative (AEI), proposes new initiatives forseveral energy technologies. (15) In particular, it embraces key initiatives (16) for hydrogen,biomass/biorefinery, and solar energy (17) that are reflected in the FY2007 DOE budget request as majorfunding increases for corresponding host programs under the Office of Energy Efficiency andRenewable Energy (EERE). (18) Table 2 shows the FY2006 funding earmarks for the Hydrogen, Biomass/Biorefinery, andSolar Energy programs at EERE. It also shows the proposed FY2007 funding increases for AEI'shydrogen, biomass/biorefinery, and solar energy initiatives under those programs. The table showsthat the FY2006 earmarks are nearly equal to the proposed increases for the hydrogen andbiomass/biorefinery initiatives; for the solar energy program, however, the total earmark is muchsmaller than the proposed AEI increase. Table 2. Earmark Funding Compared with AEIProposals ($ millions) Sources: DOE Budget Requests FY2005, FY2006, and FY2007 and H.Rept. 109-275 . Do the EERE earmarks seriously weaken R&D programs, as some opponentscontend, or do they merely provide a more equitable, although perhaps more decentralized,distribution of R&D funding, as some proponents argue? If renewable energy earmarks under EERE continue at the same or higherlevels in FY2007, would they lead to new cuts in staff positions at NREL? If Congress were to approve the Administration's requested increases for theAEI renewable energy initiatives, would earmarks continued at the same or higher levels act to diluteor otherwise erase some of the technological stimulation that the AEI aims to generate for itshydrogen, biomass/biorefinery, and solar energy goals? Table 3. DOE EERE and OE Earmarks,FY2005-FY2006 ($ millions, current) Sources: DOE, FY2007 Budget Request , vol. 3; H.Rept. 109-275 , pp. 143-145; and personalcommunication with Mr. Randy Steer, DOE/EERE, Feb. 23, 2006. Figure 1. DOE Earmark Funding for Renewable, Energy Efficiency, and Electricity

Appropriations earmarks for the Department of Energy's (DOE's) Energy Efficiency andRenewable Energy (EERE) programs have tripled from FY2003 to FY2006. According to theExecutive Office of the President and the private American Association for the Advancement ofScience (AAAS), this affects the conduct of programs and may delay the achievement of goals. Further, the Administration has proposed new funding for hydrogen, biomass/biorefinery, and solarenergy initiatives proposed under the American Competitiveness Initiative/Advanced EnergyInitiative (AEI). The report discusses the potential impact of congressional earmarks on EERE research anddevelopment (R&D) programs and, in particular, whether continued high levels of earmarks couldlead to new cuts in staff and dilute the desired impact of the AEI initiatives under EERE, shouldCongress decide to fund them. The congressional debate over earmarks centers on the transparency of the process, with afocus on earmarks not initially approved in either chamber that appear in a bill's conference report. Opponents contend that the earmarking process is not open, fair, or competitive. Proponents say itis a legitimate practice and is justified by policymakers' knowledge of local needs, as it spreadsresearch money to deserving states and institutions. The appropriation figures cited as "earmarks" in this report are those labeled by DOE budgetrequests as "congressionally directed activities" and, for FY2006, appear to be completely consistentwith figures in the FY2006 Energy and Water Development (E&W) conference report that arelabeled as "congressionally directed projects." In this regard, the earmark figures in this reportappear consistent with the definition of a congressional appropriations earmark as "funds set asidewithin an account for individual projects, locations, or institutions." This report will be updated as events warrant.

The U.S. effort to develop and deploy ballistic missile defenses (BMD) based on the concept of hit-to-kill or kinetic energy kill began three decades ago. This effort gained momentum as the primary focus of the U.S. BMD program in the mid-1980s with the announcement of President Reagan's Strategic Defense Initiative (SDI). Since that time, the United States has pursued numerous major kinetic energy BMD programs; these have produced hundreds of various flight test results. These test results and some very limited operational experience in wartime provide sufficient data for at least some conclusions regarding the decades-long U.S. investment in hit-to-kill as a concept for BMD. This overview report examines the U.S. investment in that concept, what that investment has produced, and raises various questions that might be considered. The development of BMD has shown important technological differences between efforts designed to attack and destroy short or medium-range ballistic missiles and those designed for long-range or intercontinental ballistic missiles. Therefore, this report will review and distinguish between the program results of theater missile defense (TMD) and national missile defense (NMD). CRS received historical flight test data from the Missile Defense Agency (MDA) in June 2005. It is important to note that for each of these flight tests there were various primary and multiple secondary objectives. Such flight tests are inherently complex and relatively costly. Therefore, multiple test objectives are designed to maximize the potential benefit derived from each flight test. The determination as to whether each of these objectives was reached was made by each relevant agency or military branch. All of the references to flight test results in this report are derived from the Flight Tests Results memorandum provided by the MDA unless otherwise referenced. CRS currently is awaiting an update of the historical flight test data from MDA, which will be reviewed and included in an updated version of this report later in 2007. Analysis of flight test data shows that the U.S. effort to develop, test, and deploy effective BMD systems based on this concept has produced mixed and ambiguous results. The actual performance in war-time of one kinetic-energy system currently deployed by the United States (i.e., the Patriot PAC-3) is similarly ambiguous. Further, it is not yet possible to assess the operational effectiveness the other deployed system (i.e., the National Defense System) against long-range ballistic missile threats. The United States has pursued four major kinetic energy interceptor long-range BMD or NMD programs since the early 1980s: Homing Overlay Experiment (HOE), Exoatmospheric Reentry Interceptor Subsystem (ERIS), National Missile Defense (NMD), and Ground-based Midcourse Defense (GMD). Each of these is briefly discussed below. The Army developed HOE in the late 1970s and early 1980s to test the viability of the emerging hit-to-kill concept. It conducted four intercept flight tests in 1983 and 1984. Three of the tests failed to intercept the intended target, but the fourth was considered a success. The Army did not identify any secondary flight test objectives. Nonetheless, the nascent SDI program then viewed the single reported success as evidence of the promise of non-nuclear BMD interceptor technologies. The technologies tested in HOE served as the basis for its successor program, ERIS. ERIS went through a lengthy development program before flight testing began in 1991 with the first of four intercept flight tests. Although the first was considered a successful intercept of the target, the following three intercept attempts through 1992 failed to destroy their intended targets. Even so, officials concluded that half of the primary and secondary test flight objectives were accomplished, and that the primary BMD concept being pursued held significant promise. The NMD program followed ERIS with a series of eight flight tests from 1997 to 2001. The first three were planned "fly-by" tests. There were no intercept attempt objectives. The first one failed to launch; however, the other two were deemed successful in their primary objectives. No secondary objectives were identified. Of the five planned intercept attempts, three reportedly intercepted their intended targets; one ended in failure because the interceptor kill vehicle did not deploy and the other failed because the on-board sensors designed to track and intercept the target failed. Officials concluded that 17 of the 20 primary objectives were met or partially met and all the secondary objectives by the planned intercept tests were met. The current GMD program (NMD's successor) began flight testing in 2002. Since that time six flight tests have taken place. Five of these flight tests were planned intercept attempts, with three resulting in failure to intercept. Officials concluded that about 80% of the program's 40 or so primary intercept flight test objectives were met; all the secondary objectives were met fully or partially. In 2004, the GMD undertook a new configuration with a different booster and interceptor. It flew a successful integration flight test (non-intercept test) in early 2004 with all primary and secondary objectives met. This system was deployed in Alaska and California in 2004 and declared operational after eight missiles were placed in silos. Subsequently, two planned intercept flight tests in December 2004 and February 2005 failed to launch. The currently deployed system thus remains to be tested successfully against targets it might be expected to intercept. In September 2006, a successful flight test exercise of the GMD system too place. Although not a primary objective of the data collection test, an intercept of the target warhead was achieved. Flight tests whose primary objectives are intercepts were scheduled for later in 2006, but have been delayed into 2007. Each of the four NMD programs were different, but they built on the limited successes of their predecessors. Of the eighteen or so attempted intercepts since the early 1980s, seven of them were considered successful, or roughly a 39% intercept rate in tests. Officials cited several reasons, including program hardware and software, as well as interceptor silo and target launch failures. From that, there do not appear to be any recognizable patterns that emerge to account for the mostly unsuccessful history of the effort. Nor is there conclusive evidence of a learning curve, such as increased success over time relative to the first tests of the concept 20 years ago. Program supporters can point to limited evidence that, under controlled conditions, there is reason to support the contention that kinetic energy interceptor technology for use against long-range ballistic missiles holds promise. Critics of the flight test effort to date, whether they support missile defense or not in general, can raise questions about the success rate and the realism of the testing effort, given a generation of U.S. investment in its development. Can kinetic energy interceptor technologies for use against long-range ballistic missiles be developed successfully and deployed as an effective part of the U.S. military posture? The answer appears to be ambiguous at this juncture. Can the now-deployed NMD system protect the United States from long-range ballistic missile attacks? Currently, there is insufficient empirical data to support a clear answer. There have been a number of major kinetic-energy TMD programs since the early 1990s: Extended Range Intercept Technology (ERINT), Flexible Lightweight Agile Guided Experiment/Small Radar Homing Intercept Technology (FLAGE/SRHIT), Navy Lightweight Exoatmospheric Projectile (LEAP), the Navy Aegis BMD, Patriot PAC-3, and Theater High Altitude Area Defense (THAAD). Each of these are briefly examined below. The Army's FLAGE/SRHIT program conducted eight flight tests from 1984-1987 to prove the feasibility of lower atmosphere intercepts. Five of these flight tests were planned intercept attempts. From the data provided by MDA all the primary and secondary test objectives in the series were achieved. The targets included stationary targets in the atmosphere and an air-launched target. Only one target, however, was a short-range missile. The degree to which any conclusions might be drawn regarding very short-range hit-to-kill in this effort is therefore limited. Building on the SRHIT effort, the Army's ERINT flight test program (1992-1994) conducted five flight tests. Three of these were planned intercepts; two of these three flight tests successfully intercepted their targets (the failure cited was hardware related). Despite the missed intercept, the Army concluded that all of its primary test objectives for the three tests were met fully or partially, and that all but one of the 26 secondary objectives in the three tests were met. As far as the two non-intercept flight tests were concerned, the Army determined that all of its primary and secondary flight test objectives were met. The Navy developed its own indigenous LEAP program, which flight tested from 1992-1995. Three non-intercept flight tests achieved all primary and secondary objectives. Of the five planned intercept tests, only the second was considered a successful intercept, however. Failures were due to various hardware, software, and launch problems. Even so, the Navy determined that it achieved about 82% of its primary objectives (18 of 22) and all of its secondary objectives in these tests. Building on some of its previous efforts in SRHIT and ERINT, the Army's THAAD program nevertheless experienced significant challenges from 1995 to 1999. After three relatively successful non-intercept flight tests (almost all of the primary and secondary test objectives were partially or fully met), THAAD failed to intercept in seven of its nine planned attempts. However, the THAAD intercept flight test program met about half of its primary and secondary objectives. Because the last two intercepts were successful (the last being in 1999), the Department of Defense and Congress agreed to further develop, but revamp, the THAAD program. The current THAAD program is a redesign of the former THAAD system. Recently, the program conducted its first flight test (non-intercept) to examine the launch, boost, and fly-out functions of the THAAD missile. MDA officials considered this test successful. The Army's Patriot (Phased Array Tracking to Intercept of Target) program has a history dating to the 1960s as an air-defense weapon. Only in the mid-to-late 1980s at the insistence of Congress was the program given a specific anti-missile role. Using a focused explosive charge (non-nuclear and not hit-to-kill technology), Patriot PAC-2's (Patriot Antitactical Capability) 1991 Desert Storm performance remains controversial. After the war, Patriot improvements for missile defense were widely supported. Testing of the Patriot PAC-3 with a kinetic energy interceptor began in 1997. After the initial two successful non-intercept flight tests (most of the objectives were met), the Patriot PAC-3 attempted 27 intercept tests, of which 21 (about 78%) were considered successful intercepts. Additionally, some 92% of the primary intercept test objectives were met, as well as almost all of the known secondary objectives. In terms of actual wartime use, the Patriot PAC-3 was used in Operation Iraqi Freedom (OIF) in 2003, but its role was very limited (four missiles fired in two successful engagements) and thus, while suggestive of significant promise, its operational effectiveness remains uncertain based on limited empirical data. Building on its previous efforts as well, the Navy (as of mid-2005) had conducted six (of seven) successful intercept tests of its Aegis BMD (or Navy sea-based) program using the Standard Missile-3 (SM-3) Block 1 missile (2002-2005). The most recent test included in the data sheets provided to CRS was against a warhead target that separated from the booster rocket itself, in contrast to earlier intercept tests against SCUD-type ballistic missiles. The most recent flight test intercept attempt (in December 2006) was not completed due to technical problems aboard the Aegis cruiser involved prior to the launch of the two interceptor missiles themselves. Primarily because of the Patriot PAC-3 flight test and operational record and the more recent Navy BMD program, the concept of hit-to-kill for TMD appears promising. Older TMD efforts were not as suggestive, and the foundation for the current THAAD program is based mostly on prior test failures. Nonetheless, because there is no flight test data yet on the current THAAD program, nothing conclusive can be said about its potential future for success. And, although the Patriot PAC-3 shows promise, some might note that the Patriot system itself has been evolving for about 40 years now. Additionally, much of the Navy infrastructure and technology supporting the Aegis SM-3 is decades old and is comparable in evolution to the Patriot air and missile defense system. A central question might be: at this stage how well is the United States doing in developing effective ballistic missile defenses based on this kinetic energy kill concept? Since the announcement of the SDI program in the mid-1980s the United States has spent about $100 billion on missile defense with a primary focus on the kinetic energy or hit-to-kill concept. U.S. programs began looking at that concept a decade earlier into the mid-1970s. Supporters of hit-to-kill could argue that what the United States is striving to do has indeed proven to be challenging, but that progress is being made. Furthermore, success measured in terms of operationally effective deployed BMD systems based on this concept, loom on the horizon. They could also argue that threats posed from the proliferation of ballistic missiles and weapons of mass destruction (WMD) must be addressed by developing effective BMD systems. Supporters and skeptics could argue the need for an independent, comprehensive evaluation of the test record to determine whether any systemic or conceptual challenges are impeding the U.S. effort. Although some defense officials have provided testimony and private and government agencies have looked in detail at a few of these tests, some might argue that a comprehensive and independent review of the entire record to date has not been undertaken and is warranted. Other observers might argue that alternatives should be pursued as a hedge against the possible failure of this concept for either NMD or TMD. Such alternatives could be military in nature, such as reducing the emphasis on BMD in favor of increased emphasis on counter-force (i.e., attacking and destroying enemy missile systems before their missile could be launched). Alternatives also could focus on other ways to mitigate ballistic missile proliferation (e.g., arms control). Some alternatives, such as a return to nuclear BMD concepts or emphasis toward more exotic technologies (e.g., lasers or weapons in space) might face opposition on political or technical grounds. Still other observers could argue that in general the United States needs to make a more concerted effort to increase developmental testing across the board, before these systems are ready for more realistic testing regimes. They could argue that almost all the testing to date is of a developmental nature and that an operational testing regimen has not been developed, but remains essential. Only then, they could argue, could assessments to confirm the validity of the hit-to-kill concept for BMD be made with confidence.

For some time, U.S. ballistic missile defense (BMD) programs have focused primarily on developing kinetic energy interceptors to destroy attacking ballistic missiles. These efforts have evolved over 30 years and have produced a significant amount of test data from which much can be learned. This report provides a broad overview of the U.S. investment in this approach to BMD. The data on the U.S. flight test effort to develop a national missile defense (NMD) system remains mixed and ambiguous. There is no recognizable pattern to explain this record nor is there conclusive evidence of a learning curve over more than two decades of developmental testing. In addition, the test scenarios are considered by some not to be operational tests and could be more realistic in nature; they see these tests as more of a laboratory or developmental effort. Success and failure rates (and their technical causes) have shown relative consistency through this period. The U.S. flight test effort to develop theater missile defense (TMD) systems appears more promising. In relative terms, developmental and operational testing of TMD systems has been more successful than the NMD effort. Nonetheless, TMD systems that evolved from mature, existing ground and sea-based air-defense systems have demonstrated greater test success than other TMD programs. How effective has the U.S. investment been in developing kinetic energy BMD systems? Observers could make any number of arguments as to what the record means and what could be done to improve the effectiveness of systems under development and of those deployed. Some observers have suggested that the 110th Congress might review the U.S. investment in the kinetic energy concept to date to determine how best to proceed with the U.S. BMD effort in the coming years. This report will be updated as events warrant.

This report provides background data on U.S. arms sales agreements with and deliveries to its major purchasers during calendar years 2002-2009. It provides the total dollar values of U.S. arms agreements with its top five purchasers in five specific regions of the world for the periods 2002-2005, 2006-2009, and for 2009, and the total dollar values of U.S. arms deliveries to its top five purchasers in five specific regions for those same years. In addition, the report provides a listing of the total dollar values of U.S. arms agreements with and deliveries to its top 10 purchasers for the periods 2002-2005, 2006-2009, and for 2009. The data are official, unclassified, United States Defense Department figures compiled by the Defense Security Cooperation Agency (DSCA), unless otherwise indicated. The data have been restructured for this report by DSCA from a fiscal year format to a calendar year format. Thus a year in this report covers the period from January 1 to December 31, and not the fiscal year period from October 1 to September 30. The following regional tables ( Tables 1-5 ) provide the total dollar values of all U.S. defense articles and defense services sold to the top five purchasers in each region indicated for the calendar year(s) noted. These values represent the total value of all government-to-government agreements actually concluded between the United States and the foreign purchaser under the Foreign Military Sales (FMS) program during the calendar year(s) indicated. In Table 6 , the total dollar values of all U.S. defense articles and defense services sold to the top 10 purchasers worldwide are provided for calendar year period noted. All totals are expressed as current U.S. dollars. The following regional tables ( Tables 7-11 ) provide the total dollar values of all U.S. defense articles and defense services delivered to the top five purchasers in each region indicated for the calendar year(s) noted for all deliveries under the U.S. Foreign Military Sales (FMS) program. These values represent the total value of all government-to-government deliveries actually concluded between the United States and the foreign purchaser under the FMS program during the calendar year(s) indicated. Commercial licensed deliveries totals are excluded, due to concerns regarding the accuracy of existing data. In Table 12 , the total dollar values of all U.S. defense articles and defense services actually delivered to the top 10 purchasers worldwide is provided. The delivery totals are for FMS deliveries concluded for the calendar year(s) noted.

This report provides background data on U.S. arms sales agreements with and deliveries to its major purchasers during calendar years 2002-2009, made through the U.S. Foreign Military Sales (FMS) program. In a series of data tables, it lists the total dollar values of U.S. government-to-government arms sales agreements with its top five purchasers, and the total dollar values of U.S. arms deliveries to those purchasers, in five specific regions of the world for three specific periods: 2002-2005, 2006-2009, and 2009 alone. In addition, the report provides data tables listing the total dollar values of U.S. government-to-government arms agreements with and deliveries to its top 10 purchasers worldwide for the periods 2002-2005, 2006-2009, and for 2009 alone. This report is prepared in conjunction with CRS Report R41403, Conventional Arms Transfers to Developing Nations, 2002-2009, by [author name scrubbed]. That annual report details both U.S. and foreign arms transfer activities globally and provides analysis of arms trade trends. The intent here is to complement that elaborate worldwide treatment of the international arms trade by providing only the dollar values of U.S. arms sales agreements with and delivery values to its leading customers, by geographic region, for the calendar years 2002-2005, 2006-2009, and 2009. Unlike CRS Report R41403, this annual report focuses exclusively on U.S. arms sales and provides the specific names of the major U.S. arms customers, by region, together with the total dollar values of their arms purchases or deliveries. This report will not be updated.

The chairmen of the three committees with jurisdiction over health policy in the U.S. House of Representatives have introduced the America's Affordable Health Choices Act of 2009, H.R. 3200 , and the Affordable Healthcare for America Act of 2009, H.R. 3962 , to promote health care reform, and the Small Business and Infrastructure Jobs Tax Act of 2010, H.R. 4849 , to provide tax relief to small businesses and extend the Build America Bond program. Among the revenue provisions in all of the acts is one designed to curb "treaty shopping." The most recent preliminary revenue estimates project a revenue gain of $3.8 billion over 5 years and $7.7 billion over 10 years. Treaty shopping occurs where a foreign parent firm in one country receives its U.S.-source income through an intermediate subsidiary in a third country that is signatory to a tax-reducing treaty with the United States. The purpose of a treaty shopping is solely to reduce U.S. tax liability. Supporters of proposals to curb treaty shopping argue that it would restrict a practice that deprives the United States of tax revenue and that it is unfair to competing U.S. firms. Opponents maintain that proposals to curb treaty shopping would harm U.S. employment by raising the cost to foreign firms of doing business in the United States and may violate U.S. tax treaties. In addition, some Members of Congress have objected to the use of revenue-raising tax measures under the jurisdiction of tax-writing committees to offset increases in spending programs authorized by other committees Tax treaty proposals in prior Congresses have been directed at U.S. tax treatment of foreign firms that conduct business in the United States, and to understand how the proposed changes would have affected current law treatment it is useful to take a brief look at the existing structure. A foreign firm that earns business income in the United States is at least potentially subject to two levels of U.S. tax: the corporate income tax and a flat "withholding" tax. The U.S. corporate income tax may apply whether the foreign firm conducts its business through a U.S.-chartered subsidiary corporation or through a branch of the foreign parent that is not separately incorporated. In the case of a U.S. subsidiary, U.S. tax applies because the United States generally taxes all U.S.-chartered corporations, regardless of their ownership; U.S. taxes apply to foreign branch income because the United States asserts the right to tax foreign-chartered corporations on their income from the active conduct of a U.S. trade or business. In addition, the United States applies a withholding tax on interest, dividends, rents, royalties, and other "fixed or determinable" income foreign corporations and other non-residents receive from sources within the United States. The tax is required to be withheld by the U.S. payer (hence "withholding") and is applied on a "gross" basis without the allowance of deductions. The rate of the tax is nominally 30%. However--and importantly for the proposal at hand--the tax is frequently reduced or eliminated under the terms of one of the many bilateral tax treaties the United States has signed. In principle, the withholding tax does not apply to intra-firm repatriations of income where a foreign firm's U.S. operation is not separately incorporated in the United States. Since the Tax Reform Act of 1986 (TRA86; P.L. 99-514 ), however, the United States has applied a 30% "branch tax" as a parallel to the withholding tax (and that also may be reduced by treaty). Theoretically, both levels of tax could apply to a foreign firm's U.S. source income. Picture, for example, a foreign firm that operates a U.S.-chartered subsidiary that remits its income to the home-country parent by means of a stream of dividend payments. Dividend payments are not deductible under the corporate income tax, so the tax applies in full to the subsidiary's earnings. Then, if the dividends are paid directly to a parent in a non-treaty country, the 30% withholding tax applies. The combined rate of the two taxes on dividend payments could amount to as much as 53.8%. This combined rate, however, is usually not reached. First, many types of intra-firm payments are tax-deductible under the corporate income tax, even if the payments are to related foreign parents. For example, interest on intra-firm debt is tax deductible (albeit with some restrictions, as mentioned below); royalties paid for the use of patents, trademarks, and other intangible assets are likewise deductible. Thus, a foreign firm can eliminate the U.S. corporate income tax on income transmitted to its parent via tax-deductible payments. The foreign parent can, for example, finance its U.S. operations by making loans to the U.S. subsidiary; or it can charge the U.S. subsidiary royalty fees for the use of patented technology. Tax treaties frequently reduce or eliminate the withholding tax. Like most developed countries, the United States is signatory to a large number of bilateral tax treaties. The treaties address a variety of topics aside from withholding taxes--for example, reciprocal assurances of non-discrimination and provisions for the exchange of information by tax authorities. Reciprocal reduction of withholding taxes is, however, a key element of most treaties. To illustrate, the U.S. Internal Revenue Service publication on tax treaties lists tax-treaty withholding tax rates for 56 countries; the top 30% rate applies to intra-firm interest payments in only four instances and is completely eliminated for 20 countries. In short, notwithstanding the two potential levels of tax, U.S. tax on payments foreign subsidiaries make to their parents can be eliminated or substantially reduced in the case of payments made to firms in a large number of countries. H.R. 3200 , H.R. 3962 , and H.R. 4849 , however, focus on firms whose ultimate home country did not have a tax-reducing treaty with the United States. The next section looks at how such firms are nonetheless able to use "treaty shopping" to reduce or eliminate their U.S. tax. Not all countries have income tax treaties with the United States, so if interest, dividends, royalties, or similar U.S. income were paid directly to firms from these countries, the full 30% withholding tax would apply. "Treaty shopping" is an arrangement where a firm gets around the absence of a treaty by routing its U.S. income through intermediate subsidiary corporations located in third countries where lower or non-existent withholding taxes apply. Treaty shopping, further, is not used exclusively by foreign firms conducting business in the United States; it is also used by foreign "portfolio" investors, whose U.S. investments are only financial. However, the focus of H.R. 3200 , and H.R. 3962 , as described below, on deductible payments, implies that it is targeted to treaty-shopping by foreign corporations, and such is also the focus of this report. The following countries listed by the U.S. Commerce Department as having significant direct investment in the United States are not on the IRS list of tax-treaty countries: Thus, firms whose ultimate home is one of these non-treaty countries are candidates to benefit from treaty shopping. But treaty shopping likely does not occur exclusively in "either/or" situations, where a firm faced by the full 30% withholding tax routes income through a country where no tax applies. Treaty-shopping is likely a matter of degree; a firm facing a 10% rate in its true home country, for example, could benefit substantially from routing U.S. income through a country where no tax applies. Or, a firm facing the 30% rate could benefit by channeling income through an intermediary taxed at only 15%. Further, while the exclusive focus of the current legislative proposals is deductible payments--for example, interest and royalties--treaty shopping can also benefit non-deductible payments such as dividends. To be attractive as intermediate stops in the treaty-shopping process, a country's treaty provisions must reduce or eliminate the applicable withholding tax rate with the United States, thus reducing U.S. tax on payments to the intermediate subsidiary. In addition, however, the intermediate country must impose no taxes of its own that negate the advantage of a reduced U.S. tax. According to the IRS list, a 0% rate applies to 20 treaty countries in the case of interest payments. Even if no withholding tax applies to a country, its treaty may contain "limitation on benefits (LOB)" provisions that prevent its use as a conduit for U.S. income. These provisions (also discussed below) have been included in every U.S. treaty that has entered into force since 1990; they have all denied treaty benefits to residents of third countries. In the 111 th Congress, both the America's Affordable Health Choices Act of 2009, H.R. 3200 , the Affordable Healthcare for America Act of 2009, H.R. 3962 , and the Infrastructure Jobs Tax Act of 2010, H.R. 4849 , propose to limit tax treaty benefits with respect to U.S. withholding tax imposed on deductible related-party payments. This proposal is identical to one proposed by H.R. 3970 in the 110 th Congress. Under the proposal if a U.S. subsidiary made a deductible payment to a foreign corporation that had a common foreign parent, and the withholding tax rate on the payment would be higher if the payment were made directly to the common parent, the higher rate would have been applied. For example, if the payment were made to a fellow subsidiary in country Y where no U.S. withholding tax applied, and the common parent of the U.S. subsidiary and country-Y subsidiary was a resident in country X where the applicable tax is 15%, the rate that would have been applied to payments to the country-Y subsidiary would be 15%, notwithstanding the nominal 0% rate. The provision would only apply to payments deductible under the U.S. corporate income tax (e.g., interest and royalties). The degree of common ownership applied by the bill would be 50%. Thus, the provision would apply to payments to a foreign corporation where the U.S. corporation and the payee corporation were linked to a common foreign parent by chains of at least 50% ownership. H.R. 3200 , H.R. 3962 , and H.R. 4849 all propose that the tax on a payment to a subsidiary could not be reduced unless the withholding tax was also reduced on a direct payment to the parent. Thus, it seems that the acts' restrictions would not apply where a tax-reducing treaty exists with a parent's home country (a treaty the restriction might otherwise violate). Members in the 110 th Congress considered several, largely similar, proposals to curb treaty shopping. All of the proposals would have withheld taxes at the rate of the common foreign parent. The treaty provisions in H.R. 3970 were modeled off of provisions contained in H.R. 2419 and H.R. 3160 with additional language to ensure compliance with existing tax treaties. In all of these proposals, the treaty-shopping provisions would have only applied to payments deductible under the U.S. corporate income tax (e.g., interest and royalties). The degree of common ownership applied by the bills would have been 50%. Thus, the provision would have applied to payments to a foreign corporation where the U.S. corporation and the payee corporation are linked to a common foreign parent by chains of at least 50% ownership. A central concern of supporters of the anti-treaty-shopping proposal is tax revenue: foreign firms that reduce their U.S. withholding taxes with treaty shopping reduce the tax revenue the United States collects on U.S.-source income, and in international taxation, the country of source--in this instance, the United States--traditionally has the primary right to the tax revenue it generates. Supporters cite fairness as underlying this concern, contrasting the low U.S. taxes treaty-shopping foreign firms pay with taxes paid by U.S.-resident individuals and businesses. Opponents of the measure have argued that the provision would increase the cost to U.S. firms of doing business in the United States, and would thus harm U.S. employment and wages. The tax-treaty proposals in the 111 th and 110 th Congresses were not the first instance where U.S. policymakers have attempted to restrict treaty shopping. Conceptually, one alternative to legislation is to include such restrictions in tax treaties. As described above, the treaties that the United States has negotiated in recent decades have all contained limitation on benefits (LOB) clauses that deny treaty benefits to third-country residents. The LOB provisions generally do so by requiring firms qualifying for a treaty benefit to be owned primarily by residents of the treaty country and not erode the tax base of the treaty country by making deductible payments to third-country residents. The current U.S. model income tax treaty contains such provisions. One analyst has noted, however, that considerable time would be required to renegotiate all U.S. treaties with such an approach, and not all treaty countries would be likely to agree to stringent LOB provisions. Legislation explicitly restricting treaty shopping was included as part of TRA86's branch tax provisions. Under its terms, a treaty cannot reduce the branch tax for a foreign firm where less than 50% of the firm's stock is owned by residents of the treaty country, or where 50% or more of the firm's income is used to meet liabilities to non-residents. Note that these conditions parallel those of the model income tax treaty. An existing provision of the tax code that does not directly address treaty shopping, but that is nonetheless related, is the code's "earnings stripping" rules applied by Section 163(j). Earnings stripping refers to the removal by foreign firms of profits earned in the United States by arranging for the subsidiary U.S. corporation to make tax-deductible payments--for example, interest and royalties--to the foreign parent. As described above, such a practice eliminates the U.S. corporate income tax on the deductible payments and, in combination with treaty shopping, can remove all U.S. tax on a foreign firm's U.S. income. Provisions designed to limit earnings stripping by foreign firms investing in the United States were enacted with the Omnibus Budget Reconciliation Act of 1989 ( P.L. 101-239 ) as Section 163(j) of the Internal Revenue Code. The provisions deny deductions for interest payments to related corporations, but apply only after a certain threshold of interest payments and level of debt-finance is exceeded. While the provisions do not address treaty shopping per se, they do address the same general policy goal: attempting to ensure that foreign firms pay some amount of U.S. tax on their U.S. income. Economic analysis of restrictions on treaty shopping begins by focusing on tax revenue: when foreign firms avoid withholding taxes by routing income through treaty-country intermediaries, the United States loses the tax revenue that it would collect if the income were paid directly to a foreign parent and a higher withholding tax were applied. As noted at the outset, the treaty-shopping restrictions proposed in H.R. 3200 , H.R. 3962 , and H.R. 4849 would increase revenue by an estimated $3.8 billion and $7.7 billion over 5 and 10 years, respectively. But beyond the proposals' revenue effect, economic analysis poses a more fundamental question: would the plans enhance U.S. economic welfare? The answer to this question still involves the plan's tax revenue impact, but it also looks at a balance--that between the benefit from collecting tax revenue, on the one hand, and from attracting foreign investment to the United States, on the other. The economic benefit from collecting tax revenue from foreign firms is clear: in collecting revenue, the United States retains in its own economy a portion of the profit that foreign firms would otherwise repatriate to their home country. The counterpoised benefit--the economic benefit from foreign investment--needs a closer look. Popular discussions of foreign investment frequently focus on jobs. But while "inbound" foreign investment can create new employment in particular U.S. geographic areas, its positive impact on the U.S. economy as a whole is on wages rather than jobs, according to economic theory. But, while foreign investment can attract employment from one sector of the economy to another, it does not have an appreciable long-run impact on aggregate employment--a policy goal that is the target of aggregate fiscal and monetary policy rather than targeted tax provisions. Foreign investment can, however, increase wages. Basic economic theory indicates that increases in capital serve to increase labor productivity: foreign investment thus increases productivity of domestic labor. Another basic economic principle holds that, in smoothly functioning markets, labor is paid a wage that is equal to its marginal product. It follows, then, that increases in foreign investment in the domestic economy increase domestic wages. The balance, then, is this: a given increase in taxes on foreign investors increases tax revenue and produces tax revenue, on the one hand, and a given increase in foreign investment produces higher wages, on the other. But if foreign firms are sensitive at all to taxes, a given tax increase also reduces the U.S. investment they undertake, thus reducing their positive impact on U.S. wages. From an economic point of view, the optimal policy is to tax foreign investors such that the added revenue from an increment of tax is just equal to the reduction in wages that increment would cause. The analogy of a goose and golden egg is perhaps apt. Is the rate of tax on foreign firms close to the optimal rate? Would the proposals' treaty-shopping restrictions move towards or away from the optimal point? In part, the answer depends on exactly how sensitive foreign firms are to U.S. taxes--the elasticity of supply of foreign investment, in economic parlance. The more sensitive is foreign investment, the lower the optimal tax rate. A thorough investigation of the elasticity of supply is beyond the scope of this report. Importantly, however, in some cases foreign firms may be able to use treaty shopping to eliminate all U.S. tax on their U.S. earnings, and it is unlikely that foreign investors are so sensitive to U.S. taxes that the optimal tax rate on foreign investment is zero. If this is the case, economic theory suggests that it is likely that the proposal would increase U.S. economic welfare. There are, however, a couple of important qualifications. One is economic: the analysis does not take into account possible counter-actions by foreign governments, which might erode or offset any benefit to the United States. For example, a country that is home to firms that would be affected by the treaty-shopping proposals might impose anti-treaty-shopping restrictions of its own that would affect U.S. firms' investment within its own borders. The other is non-economic: as noted above, some have argued that the anti-treaty-shopping proposal in H.R. 2419 , from the 110 th Congress, would abrogate existing U.S. tax treaties. An analysis of these questions is, however, beyond the scope of this report.

"Treaty shopping" occurs where a foreign parent firm in one country receives its U.S.-source income through an intermediate subsidiary in a third country that is signatory to a tax-reducing treaty with the United States. Supporters of proposals to curb treaty-shopping argue that it would restrict a practice that deprives the United States of tax revenue and that it is unfair to competing U.S. firms. Opponents maintain that proposals to curb treaty-shopping would harm U.S. employment by raising the cost to foreign firms of doing business in the United States and may violate U.S. tax treaties. In addition, some Members of Congress have objected to the use of revenue-raising tax measures under the jurisdiction of tax-writing committees to offset increases in spending programs authorized by other committees. In the 111th Congress, the America's Affordable Health Choices Act of 2009, H.R. 3200, the Affordable Healthcare for America Act of 2009, H.R. 3962, and the Small Business and the Infrastructure Jobs Tax Act of 2010, H.R. 4849, include tax-treaty proposals which would restrict in certain cases the use of tax-treaty benefits by foreign firms with operations in the United States. The most recent preliminary revenue estimates projected a revenue gain of $3.8 billion over 5 years and $7.7 billion over 10 years, which would be used to partially offset either the cost of health care reform or provide tax relief to small businesses and extend the Build America Bonds. These provision are identical to the provision offered in the Tax Reduction and Reform Act of 2007, H.R. 3970, during the 110th Congress. Economic theory suggests there is an economically optimal U.S. tax rate for foreign firms that balances tax revenue needs with the benefits that foreign investment produces for the U.S. economy. Under current law, the treaty-shopping arrangements some foreign firms undertake may combine, in some cases, with corporate income-tax deductions to eliminate U.S. tax on portions of their U.S. investment. In these cases, economic theory suggests that added restrictions on treaty-shopping would improve U.S. economic welfare. This analysis, however, does not consider possible reactions by foreign countries where U.S. firms invest, nor does it consider possible abrogation of existing U.S. tax treaties. This report will be updated as legislative events warrant.

A variety of legislative issues have raised interest in the First Amendment implications of mandatory public health programs, such as the minimum coverage requirements enacted in the Patient Protection and Affordable Care Act or considerations of vaccination programs to prevent an outbreak of serious illness that may arise from potential acts of bioterrorism. Because some religious denominations believe that certain health care measures would violate their First Amendment right to religious freedom, congressional action related to mandatory health care programs must be considered in light of the First Amendment's Establishment and Free Exercise Clauses. This report will discuss the legal issues that arise in the context of religious exemptions for mandatory health care programs. It will discuss constitutional and statutory provisions relating to religious protection and how such laws have been applied in the medical context. The report will also briefly address examples of health care programs that have included religious exemptions. It will analyze whether the U.S. Constitution requires religious exemptions for mandatory health care programs and whether, if not required, the Constitution allows religious exemptions for such programs. The First Amendment of the U.S. Constitution provides that "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof...." These clauses are known respectively as the Establishment Clause and the Free Exercise Clause. Although the U.S. Supreme Court had historically applied a heightened standard of review to government actions that allegedly interfered with a person's free exercise of religion, the Court reinterpreted that standard in its 1990 decision, Employment Division, Department of Human Resources of Oregon v. Smith . Since then, the Court has held that the Free Exercise Clause never "relieve[s] an individual of the obligation to comply with a valid and neutral law of general applicability." Under this interpretation, the constitutional baseline of protection was lowered, meaning that laws that do not specifically target religion or do not allow for individualized assessments are not subject to heightened review under the Constitution. Congress responded to the Court's holding by enacting the Religious Freedom Restoration Act of 1993 (RFRA), which statutorily reinstated the heightened scrutiny standard for government actions interfering with a person's free exercise of religion. When RFRA was originally enacted, it applied to federal, state, and local government actions, but in 1997 the Supreme Court ruled that its application to state and local governments was unconstitutional under principles of federalism. Under RFRA, a statute or regulation of general applicability may lawfully burden a person's exercise of religion only if it (1) furthers a compelling governmental interest and (2) uses the least restrictive means to further that interest. This standard is sometimes referred to as strict scrutiny analysis. The Supreme Court has held that in order for the government to prohibit exemptions to generally applicable laws, the government must "demonstrate a compelling interest in uniform application of a particular program by offering evidence that granting the requested religious accommodations would seriously compromise its ability to administer the program." Some religious doctrines forbid medical treatment or conflict with specific medical procedures. Followers of these religions believe that receiving treatment would violate their First Amendment right to exercise their religion freely. This conflict raises the issue known as forced care--whether patients can be forced to receive medical care to which they object on religious grounds. Legal issues of forced care typically arise in situations where patients lack the capacity to make an informed decision about whether or not to receive care. These situations often involve patients facing death if they do not receive treatment. For example, because some religions have specific teachings regarding matters of life and death, a patient may object to life-saving treatment on religious grounds. However, if that patient lacks the capacity to provide informed consent at the time that care would be provided, a doctor or hospital may not be willing to withhold care based on religious affiliation alone, without an informed discussion with the patient. Federal and state courts have addressed these issues of forced care for patients with religious objections to medical care. Courts have indicated a growing willingness over the past several decades to recognize patients' religious objections to medical care, including life-saving treatments. In the 1960s, a federal court authorized a hospital to treat a patient with what would be an objectionable procedure under her religion. The patient faced death without a blood transfusion, a procedure that her religion prohibited, but due to emergency circumstances, the hospital staff was unable to determine if the patient was making an informed decision when she refused the treatment. By the 1980s, courts were giving greater weight to patients' choices regarding care. In later cases, courts concluded that competent adults with religious objections to procedures cannot be forced to receive care, with one court noting that courts should give "great deference to the individual's right to make decisions vitally affecting his private life according to his own conscience." It is important to note, however, that such deference to patients' objections to care may not be recognized in cases in which parents are claiming objections on behalf of a child. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ), enacted in March 2010, creates a requirement that individuals maintain insurance coverage. This individual responsibility requirement (sometimes referred to as an individual mandate) requires that individuals and their dependents maintain "minimum essential coverage" after the effective date of the provision. Individuals who do not maintain the required coverage face financial penalties for the months that they are not covered (a shared responsibility requirement), if they do not qualify for one of the included exemptions. ACA includes a religious conscience exemption, which provides that the individual responsibility requirement does not apply to any individual who has been certified to be "a member of a recognized religious sect or division thereof described in section 1402(g)(1) [of the Internal Revenue Code of 1986] and an adherent of established tenets or teaching of such sect or division as described in such section." Section 1402(g)(1) provides an exemption from self-employment income tax if the individual seeking exemption: is a member of a recognized religious sect or division thereof and is an adherent of established tenets or teachings of such sect or division by reason of which he is conscientiously opposed to acceptance of the benefits of any private or public insurance which makes payments in the event of death, disability, old-age, or retirement or makes payments toward the cost of, or provides services for, medical care.... Thus, there is no list of specific religious groups that qualify for the exemption. Rather, the exemption is general, such that any member of any religious organization with the beliefs described in the provision would qualify. This construction of the exemption appears to conform with the constitutional requirements of the First Amendment, as discussed later in this report. Members of any religious group who can demonstrate conformance with the requirements of Section 1402(g) would therefore be qualified for exemption under ACA. The exemption for religious groups with conscientious objections to medical treatment outside the religious community is typically associated with religious groups such as the Amish, which have historically opposed participation in public social service programs based on their religious beliefs. However, the exception is not specifically offered to that group, and speculation on which religious groups' tenets would qualify for exemption is beyond the scope of this report. Several lawsuits have challenged the constitutionality of the minimum essential coverage requirement on various grounds. Such challenges have included religious freedom claims, with at least one court addressing the merits of those claims. In that case, taxpayers claimed that the requirement violated RFRA by imposing a substantial burden on their religious exercise because obtaining health insurance would indicate a lack of trust as Christians that God would provide for their needs. The U.S. District Court for the District of Columbia noted that, according to the U.S. Supreme Court, a substantial burden would indicate that the government has substantially pressured an individual to modify his or her behavior in violation of his or her religious beliefs. The court held that the burden imposed by the coverage requirement did not rise to the level of a substantial burden because there was insufficient evidence that the individuals would be pressured to modify their behavior and violate their beliefs. The court reasoned that the individuals could opt out of the coverage requirement by paying a shared responsibility requirement instead. Further, the court found the individuals "routinely contribute to other forms of insurance, such as Medicare, Social Security, and unemployment taxes, which present the same conflict with their belief that God will provide for their medical and financial needs." The court concluded that even if it had found a substantial burden on religious exercise, the coverage requirement nonetheless complied with RFRA. According to the court, the requirement served a compelling governmental interest in lowering health insurance premiums and improving access to health care through the least restrictive means, which provided individuals with a choice between the minimum coverage requirement or the shared responsibility requirement. On appeal, the U.S. Court of Appeals for the D.C. Circuit affirmed the district court's opinion, agreeing "that appellants failed to allege facts showing that the mandate will substantially burden their religious exercise." ACA also requires group health plans and health insurance issuers that offer health insurance coverage to provide coverage for certain preventive health services without imposing any cost sharing requirements. The U.S. Departments of Health and Human Services, Labor, and Treasury subsequently issued guidelines and regulations for coverage of a range of preventive health services, including contraceptives and related services. The rules provide authority for an exemption for "religious employers" from the preventive health services guidelines "where contraceptive services are concerned." To qualify as a religious employer, an organization must meet four criteria: (1) The inculcation of religious values is the purpose of the organization; (2) The organization primarily employs persons who share the religious tenets of the organization; (3) The organization serves primarily persons who share the religious tenets of the organization; and (4) The organization is a nonprofit organization as described in section 6033(a)(1) and section 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code of 1986, as amended. The exemption appears to apply to churches, but potentially would not apply to other religiously affiliated institutions such as universities, hospitals, and social service providers. Like the exemption to the individual coverage requirement, this exemption does not specify particular religions that would qualify and instead is generally available to any religious employer that satisfies the four criteria, regardless of the specific religious affiliation. State courts that have considered challenges to exemptions from state contraceptive coverage requirements that are essentially identical to that included in the federal exemption have upheld the exemptions under the Smith analysis. Although RFRA was not applicable to the state contraceptive coverage requirements, the California Supreme Court applied a similar analysis based on state law requirements. It held that the state's interest in requiring coverage of prescription contraceptives was compelling to avoid gender discrimination resulting from the economic inequity existing between the out-of-pocket health care costs of men and women. The state courts also held that the narrow exemption was adequate to accommodate religious burdens imposed by the requirement. The California Supreme Court explained that "any broader exemption increases the number of women affected by discrimination in the provision of health care benefits," which would undermine the compelling interest intended by the requirement. The New York Court of Appeals noted that organizations that employ many individuals who do not share the religious beliefs of the organization could not expect broad accommodations. The court explained, "when a religious organization chooses to hire nonbelievers it must, at least to some degree, be prepared to accept neutral regulations imposed to protect those employees' legitimate interests in doing what their own beliefs permit." As a matter of public health, all 50 states and the District of Columbia have enacted laws requiring vaccination, particularly in the context of school immunization laws. These laws have been enacted under a rationale of preventing the spread of communicable and debilitating diseases. Forty-eight states (all but Mississippi and West Virginia) and the District of Columbia have enacted religious exemptions for these vaccination programs. These exemptions allow students who have religious objections to the vaccinations, but would otherwise be required to be vaccinated, not to comply with the vaccination requirements. The Supreme Court has recognized that mandatory vaccination laws are a valid exercise of protecting the welfare of the people. Nonetheless, constitutional questions arise in the context of such laws with competing interests: the state's interest in the public welfare and individuals' interest in religious freedom. Faced with such a conflict between the government's interest in protecting public health and individuals' interest in being free to exercise their religious beliefs, the Court has held in favor of public health concerns. The implication that public health concerns outweigh the right to exercise one's religion without interference has led some state supreme courts to hold that mandatory vaccination programs are not a violation of religious freedom. The exemptions have also been challenged under the Establishment Clause. Allowing an exemption based on religion might appear to be endorsing a religion in violation of the Establishment Clause. Exemptions that allow certain individuals to claim religious objections to a process required for others also may give the appearance of distinct treatment for those individuals who have religious objections in violation of equal protection doctrine. Under the First Amendment, a law cannot favor some individuals based on their religious beliefs. Allowing an exemption based on religion to a generally required practice may be construed as special treatment for religious adherents, particularly in cases in which the legal provisions limit the scope of the exemption to religious beliefs only (that is, excluding philosophical beliefs) or to members of specific religions only. The Supreme Court of Mississippi has held that the inclusion of a religious exemption discriminates against individuals who do not have religious beliefs that conflict with vaccination requirements, and as a result, Mississippi is one of two states that do not offer a religious exemption. The court held that requiring certain individuals to be vaccinated while still allowing them to be exposed to individuals who are exempted does not provide equal protection and is therefore unconstitutional. The U.S. tax code includes several provisions that provide religious exceptions to certain revenue programs relating to health care. Specifically, the income "received for services performed by a member of a religious order in the exercise of duties required by the order" is excepted from the Federal Insurance Contributions Act (FICA) tax, which funds Social Security and Medicare. Also, ministers, members of religious orders, Christian Science practitioners, and members of religious faiths who oppose acceptance of insurance benefits, including medical care, are generally exempt from self-employment taxes. The U.S. Supreme Court has held that the Free Exercise Clause does not prohibit mandatory payment of social security taxes even when the payment of such taxes or the receipt of the related benefits would violate the taxpayer's religion. In United States v. Lee , an Amish man claimed that paying FICA taxes violated his belief in an obligation to provide similar assistance for church members. Lee argued that his religion prohibited him from accepting such benefits from the state or paying taxes to fund the social security system. Although the Court recognized a burden on religious belief, it held that the burden was justified by the governmental interest in "maintaining a sound tax system," and that accommodation of all of the diverse religious beliefs relating to taxation would pose too great a difficulty to maintain a functional tax system. Religious exemption provisions in mandatory health care programs often raise constitutional issues of religious freedom and equal protection. Any religious exemption must meet the requirements of the First Amendment's religion clauses, which serve as guarantees that individuals will neither be required to act under a prescribed religious belief (the Establishment Clause) nor be prohibited from acting under their chosen religious beliefs (the Free Exercise Clause). Thus, constitutional analysis of religious exemptions in mandatory health care programs must address two questions: (1) whether the Constitution requires a religious exemption to ensure the free exercise rights of citizens who may have religious objections to a mandatory program, and (2) if a religious exemption is not constitutionally required, but included nonetheless, whether it would be constitutional. Any congressional enactment regarding mandatory health care programs would be subject to constitutional rules and would qualify for review under RFRA as a federal action that potentially burdens religious exercise. Thus, any legislation that would mandate a health care program would be subject to strict scrutiny analysis. Generally, it does not appear that the U.S. Constitution requires a religious exemption with respect to legislation that creates mandatory health care programs, but the details of that legislation may impact the analysis. Under strict scrutiny, an exemption would be required only if the government does not have a compelling state interest that is achieved by the least restrictive means possible. The U.S. Supreme Court and other lower courts generally have allowed federal mandates that relate to public health, but nonetheless interfere with religious beliefs, to continue without exemptions. In addressing the issue of religious objections to generally applicable public health requirements, the Supreme Court has upheld legislative acts that promote public policies relating to public health as a valid exercise of protecting the welfare of the people. The government's interest in protecting public health has been held to outweigh individuals' religious interests. According to the Court, "the right to practice religion freely does not include liberty to expose the community or the child to communicable disease or the latter to ill health or death." The Court's decision to hold the interest of public health above the interest of individuals to freely exercise their religious belief was made before the Court applied strict scrutiny to religious exercise cases, but nonetheless provides an indication of the nature of the government's interest in public health regulation. The Court has also held that the government's interest in tax programs used to fund health care programs outweighs individuals' interests in exercising their religion freely. The Court's treatment of public health as an interest paramount to individual religious practice appears to open the door to recognition of public health as a compelling state interest under strict scrutiny analysis. A mere connection to public health is not necessarily enough to find a compelling interest. Some courts have addressed the issues of religious exemptions in the context of certain mandatory health care programs, but the nature of other programs may lead to different outcomes. Laws that require an affirmative participation in a medical procedure (e.g., vaccination) differ from laws that require a more indirect participation in medical programs (e.g., funding for insurance programs). One factor that might affect the outcome of the constitutional analysis is the role the federal government plays in the objective of the program. Public health has historically been a matter of state regulation. The vaccination laws were enacted under states' authority to regulate the public health of their citizens. The federal government, however, does have some authority to act in the realm of public health. Also, the actual connection to public health might affect whether the government's interest is compelling. For example, although courts have recognized a compelling state interest in statutes preventing the spread of disease, it may be more difficult to find a compelling state interest in requiring individuals to have health insurance. Thus, the government's interest may vary depending on the specific requirements imposed by the legislation. If the legislation does further a compelling governmental interest, it must also use the least restrictive means. That is, the government must make the burden as narrow as possible. This test may be met by providing alternative means of compliance with the legislation. In the context of the vaccination laws, for example, the government might allow individuals with religious objections to vaccination requirements to be quarantined or isolated to avoid infecting others, rather than receive the vaccination. In the context of universal health care insurance, the government might allow an exemption for individuals with religious objections and also allow individuals who objected without qualifying religious reasons to pay into a state fund rather than receive insurance coverage. These types of accommodations may be deemed the least restrictive means of advancing the government's interest if a court determines that they satisfy both the individual's free exercise of religion and the government's interest in protecting public health. There may be other accommodations that would satisfy the requirement of tailoring the legislation narrowly to meet strict scrutiny requirements. Thus, when determining whether a mandatory health care program would require a religious exemption, two factors are critical to the outcome of the analysis. First, the constitutionality may depend on the nature of the mandatory health care program (e.g., whether it is a required medical procedure or a required payment for an insurance program). Second, the constitutionality may depend on the structure of the program (e.g., whether the program provides the required participants options with which to comply in order to meet the program objectives). These factors would affect the extent of the burden placed on an individual's religious exercise and significantly impact the strict scrutiny analysis. Because legislation that mandates participating in health care programs may conflict with religious beliefs, Congress may choose to include an exemption for relevant religious objections even if it is not required. The exemption would provide an alternative for certain people based on their religious belief that would not be available to other people who do not share that religious belief. Thus, some individuals may claim that the exemption violates the Establishment Clause (by providing a benefit to groups based on religion). The Establishment Clause prohibits preferential treatment of one religion over another or preferential treatment of religion generally over nonreligion. Providing an exemption based on religion may be construed as favoring a particular religion or religion generally because only individuals with religious affiliation would be eligible for the exemption. However, the mere fact that a law addresses religion does not automatically make that law unconstitutional. Under Establishment Clause analysis, a government action must meet a three-part test known as the Lemon test. To meet the Lemon test, a law must (1) have a secular purpose, (2) have a primary effect that neither advances nor inhibits religion, and (3) not lead to excessive entanglement with religion. The Supreme Court has upheld religious exemptions for government programs, in which the exemptions were enacted to prevent government interference with religious exercise. Like the analysis under the Free Exercise Clause, the constitutionality of a religious exemption under the Lemon test would depend on the language of the exemption. Exemptions that are specifically available only to certain religions have been construed in some cases as a violation of the Establishment Clause. However, providing an exemption that does not specify certain religions as eligible may not pass the Lemon test either. A generally available religious exemption may be construed as a violation of the Establishment Clause because it provides preferential treatment to individuals with religious beliefs, but does not provide individuals who might object on philosophical grounds to claim the exemption. The Supreme Court has upheld several exemptions generally available to religious objectors as constitutional under the First Amendment.

The Patient Protection and Affordable Care Act (ACA; P.L. 111-148), enacted in 2010, established requirements for employers and individuals to ensure the provision or availability of certain health care coverage. Additionally, the threat of bioterrorism has caused some to consider the possibility of introducing vaccination programs to prevent an outbreak of serious illnesses. Programs like health care coverage and vaccinations have the potential to violate certain religious beliefs and therefore may conflict with the First Amendment. In the continuing debate over issues for which mandatory health care programs might be solutions, questions have been raised about the legal issues relating to exemptions for health care programs. For the purposes of this report, mandatory health care programs are those which require individuals to take some action relating to a health care policy objective. A variety of mandatory health care programs currently exists at the federal and state levels. Some programs are medical programs that require individuals to participate in a medical program, while some programs are financial programs that require individuals to pay for program costs. For example, all 50 states and the District of Columbia require children to be vaccinated for certain illnesses and diseases before entering school. At the federal level, the tax system requires individuals to pay taxes that fund Medicare to provide health care to elderly citizens. In some instances, mandatory health care programs include exemptions that allow qualified persons to opt out of the required action. Religious exemptions permit individuals who object to the program based on religious beliefs to avoid compromising those beliefs. This report will discuss the legal issues that arise in the context of religious exemptions for mandatory health care programs. It will discuss constitutional and statutory provisions relating to religious protection and how such laws have been applied in the medical context. The report will also briefly address examples of health care programs that have included religious exemptions. It will analyze whether the U.S. Constitution requires religious exemptions for mandatory health care programs and whether, if not required, the Constitution allows religious exemptions for such programs.

The attempted attack on a U.S.-bound airliner on December 25, 2009, and the earlier shootings at Fort Hood Army Base in November 2009 and various other incidents have led to increased concerns about the effectiveness of the laws, regulations, and organizational relationships created in the aftermath of the 9/11 attacks to prevent future terrorist attacks. Although no system is infallible and the possibility of human errors has to be assumed, recent attacks appear to demonstrate specific failures by the Intelligence Community to "connect the dots," to bring together disparate pieces of information to provide clear warning of an impending attack. In regard to the December 2009 attack, President Obama stated that, "this was not a failure to collect intelligence; it was a failure to integrate and understand the intelligence that we already had." Within the sprawling U.S. Intelligence Community, the National Counterterrorism Center (NCTC) was specifically established in 2004 to bring together all available information on terrorism, analyze the information, and provide warning of potential attacks on the U.S. Some observers argue that the failed December aircraft plot as well as other incidents raise questions about the NCTC's ability to carry out its responsibilities. The challenges involved in sifting through mountains of data on a daily or even an hourly basis are acknowledged and supporters point out many unpublicized successes by NCTC working with its sister agencies. Nevertheless, questions exist about the roles and missions of NCTC and whether it is fulfilling its statutory responsibilities. Potentially, there are also concerns about the relationship between NCTC and the Counterterrorism Center of the Central Intelligence Agency (CIA) which, prior to the establishment of NCTC, was responsible for performing much of NCTC's current mission. A central lesson that Congress and the Executive Branch drew from the 9/11 attacks was that there had been inadequate interagency coordination partially as a result of separate statutory missions and administrative barriers. A series of investigative and legislative initiatives followed. In October 2001, provisions encouraging the exchange of law enforcement and intelligence information were included in the USA Patriot Act ( P.L. 107-56 ), sometimes described as "breaking down the wall" between intelligence and law enforcement. In February 2002 the two congressional intelligence committees established a Joint Inquiry into the activities of the U.S. Intelligence Community in connection with the terrorist attacks of September 11, 2001. By the following December, the Joint Inquiry concluded that, "for a variety of reasons, the Intelligence Community failed to capitalize on both the individual and collective significance of available information that appears relevant to the events of September 11." The two intelligence committees recommended the establishment (within the newly created Department of Homeland Security (DHS)) of an effective all-source terrorism information fusion center that will dramatically improve the focus and quality of counterterrorism analysis and facilitate the timely dissemination of relevant intelligence information, both within and beyond the boundaries of the Intelligence Community. Congress and the Administration should ensure that this fusion center has all the authority and the resources needed to: * have full and timely access to all counterterrorism-related intelligence information, including 'raw' supporting data as needed; * have the ability to participate fully in the existing requirements process for tasking the Intelligence Community to gather information on foreign individuals, entities and threats; * integrate such information in order to identify and assess the nature and scope of terrorist threats to the United States in light of actual and potential vulnerabilities; * implement and fully utilize data mining and other advanced analytical tools, consistent with applicable law; * retain a permanent staff of experienced and highly skilled analysts, supplemented on a regular basis by personnel on 'joint tours' from the various Intelligence Community agencies; * institute a reporting mechanism that enables analysts at all the intelligence and law enforcement agencies to post lead information for use by analysts at other agencies without waiting for dissemination of a formal report; * maintain excellence and creativity in staff analytic skills through regular use of analysis and language training programs; and * establish and sustain effective channels for the exchange of counterterrorism-related information with federal agencies outside the Intelligence Community as well as with state and local authorities. At approximately the same time Congress, in the Homeland Security Act ( P.L. 107-296 ), enacted on November 25, 2002, provided the new Department of Homeland Security (DHS) with a specific mandate for an Under Secretary for Information Analysis and Infrastructure Protection in DHS. The mission of this office was To access, receive, and analyze law enforcement. information, intelligence information, and other information from agencies of the Federal Government, State and local government agencies (including law enforcement agencies), and private sector entities, and to integrate such information in order to-- (A) identify and assess the nature and scope of terrorist threats to the homeland; (B) detect and identify threats of terrorism against the United States; and (C) understand such threats in light of actual and potential vulnerabilities of the homeland. [and] To integrate relevant information, analyses, and vulnerability assessments (whether such information, analyses, or assessments are provided or produced by the Department or others) in order to identify priorities for protective and support measures by the Department, other agencies of the Federal Government, State and local government agencies and authorities, the private sector, and other entities. (4) To ensure, pursuant to section 202, the timely and efficient access by the Department to all information necessary to discharge the responsibilities under this section, including obtaining such information from other agencies of the Federal Government. The placement of this analysis center within DHS was not questioned prior to the signing of the Homeland Security Act in late November 2002, but there was, however, apparently considerable concern that DHS, as a new agency and not a longtime member of the Intelligence Community, would not be the best place for the integration of highly sensitive information from multiple government agencies. In the 2003 State of the Union address, President Bush revealed his instructions to "the leaders of the FBI, the CIA, the Homeland Security and the Department of Defense to develop a Terrorist Threat Integration Center, to merge and analyze all threat information in a single location." Despite the statutory responsibilities of DHS for threat integration, in May 2003 the Terrorist Threat Integration Center (TTIC) was established (without a statutory mandate) to merge all threat information in a single location. Some members of Congress expressed concerns about the possibility that the roles of the DHS intelligence analysis office and TTIC might be confused, but DHS was a partner in TTIC and gradually came to concentrate on serving as a bridge between the national intelligence community and state, local, and tribal law enforcement agencies that had never been components of the national Intelligence Community. A year later, in July 2004, the 9/11 Commission (the National Commission on Terrorist Attacks Upon the United States), noting the existence of a number of various centers in different parts of the government assigned to combine disparate pieces of intelligence, called for the establishment of a National Counterterrorism Center built on the foundation of TTIC but having a responsibility for joint planning for responding to terrorist plots in addition to assessing intelligence from all sources. The NCTC would, according to the 9/11 Commission, compile all-source information on terrorism but also undertake planning of counterterrorism activities, assigning operational responsibilities to lead agencies throughout the Government. In August 2004 shortly after publication of the 9/11 Commission Report, President Bush issued Executive Order 13354, based on constitutional and statutory authorities, that established the National Counterterrorism Center as a follow-on to TTIC. The NCTC was to serve as the primary organization of the Federal Government for analyzing and integrating all intelligence possessed or acquired pertaining to terrorism or counterterrorism (except purely domestic terrorism) and serve as the central and shared knowledge bank on known and suspected terrorists. The NCTC would not just have the analytical responsibilities TTIC had possessed; it would also assign operational responsibilities to lead agencies for counterterrorism activities, but NCTC would not direct the execution of operations. The Director of the NCTC would be appointed by the Director of Central Intelligence (DCI) with the approval of the President. Some members of Congress, however, remained concerned about the status of NCTC, the likelihood that Congress would have no role in the appointment of its leadership, and the possibility that an interagency entity might not be responsive to congressional oversight committees. In December 2004 the Intelligence Reform and Terrorism Prevention Act ( P.L. 108-458 ), implemented many of the 9/11 Commission's recommendations. The act established the position of Director of National Intelligence (DNI) along with the Office of the DNI (ODNI) and it created an NCTC with a statutory charter and placed it within the ODNI. In accordance with the 2004 Intelligence Reform Act and Terrorism Prevention Act, the Director of the NCTC was henceforth to be appointed by the President with the advice and consent of the Senate. The position of the NCTC Director is unusual, if not unique, in government; he reports to the DNI for analyzing and integrating information pertaining to terrorism (except domestic terrorism), for NCTC budget and programs; for planning and progress of joint counterterrorism operations (other than intelligence operations) he reports directly to the President. In practice, the NCTC Director works through the National Security Council and its staff in the White House. For the first time, NCTC had a statutory charter. P.L. 108-458 sets forth the duties and responsibilities of the NCTC Director: to serve as principal adviser to the DNI on intelligence operations relating to terrorism; to provide strategic operational plans for military and civilian counterterrorism efforts and for effective integration of counterterrorism intelligence and operations across agency boundaries within and outside the United States; to advise the DNI on counterterrorism programs recommendations and budget proposals; to disseminate terrorism information, including current terrorism threat analysis, to the President and other senior officials of the Executive Branch and to appropriate committees of Congress; to support the efforts of the Justice and Homeland Security Departments and other appropriate agencies in disseminating terrorism information to State and local entities and coordinate dissemination of terrorism information to foreign governments; to develop a strategy for combining terrorist travel intelligence operations and law enforcement planning and operations; to have primary responsibility within the Government for conducting net assessments of terrorist threats; and consistent with presidential and DNI guidance, to establish requirements for the Intelligence Community in collecting terrorist information. The NCTC is to contain a "Directorate of Intelligence which shall have primary responsibility within the United States Government for analysis of terrorism and terrorist organizations (except for purely domestic terrorism and domestic terrorist organizations) from all sources of intelligence, whether collected inside or outside the United States." The Intelligence Reform Act and Terrorism Prevention Act of 2004 also tasked the NCTC Director with undertaking strategic operational planning for counterterrorism operations. The statute specifies that strategic planning is to include the mission, objectives to be obtained, tasks to be performed, interagency coordination of operational activities, and the assignment of roles and responsibilities. However, NCTC may not direct the execution of such operations. In carrying out these planning responsibilities the NCTC Director is responsible statutorily to the President rather than the DNI. These unusual dual reporting responsibilities might lead to a situation in which the NCTC Director could recommend policies to the President specifically opposed by the DNI. The extent of NCTC's planning responsibilities are unclear. The legislation did not repeal the authorities of other agencies to collect counterterrorism intelligence or prepare for counterterrorism operations. NCTC can prepare and obtain approval for counterterrorism plans, but it cannot ensure implementation. Some observers have expressed concern that DOD's own planning responsibilities under Title X of the U.S. Code could be complicated by the NCTC role. The official NCTC website, summarizes the organization's understanding of its responsibilities: Lead our nation's effort to combat terrorism at home and abroad by analyzing the threat, sharing that information with our partners, and integrating all instruments of national power to ensure unity of effort. The website further states: By law NCTC serves as the USG's [U.S. Government's]central and shared knowledge bank on known and suspected terrorists and international terror groups. NCTC also provides USG agencies with the terrorism analysis and other information they need to fulfill their missions. NCTC collocates more than 30 intelligence, military, law enforcement and homeland security networks under one roof to facilitate robust information sharing. NCTC is a model of interagency information sharing. . . . NCTC also provides the CT [counterterrorism] community with 24/7 situational awareness, terrorism threat reporting, and incident information tracking. NCTC hosts three daily secure video teleconferences (SVTC) and maintains constant voice and electronic contact with major intelligence and CT Community players and foreign partners. With the approval of P.L. 108-458 in December 2004 the NCTC was established in law. The first Director, retired Navy Admiral John Redd, was confirmed by the Senate in July 2005. Redd was succeeded by Michael E. Leiter who was confirmed in June 2008. In August 2011, Matthew Olsen, formerly general counsel of the National Security Agency, was confirmed as NCTC Director and currently serves in that position. The NCTC is housed in suburban Virginia and has a staff of more than 500 officials of which some 60 percent are on detail from other agencies. According to publicly available information, NCTC provides intelligence in a number of ways--items for the President's Daily Brief and the National Terrorism Bulletin both of which are classified. NCTC claims to provide the Intelligence Community with 24/7 situational awareness, terrorism threat reporting and tracking. According to one media report, "agency-integrated teams [are] assigned by subject matter and geography [to] turn out reports disseminated to thousands of policy and intelligence officials across the government. Agency representatives sit around a table three times daily--at 8 a.m., 3 p.m, and 1 a.m.--to update the nation's threat matrix." NCTC maintains databases of information on international terrorist identities (in a system known as the Terrorist Identities Datamart Environment (TIDE)) to support the Government's watch-listing system designed to identify potential terrorists. NCTC products are available to some 75 government agencies and other working groups and facilitates information sharing with state, local, tribal, and private partners. NCTC has also established Intelligence Community-wide working groups--a Radicalization and Extremist Messaging Group and a Chemical, Biological, Radiological, Nuclear Counterterrorism Group and a working group for alternative analysis as part of an effort to improve the rigor and quality of terrorism analysis. NCTC also coordinates the DNI Homeland Threat Task Force that examines threats to the United States from al Qaeda, other groups and homegrown violent extremists. Public information on NCTC's planning responsibilities is limited. One press account describes a National Implementation Plan for the National Strategy for Combating Terrorism prepared in June 2006. The Plan identified major objectives with more than 500 discrete counterterrorism tasks to be carried out by designated agencies. The objectives included disrupting terrorist groups, protecting and defending the homeland, and containing violent extremism. Observers suggest that the primary benefit of such generalized planning is requiring agencies to coordinate their initiatives and providing an opportunity to reduce duplication of effort and ensure that specific tasks are not neglected. The 2006 implementation plan has reportedly been updated but no details have been made public. From information available on the public record, NCTC appears to reflect the mission it was assigned by the Intelligence Reform and Terrorism Prevention Act and other legislation. NCTC's organization reflects the determination to create, within the Intelligence Community, an office that could gather information from all government agencies and from open sources, analyze the data, and provide policymakers with greater situational awareness and warning of planned attacks. According to all available reports, NCTC has access to the databases of all intelligence agencies and it can draw upon analytical resources throughout the government to supplement its own files, but it is unclear to what extent the disparate databases are technically compatible or whether they are, or can be, linked in ways that permit simultaneous searching. One assessment of the NCTC undertaken by a student at the Army War college in 2007 concluded that "More than two years since its inception, however, the NCTC has arguably achieved neither an acceptable level of effectiveness nor efficiency in performing its intended role." The author, Army Col. Brian R. Reinwald, argued that in focusing on consolidating information from other agencies, the NCTC demonstrated "a seeming unwillingness to take a bold implementation approach and a preference to avoid bureaucratic conflict." Its "vision statement inauspiciously paints a picture of a non-confrontational think tank that identified issues, and attempts to merely influence the greater governmental efforts against counterterrorism." In sum, Reinwald argued that NCTC's approach "does not capture the literal roles and mission assigned by Congress, to plan, to integrate, delineate responsibility, and monitor." Moreover, the large percentage of detailees from other agencies in NCTC "sustains an environment that fosters continued loyalty of NCTC employees to their parent agencies rather than the NCTC itself." The author, taking an expansive view of the NCTC's role argues that "The U.S. requires a single federal entity focused on GWOT [Global War on Terror] counterterrorism strategy with the necessary authorities to integrate intelligence, conduct comprehensive interagency planning, compel specific action when required, and coordinate and synchronize the elements of national power for successful operations." For NCTC as for the Intelligence Community as a whole, in many cases the successes go unreported while the failures are trumpeted. However, two incidents in late 2009 led to widespread publicity about information sharing and counterterrorism analysis that led to significant congressional interest. Reports of the multiple assassinations that occurred in Fort Hood Army Base in Texas on November 5, 2009, led to expressions of concern about the Government's counterterrorism capabilities. The extent of NCTC's role, if any, in gathering information about Major Nidal M. Hasan prior to the incident has not been made available publicly. As Major Hasan was both a U.S. citizen and a commissioned officer much relevant information would have come from internal DOD information that would not necessarily be shared with NCTC. Press reports indicate, however, that he had been in contact with a known terrorist living in Yemen . This type of information might have come to the attention of law enforcement and intelligence agencies and could have been available to NCTC. Whether NCTC did access such information and whether it notified the Army or other DOD elements is unknown. Ongoing investigations will probably provide more background on NCTC's role, but Congress may move to undertake its own assessment. The December 25, 2009, incident in which a Nigerian traveler, Umar Farouk Abdulmutallab, attempted to set off an incendiary device onboard an aircraft approaching Detroit was a more straightforward foreign intelligence problem. It did not involve a U.S. citizen nor was he an employee of the U.S. Government. In this case, according to the Obama Administration, it was not the availability or the interagency sharing of data that was the problem; there were no major difficulties in collecting or sharing information (as had been the case prior to 9/11). The problem in December 2009 was inadequate analysis. Despite the information "available to all-source analysts at the CIA and the NCTC prior to the attempted attack, the dots were never connected and, as a result, the problem appears to be more about a component failure to 'connect the dots,' rather than a lack of information sharing." The Administration has pointed to several specific failures by the counterterrorism community generally and NCTC in particular: "NCTC and CIA personnel who are responsible for watchlisting did not search all available databases to uncover additional derogatory information that could have been correlated with Mr. Abdulmutallab." Further, "A series of human errors occurred--delayed dissemination of a finished intelligence report and what appears to be incomplete/faulty database searches on Mr. Abdulmutallab's name and identifying information." There was not a process for tracking reports and actions taken in response and there appears to have been a greater concern with the threat posed to American interests in Yemen than to the possibility of an attack by Al Qaeda in the Arabian Peninsula (AQAP) on the U.S. Homeland. The extent to which such failings belong solely or even significantly to NCTC as opposed to other agencies is as yet undetermined. The Executive Branch has undertaken several overall investigations of the Fort Hood shooting and the December 25 airline attack. The Senate Intelligence Committee reviewed the Christmas bombing with specific focus on the intelligence on the alleged perpetration Abdulmutallab held by various agencies. According to the published unclassified summary of the report, the committee found "systemic failures across the Intelligence Community." Despite the responsibilities assigned to NCTC, the "Committee found that no one agency saw itself as being responsible for tracking and identifying all terrorism threats." Specifically, the Senate Intelligence Committee found that NCTC's Directorate of Intelligence failed to connect reporting on Abdulmutallab; it was neither adequately organized or resourced for this effort. "Like other analysts in the Intelligence Community, NCTC's analysts were primarily focused on Yemen-based AQAP-related threats." Furthermore, NCTC's Watchlisting Office did not connect key intelligence reporting with other relevant reporting. The Committee made a number of recommendations for NCTC and other intelligence agencies to improve their performance. Beyond the recommendations coming out of these investigations, there may also be a more general interest in an assessment of the role of various agencies and how they work together. In particular, Congress may act to review the statutory framework that created the NCTC in 2004 and how the Center has functioned in the years since. In particular, Congress may wish to satisfy itself that the NCTC has access to all appropriate information and intelligence. It may wish to assure itself that detaillees to the NCTC from other agencies are highly qualified and committed to the Center's mission and do not see their role as protecting their agency's bureaucratic equities. Congress may wish to assess the availability of adequate technologies at NCTC for accessing and sharing information. Although significant efforts have been made to remove the "wall" between law enforcement and intelligence, there may be residual barriers especially those resulting from separate bureaucratic cultures. As in the case of Major Hassan the natural tendency to avoid over-involvement in law enforcement or the personnel policies of a cabinet department may have influenced the handling of information relating to contacts between a U.S. person and a suspected terrorist in another country. Concern has also been expressed that NCTC might rely on authorities available to foreign intelligence agencies that do not encompass the restrictions on domestic intelligence gathering and law enforcement operations and that this approach may jeopardize privacy rights. Congress might seek additional information on NCTC policies regarding privacy rights of U.S. persons. It has become clear that the question of "home-grown" terrorists, U.S. persons who become radicalized through contacts with foreign terrorists is especially challenging in this regard. Congress exerts its greatest influence through authorization and appropriations legislation. However, NCTC is not a large collection agency and its relatively small budget goes mainly for personnel expenses. Some in Congress may find the number of NCTC personnel either excessive or inadequate, but changes in the number of positions would affect the NCTC budget but in relatively small amounts in comparison to the $53+ billion budget for all national intelligence programs. Some observers have argued that NCTC's information technology capabilities need to be enhanced, but it is unlikely that the budgetary implications would be dramatic. There will undoubtedly be varying assessments of NCTC's analytical products; observers argue, however, that judging the overall quality of analytical efforts can be challenging. Analysis is an intellectual exercise that incorporates education and training, experience, insight, determination and occasionally elements of luck. Simply replacing current officials with those with greater education, or paying them more or giving them more (or less) supervision will not guarantee better results. Some argue that the best approach is to build and maintain a culture of excellence. The unusual dual mission of the NCTC and the different reporting responsibilities of the NCTC Director to the DNI and the President may be a source of congressional interest. Are there contradictions between the two missions? Has the NCTC Director's direct link to the President caused difficulties with his relationship with the DNI? Does the NCTC monitor the responses of other agencies to analytical information it provides? What role does the CIA's Counterterrorism Center currently have and how do the two entities interact? Does the NCTC become involved in planning covert actions? Is there beneficial or counterproductive competition between the two centers? In general, how has NCTC's strategic analysis of the overall terrorist threat evolved in recent years? Is the relationship between strategic analyses and operational planning been carefully reviewed? What is the NCTC's current role in dealing with different agency approaches to specific terrorist threats? To what extent does the NCTC Director choose options and to what extent are different proposals forwarded to the National Security Council staff? Arguably most important, however, is the capability of ensuring that analysts are integrated into the counterterrorism effort, that operational planning is shared with analytical offices so that particular reactions or threats can be anticipated and assessed. The most important "wall" may not be the one that existed between law enforcement and intelligence agencies prior to 2001, but the one that often persists between analysts and operators. The latter may lack the time and opportunity to integrate analytical efforts into their ongoing work, but if the country is aiming for a "zero defects" approach to terrorism, close attention to intelligence is a prerequisite. Some experienced observers maintain that "zero defects" is unrealizable, some failures are inevitable and argue that it is more responsible to minimize failures and limit their effects. The use of intelligence by policymakers and military commanders is in largest measure the responsibility of the Executive Branch, but some observers argue that the quality of analysis may be enhanced when analytical efforts are regularly reviewed by congressional committees and hearings are conducted to ensure that they are properly prepared and fully used.

The National Counterterrorism Center (NCTC) was established in 2004 to ensure that information from any source about potential terrorist acts against the U.S. could be made available to analysts and that appropriate responses could be planned. Investigations of the 9/11 attacks had demonstrated that information possessed by different agencies had not been shared and thus that disparate indications of the looming threat had not been connected and warning had not been provided. As a component of the Office of the Director of National Intelligence, the NCTC is composed of analysts with backgrounds in many government agencies and has access to various agency databases. It prepares studies ranging from strategic assessments of potential terrorist threats to daily briefings and situation reports. It is also responsible, directly to the President, for planning (but not directing) counterterrorism efforts. The NCTC received a statutory charter in the Intelligence Reform and Terrorism Prevention Act of 2004 (P.L. 108-458); it currently operates with a staff of more than 500 personnel from its headquarters in northern Virginia. The NCTC Director is appointed with the advice and consent of the Senate. Although there have been a number of arrests of individuals suspected of planning terrorist attacks in the U.S., two incidents in 2009--the assassination by an Army Major of some 13 individuals at Fort Hood Army Base on November 5, 2009, and the failed attempt to trigger a bomb on an airliner approaching Detroit on December 25, 2009--contributed to increased concern about counterterrorism capabilities domestically and internationally. An Executive Branch assessment of the December 2009 bombing attempt concluded that, whereas information sharing had been adequate, analysts had failed to "connect the dots" and achieve an understanding of an ongoing plot. Attention has focused on the NCTC which is responsible for ensuring both the sharing of information and for all-source analysis of terrorist issues. A review by the Senate Intelligence Committee released in May 2010 found there were systemic failures across the Intelligence Community and, in particular, that the NCTC was inadequately organized and resourced for its missions. In addition, the committee concluded that intelligence analysts (not only those in NCTC) tended to focus more on threats to U.S. interests in Yemen than on domestic threats.

H.Res. 6 renamed five committees. The name of the Committee on Education and the Workforce was changed to the Committee on Education and Labor. The name of the Committee on International Relations was changed to the Committee on Foreign Affairs. The name of the Committee on Resources was changed to the Committee on Natural Resources. The name of the Committee on Government Reform was changed to the Committee on Oversight and Government Reform. The name of the Committee on Science was changed to the Committee on Science and Technology. The Rule X, clause 11 jurisdiction of the Permanent Select Committee on Intelligence was updated to reflect the overhaul of the intelligence community, including the creation of the director of national intelligence. Pursuant to a statement inserted in the Congressional Record by Rules Committee Chairwoman Louise Slaughter during the debate on H.Res. 6 , the jurisdiction of the Committee on Small Business was reaffirmed to include the Small Business Administration and its programs, as well as small business matters related to the Regulatory Flexibility Act and the Paperwork Reduction Act. Other programs and initiatives that address small businesses outside the confines of those acts were referenced as well. Also inserted in the Congressional Record during debate on H.Res. 6 was a memorandum of understanding between the Committee on Homeland Security and the Committee on Transportation and Infrastructure detailing the jurisdictional agreement related to the Federal Emergency Management Agency and to port security. House Rule X, clause 5(d), which generally limits committees to five subcommittees was waived for three committees. The Armed Services Committee was permitted to have seven subcommittees; the Foreign Affairs Committee was permitted to have seven subcommittees; and the Transportation and Infrastructure Committee was permitted to have six subcommittees. The Committee on Oversight and Government Reform was authorized to adopt a committee rule that authorized and regulated the taking of depositions by a Member or counsel of the committee, including depositions in response to a subpoena. The rules resolution permitted the new committee rule to require those being deposed to subscribe to an oath. It also required the committee rule to provide the minority with equitable treatment, by providing notice of such a proceeding and a reasonable opportunity to participate. The Rules Committee was allowed to publish the record votes taken during committee consideration in committee reports and through other means such as the Internet. The Rules Committee report was shielded from a point of order if the report was filed without a complete list of record votes taken during consideration of a special rule. Committees of jurisdiction were required to publish lists of earmarks, limited tax benefits, and limited tariff benefits contained in any reported bill, unreported bill, manager's amendment, or conference report that comes to the House floor.

This report details changes in the committee system contained in H.Res. 6 , the Rules of the House for the 110 th Congress, agreed to by the House January 4, 2007. The report will not be updated unless further rules changes for the 110 th Congress are adopted.

Concern about shareholder value, corporate governance, and the economic and social impact of escalating pay for corporate executives has led to a controversy regarding the practices of paying these executives. In a stated attempt "to provide investors with a clearer and more complete picture of compensation to principal executive officers, principal financial officers [and] the other highest paid executive officers and directors," the Securities and Exchange Commission (SEC or Commission) issued rules in 2006 concerning the disclosure of executive compensation. The rules, however, have created a controversy of their own. Separate from the SEC, Congress has also examined ways to address concerns relating to executive compensation. Both the 110 th and 111 th Congresses enacted significant legislation with executive compensation provisions. On July 26, 2006, the SEC voted to adopt revisions to its rules concerning disclosure of executive compensation. These compensation disclosure rules were particularly focused upon companies' providing investors with details about executives' stock-option grants and corporate stock-option programs. The rules required companies to prepare a principles-based Compensation Discussion and Analysis section in their proxy statements, annual reports, and registration statements. In these July 26 rules, the Commission required companies "to make tabular and narrative disclosure about all aspects of stock option grants and ... provid[e] additional guidance about the disclosure of company stock-option practices." The tables would have to contain such information as the grant date fair value, the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards Rule No. 123 (FAS 123R) grant date, the closing market price on the grant date if the closing market price is greater than the exercise price of the award, and the date on which the board of directors or the compensation committee took action to grant the award if the action date is different from the grant date. On December 22, 2006, the Commission announced that it had adopted changes to its July 26 executive and director compensation disclosure rules "to more closely conform the reporting of stock and option awards to Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123 (revised 2004) Share-Based Payment (FAS 123R)." The amendment was made in the form of interim final rules that would become effective upon publication in the Federal Register. The Commission went on to state that FAS 123R requires recognition of the costs of equity awards over the period in which an employee is required to provide service in exchange for the award. Using this same approach in the executive compensation disclosure will give investors a better idea of the compensation earned by an executive or director during a particular reporting period, consistent with the principles underlying the financial disclosure statement. The SEC briefly summarized some of the important provisions of the amendment as follows: The dollar values required to be reported in the Stock Awards and Option Awards columns of the Summary Compensation Table and the Director Compensation Table are revised to disclose the compensation cost of those awards, before reflecting forfeitures, over the requisite service period, as described in FAS 123R. Forfeitures are required to be described in accompanying footnotes. The Grants of Plan-Based Awards Table is revised to require disclosure of the grant date fair value of each individual equity award, computed in accordance with FAS 123R, and the Director Compensation Table required under Item 402 of Regulation S-K is revised to require footnote disclosure of the same information. The Grants of Plan-Based Awards Table is revised to require disclosure of any option or stock appreciation right that was re-priced or otherwise materially modified during the last completed fiscal year, including the incremental fair value, computed as of the re-pricing or modification date in accordance with FAS 123R, and the Director Compensation Table required under Item 402 of Regulation S-K is revised to require footnote disclosure of the same incremental fair value information. These December 22 amendments have resulted in criticism by some investor groups. Investor groups' criticism has focused on what they believe to be the obfuscation of executive pay packages. An example given is the following: Say the chief executive of American Widget gets a $24 million option grant on December 1 of this year, with the options vesting--meaning they may be exercised--over four years. He is not eligible for retirement, perhaps because he joined the company only a few years ago, or perhaps because he has not reached the company's minimum retirement age of 60. In the summary table, the value of that option will be shown as $500,000. That is because he has worked just one month of the 48 months needed for the option to become fully exercisable. Over at National Widget, American's main competitor, the chief executive gets an inferior options package on the same day. It is worth $5 million, with the same four-year schedule. But that executive is eligible to retire, although he has no intention of doing so. The compensation summary will show he got a $5 million option. The reality is that one man received options worth nearly five times what the other one was awarded. The appearance is very different. On the other hand, some business groups claimed that the executive compensation disclosure requirements as originally proposed by the SEC needed to be revised because they did not provide a completely accurate picture of actual annual executive compensation. In the 110 th Congress, two laws containing executive compensation provisions applicable to executives of specific types of businesses were enacted: P.L. 110-289 , the Housing and Economic Recovery Act of 2008, and P.L. 110-343 , the Emergency Economic Stabilization Act of 2008. Sections of P.L. 110-289 concern restrictions on compensation for executives of federal home loan banks, Fannie Mae, and Freddie Mac. Section 1117 allows the Secretary of the Treasury, in exercising temporary authority to purchase obligations issued by any federal home loan bank, Fannie Mae, and Freddie Mac, to consider limitations on the payment of executive compensation. Sections 1113 and 1114 allow the Director of the Federal Housing Finance Agency to prohibit and withhold executive compensation from executives of federal home loan banks, Fannie Mae, and Freddie Mac if wrongdoing has occurred. There is also authority for limiting golden parachute payments to these executives. Section 111 of P.L. 110-343 allowed the Secretary of the Treasury to require that financial institutions whose troubled assets are purchased meet appropriate standards for executive compensation. These standards were required to include limits on incentive-based compensation for unnecessary and excessive risks, recovery of bonuses and incentive compensation based on criteria later proven to be materially inaccurate, and a prohibition on golden parachutes. In the 111 th Congress, Title VII of P.L. 111-5 , the American Recovery and Reinvestment Act of 2009, amended Section 111 of P.L. 110-343 to set forth somewhat different and more detailed restrictions on the compensation of executives of companies during the period in which any obligation arising from financial assistance provided under the Troubled Assets Relief Program (TARP) remains outstanding. The Secretary of the Treasury is required to develop appropriate standards for executive compensation. The standards must include the following: Limits on compensation that exclude incentives for the five highest paid executives of the TARP recipient to take unnecessary and excessive risks. A provision for the recovery by the TARP recipient of any bonus, retention award, or incentive compensation paid to the five highest paid executives and the next 20 most highly compensated employees of the TARP recipient, based upon criteria that are later found to be materially inaccurate. A prohibition on the TARP recipient's making any golden parachute payment to the five highest paid executives or any of the next five highest paid employees of the TARP recipient. A prohibition on a TARP recipient's paying a bonus, retention award, or incentive compensation, except that the prohibition shall not apply to paying long-term restricted stock, so long as this stock does not fully vest during the period in which the TARP recipient has outstanding financial assistance, has a value not greater than one-third of the total amount of the annual compensation of the employee receiving the stock, and is subject to other conditions that the Secretary of the Treasury may determine to be in the public interest. The prohibition is not to be construed to apply to a bonus payment required to be paid according to a written employment contract executed on or before February 11, 2009. Application of the prohibition is dependent upon the amount of assistance received. The prohibition applies as follows: to the highest paid person of a financial institution receiving less than $25 million in financial assistance, to at least the five highest paid employees of a financial institution receiving at least $25 million but less than $250 million in financial assistance, to the five highest paid executive officers and at least the next 10 highest paid employees of a financial institution receiving at least $250 million but less than $500 million, and for a financial institution receiving financial assistance of $500 million or more, to the five highest paid officers and at least the next 20 highest paid employees. A prohibition on any compensation plan encouraging manipulation of the reported earnings of a TARP recipient to enhance the compensation of any of its employees. A requirement for the establishment of a Board Compensation Committee. The chief executive officer and the chief financial officer of each TARP recipient must certify that the TARP recipient has complied with the standards issued by the Secretary of the Treasury and file the certification with the Securities and Exchange Commission if the company's securities are publicly traded or with the Secretary of the Treasury if the company's securities are not publicly traded. The Board Compensation Committee which each TARP recipient is required to establish must be made up of independent directors and must review employee compensation plans. The Board must meet at least semiannually to discuss and evaluate employee compensation plans. If the TARP recipient's stock is not registered with the SEC and it has received $25 million or less of TARP assistance, the Board Compensation Committee's duties shall be performed by the recipient's board of directors. The board of directors of each TARP recipient must have a policy concerning excessive or luxury expenses, including entertainment, office renovations, transportation services, and other unreasonable expenditures. Any annual or other meeting of the shareholders of a TARP recipient must permit a separate shareholder vote to approve the compensation of executives. The vote shall be nonbinding and cannot be construed to overrule a decision by the board of directors. The Secretary of the Treasury is required to review bonuses, retention awards, and other compensation paid to the five highest paid executives and the next 20 highest paid employees of each company that received TARP assistance before February 17, 2009 (the act's date of enactment), to determine whether any payments were inconsistent with the purposes of TARP or contrary to the public interest. Payments determined to be excessive shall be reimbursed to the federal government. In consultation with the appropriate federal banking agency, the Secretary of the Treasury shall permit a TARP recipient to repay any assistance provided to the financial institution, without regard to whether the financial institution has replaced the funds from any other source or to any waiting period. When the assistance is repaid, the Secretary of the Treasury shall liquidate warrants associated with the assistance at the current market price. In tax law, executive compensation is limited by either denying the payer a deduction for a payment to an executive or by imposing a tax on either the payer or the payee. The former is used as a means of limiting salary deductions. Both are used to limit "golden parachutes." Provisions to limit executive compensation, including golden parachute payments, have existed within the Internal Revenue Code (IRC) for many years; however, new provisions affecting entities receiving funds from the Troubled Assets Relief Program (TARP) were introduced in the 110 th Congress by the Emergency Economic Stabilization Act of 2008 (EESA). These provisions have some similarities to the earlier provisions in the code, but differ sufficiently that the EESA provisions will be described separately from the earlier provisions, which are still in effect for publicly held corporations that have not received TARP funds. EESA and the American Recovery and Reinvestment Act of 2009 (ARRA) also introduced restrictions outside of the IRC on golden parachute payments. These are discussed in the corporate governance section of this report. In 1993, subsection 162(m) was introduced into the IRC. Effective for tax years beginning after December 31, 1993, the provision applied only to publicly held corporations and not to closely held corporations or non-corporate employers. With the exception of employers receiving TARP funds, the SS 162(m) limitations on deductibility continue to apply only to publicly held corporations and limit deductions for an employee's compensation to $1 million in a taxable year. The subsection did not include a provision for inflation adjustments to the $1 million limit, and that amount has not been statutorily increased. In calculating compensation, neither commissions based on income earned through the personal effort of the employee nor compensation based on achievement of one or more performance goals is to be included; however, other compensation such as retention pay and severance pay is included in the calculation of compensation subject to the deduction limit. The $1 million limitation on deductibility applies only to compensation paid to covered employees. Who is a covered employee is determined at the end of the taxable year. A covered employee is the CEO (or someone acting in that capacity) or someone who is among the four most highly compensated employees (other than the CEO) for the taxable year and whose compensation for the taxable year must be reported to shareholders under the Securities Exchange Act of 1934. In October 2008, EESA introduced a new paragraph to SS 162(m) that is specifically applicable to recipients of TARP funding. For these entities, deduction for employee compensation to "covered executives" is limited to $500,000. The definition of "covered executive" is similar to the definition of "covered employee" found in SS 162(m)(3). However, it is expanded to include explicitly anyone who is or who acted as the chief financial officer (CFO). The three most highly compensated officers (other than those who are or act as CEO and CFO) are also considered covered executives. Determination of who is a covered executive is made based on the individual's position at any time during the taxable year when the authority under EESA SS 101(a) is in effect. Thus, if more than one person was or acted as either the CEO or CFO during the applicable portion of the first taxable year in which this provision applies, there would be more than five "covered executives" for whom the deduction limit would apply. In future years the limitation could apply to even more executives because, once an executive has qualified as a covered executive, that designation continues in all subsequent years so long as EESA's authority remains in effect. In calculating the remuneration of a covered executive, entities receiving TARP funds may not use the exclusions available to those not receiving TARP funds. Both commissions and compensation based on achievement of performance goals must be used in the calculation of the covered employee's remuneration. Golden parachute payments are limited by denying the payers a tax deduction for "excess parachute payments" and by imposing upon the recipients a 20% excise tax on the excess parachute payments. EESA has expanded the context in which excess parachute payments may exist. Whenever an excess parachute payment exists, whether under the new EESA provisions or under otherwise existing law, the recipient of the payment will be liable for the 20% excise tax on the excess payment as imposed by IRC SS 4999. The excise tax is assessed in addition to the income tax on the amount received. When the recipient is an employee, the employer must withhold 20% of the payment for the excise tax in addition to regular income tax withholdings on the payment. Introduced into law in 1984, IRC SS 280G addressed only corporate entities prior to EESA. However, unlike SS 162(m), there was no requirement that the corporation be publicly held, although there is an exemption for certain small business corporations. The section's applicability to corporations comes from its definition of parachute payments. To be parachute payments, payments made by an entity not receiving TARP funds must be contingent upon a change in either the ownership of a substantial portion of the corporation's assets or the ownership or control of the corporation. Thus, if no TARP funds have been received, a non-corporate entity cannot be deemed to have made parachute payments. Additionally, parachute payments must be "in the nature of compensation to (or for the benefit of) a disqualified individual." A "disqualified individual" is defined as being an officer, shareholder, or highly compensated individual who performs personal services for any corporation and is an employee, independent contractor, or other person specified in the Treasury regulations. To be a parachute payment, the aggregate present value of the payment must be three times the base amount. To the extent that the payment exceeds the allocable base amount, there is an "excess parachute payment" that cannot be deducted by the corporation. The base amount is generally the employee's average compensation for the five most recent tax years ending prior to the change of ownership or control. Subsection 280G(e) extends the provisions of SS 280G to entities receiving TARP funds even when they are not corporations. The small business exemption does not apply to entities receiving TARP funds. For purposes of determining whether TARP recipients have excess parachute payments that cannot be deducted, covered executives are considered "disqualified individuals." A covered executive's severance from employment is treated as a change in ownership or control of a corporation if that severance is due to involuntary termination by the employer or related to the employer's bankruptcy, liquidation, or receivership. In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Although many of its most publicized changes involved consumer bankruptcies, BAPCPA also made changes to business bankruptcies. Among the changes was a new subsection that limited the extent to which "key employee retention plans" (KERPs) could be paid as administrative expenses of the debtor. This restriction generally is more applicable in chapter 11 reorganizations than in chapter 7 liquidations, but is not limited to chapter 11. Chapter 11 reorganizations are designed to allow the debtor to remain in possession of the business and continue to operate the business while negotiations are conducted with creditors. Generally, a trustee is not appointed. The legislative history of the Bankruptcy Act of 1978 indicates that chapter 11 presumes that reorganization is apt to be more successful if the debtor's management leads it through the reorganization and that the continuity of business operations will benefit both the creditors and the public. Prior to BAPCPA, KERPs were used to provide retention bonuses and severance pay to management employees who remained with the debtor business to manage it through its reorganization. However, there was a perception that KERPs were being abused to favor insiders. This perception of abuse led to BAPCPA's restrictions on retention pay and bonuses as administrative expenses in a bankruptcy. Administrative expenses have a high statutory priority in bankruptcy and generally must be paid before other priority claims as well as non-priority unsecured claims. As a result of BAPCPA, administrative expenses generally cannot include either allowances or payments of inducements to remain with the debtor company if those inducements are transfers to an insider of the debtor or obligations incurred for the benefit of the insider. The Bankruptcy Code does establish standards under which such inducements may be allowed or paid. However, there is some question as to whether the standards can realistically be met within the context of a pending bankruptcy. To be allowed, the court must find, based on evidence in the record, that (1) the inducement "is essential to retention of the person because the individual has a bona fide job offer from another business at the same or greater rate of compensation" and (2) the person's services are "essential to the survival of the business." In addition, the court must compare the amount of the inducement to other similar transfers or obligations to nonmanagement employees, for any purpose, within the same calendar year. To be allowed, the inducement to the insider may be no more than 10 times the mean of the nonmanagement transfers or obligations. In the case where there have been no similar transfers or obligations to nonmanagement employees within the calendar year, the amount of the insider's inducement must be no more than 25% of any similar transfer or obligation, for any purpose, benefiting the insider during the previous calendar year. Severance payments to insiders may be allowed as administrative expenses in a post-BAPCPA bankruptcy only if "the payment is part of a program that is generally applicable to all full-time employees." Such a payment will not be allowed if it is more than 10 times the mean severance pay for nonmanagement employees during the same calendar year. BAPCPA further prohibited other transfers and obligations benefitting officers, managers, or consultants who were hired post-petition if made "outside of the ordinary course of business and not justified by the facts and circumstances of the case." Since BAPCPA's passage, there has been a move toward paying managers incentive payments, which are not restricted. Though some of these incentive pay schemes have been rejected by the courts as actually being retention bonuses that did not meet BAPCPA's requirements, others have been upheld as incentive bonuses and, therefore, not subject to the restrictions imposed by the post-BAPCPA Bankruptcy Code. Recent Congresses have offered a number of proposals concerning executive compensation. Some of these involve additional disclosure of executive compensation to shareholders. Recently, several proposals have been made involving TARP recipients. Other areas in which bills involving executive compensation have been introduced include tax and bankruptcy. Bills introduced in the 111 th Congress on executive compensation include S. 1074 , which would apply a say-on-pay rule to all publicly traded companies, and S. 1006 , which would require 60% of shareholders to give their approval to pay packages larger than 100 times the average annual compensation of a company's employees. The House Committee on Financial Services circulated a discussion draft of H.R. 3269 , the Corporate and Financial Institution Compensation Fairness Act of 2009. The draft had four major parts: Say-on-Pay, Independent Compensation Committee, Incentive Based Compensation Disclosure, and Compensation Standards for Financial Institutions. On July 31, 2009, the House passed an amended version of the bill. Section 2 of the House-passed bill, concerning shareholder votes on executive compensation disclosures, would amend section 14 of the Securities Exchange Act by adding subsection (i), which would require every annual shareholder meeting to have a separate shareholder vote to approve the compensation of executives. The shareholder vote would not be binding and could not be construed as overruling a decision made by the board of directors. In addition, any proxy or consent solicitation material in which shareholders are asked to approve an acquisition, merger, consolidation, or proposed sale of an issuer would have to disclose any agreements or understandings that executive officers have concerning compensation based upon the acquisition, merger, consolidation, or sale of the issuer, so-called golden parachute agreements. There would have to be a nonbinding shareholder vote on this compensation. Every institutional investment manager would be required to disclose how it voted on executive compensation and golden parachutes. The SEC could exempt certain categories of issuers from the shareholder vote requirements and, in determining these exemptions, would need to take into account the potential impact upon smaller companies. Section 3 of the House-passed bill would require that every national securities exchange or association prohibit the listing of equity securities of an issuer not having a compensation committee of the board of directors. Every member of the compensation committee would have to be independent, meaning that he or she could not accept any consulting, advisory, or other compensatory fee from the issuer. A compensation committee would have the authority to retain a compensation consultant and independent counsel. A compensation consultant or other adviser to an issuer's compensation committee would have to meet the independence standards established by the SEC by regulation. Section 4 of the House-passed bill would require federal regulators to issue regulations requiring covered financial institutions to disclose the structures of all incentive-based compensation arrangements offered by the institutions so as to determine whether the structures are aligned with sound risk management, structured to consider risks over time, and meet other criteria to reduce unreasonable incentives offered to employees to take excessive risks that could threaten the safety and soundness of financial institutions or could have adverse effects upon economic conditions or financial stability. The federal regulators covered are the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, the National Credit Union Administration Board, the Securities and Exchange Commission, and the Federal Housing Finance Agency. Covered financial institutions are a depository institution or depository institution holding company, a broker-dealer, a credit union, an investment adviser, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and any other financial institution that the federal regulators determine should be treated as a covered financial institution. The Comptroller General would be required to carry out a study to determine whether there is a connection between compensation structures and excessive risk taking. Bills concerning executive compensation limits have been introduced in the 111 th Congress. Among these bills are H.R. 851 , which would require any institution provided with assistance under the Emergency Economic Stabilization Act of 2008 to meet standards for executive compensation and corporate governance, and H.R. 857 and S. 360 , which would prohibit any officer or employee of an entity receiving funds under TARP from being compensated more than the President of the United States. With the acknowledgment by AIG of the payment of bonuses to a number of its employees, bills have been introduced to recover at least some of the bonuses paid. These bills would use different ways of recovering the bonuses. For example, H.R. 1575 would authorize the Attorney General to recover excessive compensation paid by entities which have received federal financial assistance on or after September 1, 2008. H.R. 1664 , passed by the House, would amend the Emergency Economic Stabilization Act of 2008 to prohibit unreasonable and excessive compensation and compensation not based on performance standards paid by companies receiving direct capital investments of taxpayer money. A bill that would limit the deductibility of employee compensation for all employers, corporate or noncorporate, was introduced in the 111 th Congress. H.R. 1594 proposed limiting the deduction for compensation paid to an employee in excess of the greater of $500,000 or "an amount equal to 25 times the lowest compensation for services performed by any other full-time employee during such taxable year." Since it applies to all employers and is not limited to a few top executives, the provision is broader than either the SS 162(m) provisions in EESA or the provisions that pre-date EESA. Following AIG's bonus announcement in 2009, both the House and Senate introduced bills that would have imposed high taxes both retrospectively and prospectively on bonuses paid by entities receiving TARP funds or other federal emergency economic assistance after December 31, 2007. H.R. 1586 , which was passed by the House, would have imposed a 90% income tax on the bonuses to the extent that the bonuses increased the recipient's adjusted gross income to more than $250,000. The 90% rate would have been instead of, rather than in addition to, the taxpayer's regular income tax rate. Other taxable income would be taxed at the regular tax rates. S. 651 proposed imposing an excise tax on "excessive bonuses." The 35% excise tax would be imposed on both the payer and the recipient resulting in a total 70% of the bonuses being paid as excise tax. The excise tax would have been in addition to, rather than instead of, the recipient taxpayer's normal income tax rate. In the 109 th Congress, H.R. 5113 and its companion S. 2556 proposed expanding the prohibition on retention payments introduced by BAPCPA as 11 U.S.C. SS 503(c). The bills would have included performance and incentive payments and other bonuses as well as "any other compensation enhancement." The bills would also have extended the reach of 11 U.S.C. SS 503(c)(3) to include payments made within the ordinary course of business as well as those outside of the ordinary course of business. In the 110 th Congress, H.R. 3652 and its companion S. 2092 also proposed expanding the general restrictions on retention payments to include both performance and incentive payments, but went on to include "bonus[es] of any kind, or other financial returns designed to replace or enhance incentive, stock, or other compensation in effect" before the bankruptcy petition was filed. The proposed modifications to SS 503(c) of the Bankruptcy Code also extended paragraph 503(c)(3) to payments made within the ordinary course of business. The bills also proposed restricting compensation to officers and directors of the reorganized debtor, making the compensation subject to court approval as reasonable when compared to compensation paid to others in the industry in similar positions at similar jobs. However, even if found reasonable, to be approved the compensation could not be disproportionate when compared to economic concessions from nonmanagement workforce during the bankruptcy case. The bills also included a number of provisions that would indirectly limit executive compensation by linking it to compensation provided to other employees. CRS anticipates that bills will be introduced in the 111 th Congress addressing further limitations on executive compensation for companies involved in chapter 11 bankruptcies, but, as of the date of this report, no such bills have been found. However, although it did not propose a change to the Bankruptcy Code, H.R. 1575 , discussed in the section on " Proposals to Impose Limitations on TARP Recipients ," incorporated language similar to that in SS 548 of the Bankruptcy Code, which addresses fraudulent transfers. Table A-1 lists selected provisions in federal law that address executive compensation. Some of these provisions are not discussed in the body of the report, but are listed here for reference. Executive compensation is used broadly in the context of this table to describe various types of compensation including retention payments and "golden parachutes." The table focuses on limitations on executive compensation in four areas of law: bankruptcy, banking, securities, and tax, but it includes some provisions outside those areas. The table includes provisions from both the Emergency Economic Stabilization Act of 2008 (EESA; P.L. 110-343 ) and the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ). EESA's provisions are listed as originally enacted, but with a notation if they have been modified by ARRA.

Concern about shareholder value, corporate governance, and the economic and social impact of escalating pay for corporate executives has led to controversy regarding the practices of paying these executives. This report focuses on legal provisions related to tax, bankruptcy, and corporate governance that attempt to limit executive compensation. Many provisions have existed for a number of years, but some have a more recent origin in the 110th and 111th Congresses. In the 110th Congress, two laws containing executive compensation provisions were enacted: P.L. 110-289, the Housing and Economic Recovery Act of 2008 (HERA), and P.L. 110-343, the Emergency Economic Stabilization Act of 2008 (EESA). In the 111th Congress, H.R. 1, the American Recovery and Reinvestment Act of 2009 (ARRA), became law (P.L. 111-5). Title VII of ARRA sets forth restrictions on the compensation of executives of companies during the period in which any obligation arising from financial assistance provided under the Troubled Assets Relief Program (TARP) remains outstanding and requires standards and a review board to determine appropriate executive compensation, which must be voted on by shareholders of TARP recipients. In the wake of American International Group's (AIG's) bonus announcement, several bills (H.R. 1575, H.R. 1586, H.R. 1664, and S. 651) were introduced in the 111th Congress to recover, directly or indirectly, bonuses paid by TARP recipients and to discourage future bonus payments. Other bills have also been introduced in the recent Congresses concerning limiting executive compensation. These bills include proposals to modify the corporate governance provisions as well as the Bankruptcy and Internal Revenue Codes. This report includes, as an Appendix, Table A-1, which outlines a number of statutory provisions that limit executive compensation.

In 1994, at the first Summit of the Americas, the leaders of the 34 countries in the WesternHemisphere agreed to negotiate a Free Trade Area of the Americas (FTAA). FTAA's statedobjective is to reduce and eliminate barriers to trade in goods (including agricultural commoditiesand food products) and services, and facilitate cross-border investment, allowing all countries totrade and invest with each other under the same rules. (1) At their second Summit in 1998, theyformally initiated negotiations to create a hemispheric free trade area by the year 2005. At the thirdSummit in Quebec City in April 2001, leaders assessed progress to date by nine negotiating groups,agreed to conclude the negotiations by January 2005, and to bring the FTAA into effect no later thanDecember 2005. Following the timetable agreed upon in Quebec City, FTAA countries during 2003 have exchanged detailed offers and counteroffers designed to reduce and eliminate tariffs and quotas ontraded goods. In November 2002, trade ministers released the second draft consolidated text of anFTAA agreement covering all issue areas. Substantial differences in viewpoints continue to bereflected in the FTAA's chapter on agriculture, particularly on the issue of domestic farm subsidies. Many note that negotiating free trade in agricultural products could prove to be one of severaldifficult issues in the FTAA talks, as was the case in the negotiations between the United States andMexico on the agricultural provisions of the North American Free Trade Agreement (NAFTA). Hemispheric trade liberalization would directly affect U.S. agricultural trade with the countrieslocated in South America, Central America, and the Caribbean (except Cuba). Trade in mostagricultural products with Canada and Mexico already is, or will within a few years become, freeunder NAFTA's terms. (2) Also, a large portion of theagricultural products imported from outside theNAFTA trade bloc already enter the United States duty free under various trade preference programs. Imports from the Caribbean and Central American countries arrive under the Caribbean BasinInitiative. Those from Bolivia, Colombia, Ecuador, and Peru enter under the Andean TradePreference Act. Imports of certain agricultural products from other countries in the hemisphere areeligible to enter free under the Generalized System of Preferences (GSP). Countries that takeadvantage of these programs, though, are not required to offer tariff concessions on agricultural orother products imported from the United States. The United States in 2002 recorded a $2.8 billion deficit in agricultural trade with the non-NAFTA countries of the Western Hemisphere. Deficits occurred in two-way trade with theSouth American and Central American countries. Agricultural trade with the Caribbean nationsgenerated a noticeable surplus (Table 1). Table 1. U.S. Agricultural Trade Balance with FTAA Countries, by Region, 2002 Source: Derived from Tables 2 and 3 U.S. agricultural exports to the FTAA countries in the hemisphere (excluding Canada and Mexico) totaled $4.2 billion last year (Table 2). These sales represented 8% of worldwide U.S.agricultural exports, or 21% of farm exports to the region. Farm and food exports to both NAFTApartners totaled $15.9 billion (accounting for 30% of worldwide sales, or 79% of exports to the other33 FTAA countries). U.S. agricultural imports from FTAA countries (excluding NAFTA partners) totaled $7.0 billion in 2002 (Table 3). Entries accounted for 17% of all U.S. agricultural imports, or 31% ofimports from the region. Food imports from Canada and Mexico totaled $15.9 billion (representing38% of worldwide purchases, or 69% of such imports from the other 33 FTAA countries). Table 2. U.S. Agricultural Exports to FTAA Countries, 2002 Source: USDA Imports of agricultural products from the hemisphere that compete with the output of U.S. domestic producers accounted for 80% of the total. Non-competitive products not produceddomestically (such as bananas and coffee) represented 20% of these imports. Table 3. U.S. Agricultural Imports from FTAA Countries, 2002 Source: USDA Discussions on how to proceed to eliminate border protection and other barriers to agriculturaltrade have occurred primarily in two of the nine formal negotiating groups created for FTAAnegotiations. These are the Negotiating Group on Agriculture (NGAG), and the Negotiating Groupon Market Access (NGMA). Their focus has been on identifying the key issues and formulating therules to be followed in negotiating hemispheric free trade in agricultural and food products. Theirwork resulted in the consolidation by the end of 2000 of the first "bracketed" FTAA draftagreement. (3) Two chapters laid out text onagricultural provisions and guidelines on how marketaccess for agricultural products should be negotiated, respectively. Trade ministers released a secondconsolidated draft text in November 2002. (4) Itsagriculture chapter reportedly differs little from thetext in the first draft, continuing to reflect the wide range of positions between individual countries,or groups of countries. Seeking to keep to the timetable adopted at the April 2001, Quebec City summit, trade ministers in August 2002 reached agreement on the "methods and modalities" (the procedures, formulas,targets, rules, and timetables used to put negotiating objectives into practical terms) to be followedto make tariff reductions (see Market Access below for background). This provided the basisforeach country to prepare for the process of exchanging tariff and other market access concessions ona product- or sector-specific basis. Trade ministers agreed that all countries (except CARICOMmembers -- comprising most Caribbean islands, Belize in Central America, and Guyana andSuriname in South America) could start tariff cuts from current applied rates rather than from thehigher bound rates that all WTO members adopted in the last multilateral negotiating round. (5) CARICOM countries will be allowed to identify those agricultural and other products where themaximum bound rate could be used as the reference point for reducing tariffs. The November 1,2002, meeting of trade ministers in Ecuador finalized the negotiating pace and process to be followedover the 2003-2004 period. These final stages of the FTAA negotiations are being co-chaired byBrazil and the United States. All FTAA countries met the February 15, 2003 deadline for presentingtheir initial tariff reduction offers (see U.S. Market Access Offer for information on what U.S.negotiators tabled). Each country was expected to respond to these in the form of market accessrequests, due by June 15, 2003. The schedule then called for revised offers to follow this"request-offer" process by July 15, 2003. For the United States, the Office of the U.S. Trade Representative (USTR) is the lead agency involved in negotiating the FTAA. Other departments, particularly the agencies of the U.S.Department of Agriculture (USDA), provide input to USTR and have assigned staff to serve asexperts to lead negotiators. USDA representatives have also been actively involved in developingthe U.S. positions in relevant areas. FTAA trade ministers in 1998 agreed on several objectives to be followed in negotiatinghemispheric free trade in agricultural products. These have guided the work of the NGAG and theNGMA. The pertinent objectives call for: eliminating those measures that countries use to restrict the entry of agricultural products into their markets, developing disciplines on the use of export subsidies and other mechanisms that can distort trade in agricultural products, and ensuring that rules to protect food safety and plant and animal health will be based on science, and not applied on a discriminatory basis or as a disguised trade restriction. FTAA negotiators were also instructed to incorporate progress made in the current multilateral negotiations on agriculture sponsored by the World Trade Organization (WTO), (6) and the results ofthe review of WTO's multilateral agreement on the application of food safety and agricultural healthrules in international trade. These FTAA objectives are elaborated on below, with relevant background. For each issue, the U.S. position, and the positions or views of other countries when known, are summarized. (7) TheUSTR noted in 2001 that "U.S. agricultural negotiators [participating in the NGAG] will continueto work with the agricultural community to address appropriately import sensitivities and exportinterests." These positions are reflected in USTR's October 2002 notification to congressionalleaders of the U.S. negotiating objectives in the FTAA negotiations. (8) Countries use tariffs and tariff-rate quotas (TRQs) to protect certain economic sectors or specific products against import competition. [TRQs allow zero or low-duty access for specifiedamounts of a commodity or product. Imports above the quota amount may still enter, but face a veryhigh tariff rate.] To address this type of border protection, one major FTAA objective is "toprogressively eliminate, tariffs, and non tariff barriers, as well as other measures with equivalenteffects, which restrict [agricultural] trade between participating countries." Trade ministers agreedthat "all tariffs will be subject to negotiation," but allow for flexibility in negotiating "different tradeliberalization timetables." Further, negotiations on market access for agricultural products are to beconducted "to facilitate the integration of smaller economies [i.e., the Caribbean and CentralAmerican nations] and their full participation in the FTAA negotiations." The U.S. proposal called for formulating market access rules that apply similarly to both agricultural and non-agricultural products. In other words, trade in agriculture is not to be treatedany differently than trade in manufactured goods. The U.S. position is reported to advocateprocedures that "ensure that the benefits of free trade are broadly distributed," and proposed thatmost tariffs be rapidly reduced. USTR stated, with likely implications for agricultural trade, that thedetails of the U.S. position take into account "product sensitivities in a framework that is fullyconsistent" with WTO disciplines. Average Agricultural Tariffs in FTAA Area. Average tariffs on agricultural imports are lower in the Western Hemisphere compared to many otherregions around the world. The global average tariff on such imports is 62%, compared to the U.S.average (12%). For regions covered by the FTAA, the average bound tariff is 25% for NorthAmerica, 39% for South America, 54% for Central America, and 86% for the Caribbean Islands. (9) However, applied tariffs can be considerably lower than bound rates. For example, applied tariffsfor agricultural products averaged between 11% and 17% for Central and South America during the1995-99 period. These regional averages mask the range of protection between commodities in anycountry, and do not fully reflect the use of TRQs by many countries in the Western Hemisphere(including the United States), many of which apply prohibitive tariffs on above-quota imports. Reflecting FTAA's objective, the target would be to reduce tariff levels to zero and to eliminateTRQs by the end of the agreed-upon transition period, likely to be about 2020. This part of thenegotiating process will be a difficult process, as some countries seek exceptions for specificcommodities or products that currently receive protection under restrictive TRQs. Transition Periods. The U.S. proposal on FTAA's timetable and pace of tariff elimination is based in part on WTO rules, which requirecountries in a free trade area to eliminate tariffs and other forms of protection on most of their tradewithin 10 years. Some FTAA participants, though, acknowledge that some politically-sensitiveagricultural products may need to be allowed a transition of up to 20 years to adjust to competitionbefore tariffs or quotas disappear. They refer to the precedent set in NAFTA, which provided fora 15 year transition to free trade on the most sensitive agricultural products scheduled to enterMexico and the United States (i.e., frozen concentrated orange juice, peanuts, and sugar importedinto the United States from Mexico; and corn, dry beans, milk powder, and sugar imported byMexico from the United States). U.S. Market Access Offer. USTR's Ambassador Robert Zoellick, on February 11, 2003, laid out the scope of the U.S. tariff reduction offer onagricultural and other products. In unveiling this offer, he said that the United States is prepared togrant immediate duty-free access on 56% of the agricultural products that enter from non-NAFTAcountries once the agreement takes effect. On politically-sensitive farm products, AmbassadorZoellick stated that the United States proposes to eliminate tariffs with specific timetables that woulddiffer between countries or regional groups. Transition periods could be 5 or 10 years, or evenlonger, depending upon a country's size and its level of economic development, and on the type ofagricultural product. He indicated all agricultural products are on the table and subject to negotiation(i.e., no exclusions), and that the United States will move forward with other countries willing totake the same position. Governments use various mechanisms to support their farm sectors and to facilitate agricultural exports. The Uruguay Round's Agreement on Agriculture (URAA) lists those determined to distortagricultural trade, and requires that countries now follow some disciplines on their use. TheAgreement, among other things, spelled out commitments and a timetable for governments to reduceexport subsidies and domestic support. Other mechanisms (i.e., export credits, activities of statetrading enterprises) claimed to distort trade were identified for future trade talks, are on the agendaof the WTO multilateral negotiations now underway, and have surfaced in the FTAA debate. Export Subsidies. Though the WTO Agreement introduced some discipline on the use of export subsidies, WTO rules still allow countries tosubsidize exports of commodity surpluses. As a result, export subsidies continue to distortinternational trade in agricultural and food products by giving a price advantage to the exporter. Though subsidized sales reduce the price an importing country pays, the price that other exportingcountries receive for the same product sold into other markets frequently is less than would beotherwise. Two FTAA negotiating objectives agreed to by hemispheric trade ministers in their 1998 San Jose Declaration address this issue. One calls for the elimination of "agricultural export subsidiesaffecting trade in the Hemisphere." The other requires agricultural negotiators "to identify othertrade-distorting practices for agricultural products, including those that have an effect equivalent toagriculture export subsidies, and bring them under greater discipline." The U.S. position reaffirms the FTAA's goal of eliminating the use of export subsidies within the hemisphere, and proposes that the FTAA countries at the same time "establish mechanisms toprevent agricultural products from being exported to the FTAA by non-FTAA countries with the aidof export subsidies." This is likely aimed at the European Union, which heavily subsidizes itsagricultural exports and actively promotes such sales to Latin American markets. The initial U.S.proposal states that the United States does not consider export credits, credit guarantees, insuranceprograms, and international food aid "to constitute an export subsidy." The U.S. position reflectsthe use of the same definition of agricultural export subsidies (i.e., direct subsidies) as is used in theURAA. Domestic Support. Some South American countries have placed the issue of domestic farm support on the FTAA negotiating agenda. Thisrefers to government program spending to support commodity prices and raise incomes ofagricultural producers. These countries argue, with the United States and enactment of the 2002farm bill in mind, that such spending encourages farmers to produce commodity surpluses, that whenexported into world markets, depress the price that their producers receive for the same products. They view some forms of domestic support as more distorting of agricultural trade than tariffs orother border measures, and want to include this issue in the negotiations. The impetus behind theircall appears to be concern that the access they gain to the U.S. market under FTAA liberalization willnot result in much benefit to them, since the level of U.S. protection on agricultural imports isalready quite low. Therefore, these countries' strategy appears to be to offer to lower their higherlevel of border protection on agricultural products only if the United States agrees to reduce its levelof domestic farm support. U.S. negotiators continue to reject this linkage. The U.S. position is to seek a recognition by other FTAA countries that commitments to reduce domestic support levels can only be achieved inthe WTO multilateral negotiations. The U.S. proposal calls for a hemispheric agreement to worktogether in the WTO arena to substantially reduce and more tightly discipline trade-distortingdomestic support. In recent months, the United States and Brazil (now serving as FTAA co-chairs) have differed on how to address the issue of domestic farm subsidies in seeking a common position on the FTAA'send-game negotiating agenda. In responding to the U.S. market access offer, which Brazil views asdiscriminatory in the scope of duty-free access it would receive compared to other country groupsin the hemisphere, Brazil formulated a counter-proposal that has called into question what FTAA'sscope should be. It calls for: (1) the United States to negotiate market access with Mercosur (Brazil,Argentina, Uruguay, and Paraguay) as a trading bloc rather than with them as individual countries,and (2) shifting investment, government procurement, and intellectual property rights (IPR) issues,along with agricultural subsidies and antidumping rules (advocated by the U.S.) to the Doha WTOround. The United States, though, wants to include investment, procurement and IPR in acomprehensive FTAA agreement, while Brazil (seeing its priorities not being addressed) proposesto scale back the agenda to instead negotiate a "FTAA lite." State Trading Enterprises (STEs). The United States "calls for the staged elimination of exclusive export rights granted to state trading enterprisesengaged" in agricultural exports. The aim is to "permit private traders to participate in, compete for,and transact for" exports in countries where they exist. This position appears to be aimed atchanging the character of, for example, the Canadian Wheat Board, which is that country's soleexporter of wheat to several Latin American countries. If the United States persuades other countriesto include its position in the FTAA, U.S. agribusiness and commodity exporting firms would havethe opportunity to expand operations in countries where STEs exist to compete with them in sellingagricultural commodities for export. One FTAA agricultural negotiating objective adopts the WTO's SPS Agreement's principle that SPS measures not be applied "in order to prevent protectionist trade practices and facilitate trade inthe hemisphere." It declares that the use of such measures (consistent with this Agreement) toprotect "human, animal or plant life or health, will be based on scientific principles, and will not bemaintained without sufficient scientific evidence." The objective further calls for negotiations tofollow this Agreement to identify and develop measures "needed to facilitate trade." As background, most countries have policies to ensure food safety for humans and to protect animals and plants from diseases, pests, or contaminants. The WTO agreement referred to in theFTAA objective is the WTO "Agreement on the Application of Sanitary and PhytosanitaryMeasures." It includes understandings or disciplines on how countries will establish and use thesemeasures, taking into account their direct or indirect impact on trade in agricultural products. TheAgreement requires countries to base their SPS standards on science, and encourages countries touse standards set by international organizations to guide their actions. It seeks to ensure thatcountries will not use SPS measures to arbitrarily or unjustifiably discriminate against the trade ofother WTO members or to adopt them to disguise trade restrictions. The U.S. position calls for FTAA countries to agree to strengthen hemispheric collaboration on matters covered by WTO's SPS Committee and to work together to develop internationalstandards, guidelines or recommendations in relevant international bodies. The U.S. objective is toaccept and apply the work and findings of this WTO Committee, rather than create a separatehemispheric organization, in how FTAA countries formulate and apply SPS measures. FTAA trade ministers agreed to assign to the NGMA responsibility for addressing the rules of origin, customs procedures, and technical trade barriers that apply to agricultural products. ThisGroup is also charged to develop rules for safeguards, an issue that will be monitored carefully bythose countries with import-sensitive agricultural products. (10) The United States views the rules and disciplines that FTAA negotiators develop in these areas"critical in determining conditions for market access in agricultural products." The objective of thedetailed U.S. proposals on these issues is to ensure that sensitive products receive differentialconsideration during the transition to free trade, and that the benefits of free trade accrue to producersin the hemisphere and not to exporters outside the FTAA bloc who might seek to take advantage ofthe openings created by the new hemispheric free trade environment. Environmental and labor issues continue to be of concern in the wider context of the FTAAnegotiations generally, as well as to U.S. agricultural interests. Environment and labor provisionshave been included in some trade agreements, notably NAFTA and the U.S.-Jordan Free TradeAgreement, and in side agreements and decisions made relative to these agreements. However, theseissues remain contentious, with some in Congress expressing the need to include such provisions inthe FTAA. Others, though, argue that these issues do not belong in trade agreements and should beaddressed in environmental or other agreements. With regard to agriculture, some U.S. farm groups have expressed concern about the level of environmental, health, and labor standards found in the agricultural sectors of Latin Americancountries. U.S. farmers that produce import-sensitive commodities refer to these countries' lowerproduction costs, and their minimal safety and health requirements. For this reason, theirrepresentatives are concerned that complete trade liberalization would place them in a difficultcompetitive position, due to increased imports from countries where farm workers are paid muchlower wages and environmental regulations are lax. (11) Other farm groups, though, are opposed toincluding labor and environmental provisions (such as trade sanctions to enforce such rules) in tradeagreements. They support liberalizing trade in a way that promotes sustainable agriculturaldevelopment and improves working conditions. U.S. agriculture would benefit to some degree from U.S. participation in an FTAA thateliminates tariffs throughout the Western Hemisphere, according to a USDA analysis. (12) It found thaton an annual basis U.S. farm income (in 1992 dollars) would be $180 million higher (0.08%), totalagricultural exports would increase by $580 million (1%), and total agricultural imports would riseby $830 million (3%). This study found that the impact would vary among commodities. Assuming that the United States and Canada resolve the dispute surrounding Brazil's application of restrictive phytosanitaryrules to their wheat, both countries would see their wheat market share increase in Brazil -- the U.S.share would likely increase more than Canada's given lower U.S. shipping costs to Northeast Brazil. Gains are also expected in U.S. exports of corn, soybeans, and cotton to the hemisphere. Littleimpact is seen on sales of U.S. rice, meat, and dairy products. According to this analysis, completetrade liberalization under an FTAA would mean increased competition for U.S. sugar and orangejuice. It shows that U.S. sugar prices, production, and exports "could decline significantly, andimports could increase" from lower-cost producers like Brazil and Guatemala. The study also notesthat the removal of U.S. tariffs "may create incentives to import less-expensive Brazilian orangejuice," a development that "may displace some Florida juice." Congress will take up any agreement that results from the FTAA negotiations under fast trackprocedures found in Bipartisan Trade Promotion Authority Act of 2002 (Section 2105 of P.L.107-210 ). This details the process that Congress must follow to consider legislation sent to the Hillby the Executive Branch to implement signed trade agreements. Other provisions state broadobjectives for U.S. negotiators to follow in negotiating agricultural provisions in trade agreements,including those included in the FTAA. (13) In themeantime, the Administration is required to consultwith Congress on specific agricultural issues as negotiations on the FTAA and other tradeagreements proceed. Interaction during the period of consultation on negotiating positions andstrategies is intended to lay the groundwork for later congressional consideration of an FTAAagreement. Detailed provisions require the Executive Branch to follow special consultation procedures with Congress before engaging in, and during, trade negotiations that affect certain agricultural products. Section 2104 provides for extensive consultations on agricultural trade negotiations between theExecutive Branch and the House and Senate Agriculture Committees (among other congressionalcommittees and the Congressional Oversight Group). Section 2104 (b)(2) further prescribes specialconsultation procedures and a process for USTR to follow beforeundertaking agricultural tariffreduction negotiations in the FTAA and in negotiations on other trade agreements, on over 200"import-sensitive" agricultural commodities and food products. (14) It requires USTR to: consult with the House Agriculture and Ways and Means Committees, and the Senate Agriculture and Finance Committees, on whether any further tariff reductions on anyidentified product "should be appropriate, taking into account the impact of any such tariff reductionon the United States industry producing the product," on whether any covered product faces"unjustified sanitary or phytosanitary restrictions, including those not based on scientific principlesin contravention of the Uruguay Round Agreements," and on whether countries in the negotiationsuse export subsidies or other trade-distorting measures on products that affect U.S. producers of suchproducts, request the International Trade Commission to "prepare an assessment of the probable economic effects of any such tariff reduction on the U.S. industry producing the productconcerned and on the U.S. economy as a whole," and upon completing these steps, notify the four above-identified congressional committees of those products identified in the first step "for which the Trade Representative intendsto seek tariff liberalization in the negotiations and the reasons for seeking such tariffreductions." After negotiations have begun, this provision requires that if USTR identifies any other"import-sensitive" agricultural products for tariff reduction, or if a country involved in thenegotiations requests a reduction in the tariff on any other "import-sensitive" agricultural product,the Trade Representative shall notify the four committees of those products and the reasons forseeking tariff reductions. Reflecting the structure of other free trade agreements, hemispheric free trade in agriculturalproducts could occur by about 2020, assuming negotiators reach agreement on an FTAA by January2005. The agricultural component of the FTAA negotiating process, however, could becomeproblematic once negotiators begin to apply negotiating parameters and timetables to specificcommodities and food products that each country historically has protected. Some Latin Americancountries, particularly Brazil, seek increased access to the U.S. market for products that wouldcompete directly with U.S. producers of citrus, sugar, and beef. U.S. commodity groups andagribusiness seek additional openings for their products in the growing Latin American market. They also seek legal assurances that all countries will abide by sanitary and phytosanitary rules withrespect to agricultural imports. Though the United States will emphasize eliminating tariffs and other barriers to agricultural trade, Brazil and other countries have signaled they want the negotiating agenda to also address theissue of domestic agricultural support (i.e., farm price and income support). They have suggestedlinking their reduction in their higher tariffs to a concession by the United States on the domesticsupport issue. The United States has countered that this issue is not one of the agreed-upon FTAAobjectives, and should instead be addressed jointly by all FTAA countries in the ongoing WTOagriculture negotiations. These differing views over how this issue should be addressed in thenegotiations, and/or whether a compromise emerges in the next three weeks, will be a significant partof the mix influencing the outcome of the Miami FTAA Ministerial held November 17-21. U.S. agricultural interests have had the opportunity through public comment to present their views and concerns on the FTAA negotiations to USTR officials. Some have participated in theprivate sector meetings scheduled alongside those for FTAA trade ministers. The U.S. agriculturalsector, though, appears either lukewarm about FTAA prospects or opposed to this initiative. Thereis a widely held view that U.S. agriculture expects to benefit more, or would have less to lose, froma comprehensive multilateral WTO agreement compared to an FTAA agreement, If an FTAA agreement is reached that reflects the objectives agreed to by trade ministers in 1998, U.S. farm policymakers may have to contend with the repercussions of opening the U.S.market to import-sensitive farm products. Though final agreement and implementation of an FTAAagreement would be many years off, this outcome could prompt interest in developing alternativesto the current sugar program. Some may also explore whether there might be a need to developmechanisms to help other commodities and products that have traditionally not received governmentsupport, such as vegetables, fruit, and orange juice, to offset the effects of increased importcompetition.

Leaders of Western Hemisphere countries have agreed to negotiate a Free Trade Area of the Americas (FTAA) agreement by 2005. FTAA's objective is to promote economic growth anddemocracy by eliminating barriers to trade in all goods (including agricultural and food products)and services, and to facilitate investment. If diplomats reach agreement, free trade in the hemispherecould occur by 2020. Negotiations on FTAA's agriculture component have become contentious. FTAA's negotiating objectives for agriculture call for removing tariffs and other barriers to agricultural imports in eachcountry, developing disciplines on the use of export subsidies and other mechanisms that distortagricultural trade, and ensuring that rules on food safety and animal and plant health are not used asdisguised trade barriers. Following an agreed-upon timetable, FTAA countries during 2003exchanged detailed offers and counteroffers designed to reduce and eliminate tariffs and quotas onall traded goods. The agriculture chapter in the second draft consolidated text of an FTAAagreement issued in November 2002 continues to reflect differences in viewpoints among countrieson substantive agricultural issues. Strong differences currently exist between the United States andBrazil over how to address in the FTAA the issue of domestic farm subsidies and agricultural exportsubsidies. This issue has become pivotal in efforts to reach an agreement on FTAA's scope(comprehensive or scaled back) in the period leading up to the FTAA Ministerial in Miami onNovember 17-21. Much of U.S. agricultural trade with Canada and Mexico already occurs free of barriers under the North American Free Trade Agreement. Accordingly, an FTAA would primarily affect U.S.agricultural trade with the countries of South America, Central America, and the Caribbean. Salesto these three markets currently account for a small share (8%) of U.S. farm product exports. Agricultural imports from these three regions, by contrast, account for 17% of all such U.S. imports. A 1998 U.S. Department of Agriculture analysis finds that U.S. agriculture would benefit to some degree with U.S. participation in an FTAA that eliminates all tariffs throughout the region. According to this analysis, U.S. farm income would be $180 million (1%) higher than without anagreement, U.S. agricultural exports would increase by $580 million (1%), and U.S. agriculturalimports would rise by $830 million (3%). Some agricultural product sectors expecting to gain from increased sales are supportive of the FTAA initiative. Others appear to be ambivalent, preferring instead that the Bush Administrationplace more emphasis on liberalizing agricultural trade on a multilateral basis under the WTO. Producers of import-sensitive food products (i.e., sugar and orange juice) are concerned aboutincreased competition. They seek to be excluded from FTAA coverage or be covered by the longesttransition periods possible. Under trade law, the Executive Branch must follow special consultationprocedures with Congress on import-sensitive agricultural products covered by the FTAA agreement. This report will be updated periodically .

The 108th Congress did not complete action on legislation to reauthorize the block grant ofTemporary Assistance for Needy Families (TANF). Instead it and its predecessor, the 107thCongress, adopted short-term funding extensions since the original funding authority for TANFexpired on September 30, 2002. The latest short-term extension funds the program through March31, 2005. The House of Representatives did pass a bill in February 2003 ( H.R. 4 ), and the Senate Finance Committee reported an amended version of the legislation in October 2003. Thoughthe full Senate took up the bill in late March 2004, the measure was set-aside in that chamber aftera motion to limit debate on the bill failed to receive the required 60 votes on April 1. The lack of final action in the 108th Congress means that welfare reauthorization is likely to again be a topic in the 109th Congress. This report describes both the House-passed and SenateFinance Committee-approved versions of welfare reauthorization legislation in the 108th Congress. The differences in the two bills highlight some of the contentious issues in the reauthorizationdebate. Before the bill was pulled from the Senate floor, the Senate did approve one amendment tothe bill which would have added $6 billion over five years for child care funding (to a total of $7billion in child care funds above current law levels for the five years). There were no approvedamendments to the Senate Finance Committee bill's TANF provisions. The bills had many similarities, with both extending basic funding at current levels throughFY2008 and incorporating President Bush's proposal to provide categorical "marriage promotion"grants. They both also raised TANF work participation standards, though the two bills differed interms of how much more work would be required and what activities count toward the participationstandards. This report provides a comparison of the TANF provisions of H.R. 4 as itpassed the House and was reported from the Senate Finance Committee. It does not addressnon-TANF provisions of both bills, such as revisions to the Child Care and Development Fund,Child Support Enforcement, Abstinence Education, and transitional Medicaid. The House-passed and Senate Finance Committee bills had very similar funding provisions. The major difference in the funding provision between the two bills was that the Senate FinanceCommittee bill would have completely revamped the TANF contingency (recession) funds, whilethe House-passed bill would have made relatively minor revisions to the fund. Basic Funding. The 1996 welfare reform law entitled states to a basic TANF block grant equal to peak expenditures in the pre-1996 welfareprograms during the FY1992 to FY1995 period. It also established a maintenance of effort (MOE)requirement that states continue to spend at least 75% (80% if a state failed TANF work participationrequirements) of what they spent in these programs in FY1994. The mid-1990s were the period whencash welfare caseloads were at their peak. Both the basic TANF grant and the MOE are legislativelyfixed: they did not change when cash welfare caseloads declined in the mid- and late-1990s, nor didthey increase when caseloads in some states increased during the recent economic slump. Neitherthe basic TANF block grant nor the MOE have been adjusted for inflation. Both the House-passed and Senate Finance Committee versions of H.R. 4 would have continued both the basic block grant and the MOE at their current funding levels (withoutinflation or caseload adjustment) through FY2008. Supplemental Grants. During the consideration of legislation that led to the 1996 welfare law, fixed funding based on historical expenditures wasthought to disadvantage two groups of states: (1) those that experience relatively high populationgrowth; and (2) states that had historically low grant levels relative to poverty in the state. Therefore,additional funding in the form of supplemental grants was provided to states that met criteria of highpopulation growth and/or low historic grants per poor person. Supplemental grants have beenprovided to 17 states: Alabama, Alaska, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho,Louisiana, Mississippi, Montana, New Mexico, Nevada, North Carolina, Tennessee, Texas, andUtah. In FY2003, supplemental grants totaled $319 million. Both the House-passed and Senate Finance Committee bills would have continued supplemental grants for the same 17 states at theFY2003 funding level through FY2007 (unlike other grants, which expire in FY2008). Contingency Funds. The fixed basic grant under TANF also led to concerns of inadequate funding during economic downturns. TANF includes acontingency fund, which is designed to provide extra matching grants to states that meet criteria ofeconomic need (based on unemployment rates and food stamp caseloads) and have stateexpenditures in excess of their FY1994 level. The two bills differed substantially in their revisions to the TANF contingency fund. The House-passed version of H.R. 4 essentially would have continued the fund on existingrules, with some relatively minor modifications: allowing some additional state spending to counttoward meeting the FY1994 funding level threshold and modifications to increase grants for statesthat qualify for funds for only part of the year. The Senate Finance Committee bill fully revamped the contingency fund. It would have eliminated the requirement that states increase expenditures from their own funds above the regularTANF MOE level and eliminated the matching requirements. It added a new financial requirementthat unspent TANF balances be below a certain threshold to qualify for contingency funds. TheFinance Committee proposal would have based contingency grants on a portion of the estimated costof increased cash assistance caseloads. The Senate Finance Committee bill would have also revisedthe criteria of economic need for a state. Uses of Grants and Program Requirements. Federal TANF grants and MOE funds can be used for a wide range of benefits, services, andactivities to assist low income families with children and to further TANF goals of reducingout-of-wedlock births and promoting two-parent families. TANF grants can also be transferred toother block grant programs: up to 30% of the grant can be transferred to the Child Care andDevelopment Fund (CCDF) and to the Social Services Block Grant, though the limit on transfers toSSBG is set at 4.25% (though annual appropriations have restored the SSBG transfer limit to itsoriginal limit set in the 1996 welfare law of 10%). Within the overall 30% limit, federal TANFfunds may also be used as the state match for federal reverse commuter grants if the program benefitswelfare families. Both bills would have set the SSBG transfer limit permanently at 10%. However, the Housebill would have raised the overall transfer limit to 50%. The Senate Finance Committee bill wouldhave retained the current law 30% transfer limit. Both bills included provisions to ease some rules regarding use of TANF funds. Both the House-passed and Senate Finance Committee versions of H.R. 4 would have: Allowed states to use carryover TANF funds for any TANF benefit and service. Current law restricts the use of carryover funds for the provision of"assistance." Narrowed the definition of "assistance" to exclude all child care andtransportation aid. TANF funds spent on assistance trigger certain program requirements, such aswork requirement, time limits, assignment of child support payments, and data reportingrequirements. Under current regulations, child care and transportation aid for nonworking familiesis counted as assistance and triggers these requirements. The bills would have eliminated such aidfrom the definition of assistance, freeing nonworking families who receiving only child care ortransportation aid from these requirements. Both the House-passed and Senate Finance Committee bills substantially revised TANF workparticipation requirements that apply to both the states and to individuals. They both raised workparticipation rates that states must meet from the current law's standard of 50% to 70%, raised therequired hours of working to receive full credit and provided partial credit for participating familiesthat do not meet the full credit standard, and revised the list of activities. However, the bills differedin how they did these three things. Both bills also incorporated the Bush Administration's "universal engagement" proposal, which requires states to develop a self-sufficiency plan for all TANF adult recipient to monitor progresstoward that plan. The House -passed bill also required states to end benefits ("full family sanction")for families that fail to comply with work participation rules. Participation Rate Standards. Current law requires states to have a specified percentage of their families with an adult recipient (or minor headof household) participating in creditable work activities. The current participation standard is 50%. States are subject to an additional participation rate standard for two-parent families, currently 90%. The participation rate standards may be reduced for caseload reduction (not attributable to policychanges) that have occurred since before enactment of welfare reform (FY1995). This "caseloadreduction credit" has had a large effect on participation standards, reducing the standardconsiderably from its statutory rate. In FY2002, the standard was reduced to 0% for 21 states. Both the House-passed and Senate Finance Committee bills raised the work participation standard for all families to 70% by FY2008 and eliminated the separate standard for two-parentfamilies. Both bills also would have revised the credits that reduce these standards from theirstatutory rate (i.e., reduce the 70% standard to a lower rate), but they did so in different ways. The House-passed bill revised the current caseload reduction credit so that caseload change is measured from a more recent year (rather than the pre-welfare reform caseload level of 1995). Ultimately, caseload reduction would have been measured based on the most recent four years. TheHouse bill also included a provision to give an additional credit to states that achieved a caseloadreduction of 60% of more from FY1995 to FY2001. The Senate Finance Committee bill retained the current caseload reduction credit for FY2004 and FY2005, but beginning in FY2006 would have replaced the caseload reduction credit with acredit for employed welfare leavers. The bill would have also capped all credits against theparticipation standard, so that the minimum effective rate standard would have been 10% in FY2004,20% in FY2005, 30% in FY2006, 40% in FY2007, and 50% in FY2008. Hours Standards. Current law requires that a family be considered participating only if it participates for a minimum number of hours per weekin a month. Under current law, 20 hours is required for single parents with a pre-school child (underthe age of six), and 30 hours is required for other families. Higher hours are set for the purposes ofthe two-parent work participation rate. Both the House-passed and Senate Finance Committee bills raised the hours standards. TheHouse-passed bill incorporated a 40-hour workweek standard for full credit, but would also haveprovided "partial" credit for families with at least 24 hours of participation. No special lower hourstandard would have been provided for single parents with preschoolers. The Senate Finance Committee bill also raised the hours standard for full credit, but by less than proposed in the House-passed bill. Single parents with a pre-school child would have been givenfull credit for participation at 24 hours per week, and other single parent families would have beengiven full credit at 34 hours per week. Partial credit for single parent families would have beenprovided at 20 hours per week. Higher hours requirements would apply to two-parent families. Creditable Activities. Current law lists 12 activities that may be counted toward TANF work participation standards. The bulk of countableparticipation is in a subset of "core" activities focused on work, time-limited job search (countablefor six weeks in a fiscal year, 12 weeks if criteria of economic need is met), time-limited vocationaleducational training (12 months in a lifetime), and community service and work experience. Inmeeting the general 30-hour-per-week standard, hours in educational activities are countable onlyfor families who are also participating in at least 20 hours per week of "core" activities. Post-secondary education, other than that considered "vocational educational training," does notcount toward current law federal TANF work participation standards. Both bills would have revised the list of countable activities, but in very different ways. TheHouse-passed bill would have narrowed what counts as "core" activity by removing job search andvocational educational training from that list. Except for a limited period of time (see below), theHouse bill would have required that families participate for at least 24 hours per week in work,community service, or work experience programs to be counted toward the state's standard. Forthree months in a 24-month period (four months in the case of an educational program), states wouldhave been allowed to define activities that count toward the standards. These activities would haveincluded job search and vocational educational training or other types of activities (e.g., English forSpeakers of Other Languages classes, substance abuse treatment or treatment for victims of domesticviolence). States would also have been allowed to determine the activities for which hours wouldcount above the 24-hour-per-week standard. The Senate Finance Committee bill retained the current law list of activities, including keeping time-limited job search and vocational educational training as "core" activities. However, itprovided states with options to allow recipients to participate in an additional set of activities forthree months in a 24-month period. In the case where that participation is in a rehabilitative activity,another three months of rehabilitation would have been allowable if combined with a core workactivity. The Senate Finance Committee bill would also have allowed these additional activities (andjob search and vocational educational training to count without regard to their usual time limits) tocount for hours above 24 hours per week spent in core activities. The Senate Finance Committee bill also allowed states to have up to 10% of their caseload enrolled in a special program of two- or four-year undergraduate education or vocational educationaltraining. This program is modeled after the "Parents as Scholars" program that has operated inMaine using TANF MOE funds. Current law allows states to use TANF funds for any activity "reasonably calculated" to achievea TANF purpose. One of the statutory purposes of TANF is to end dependency of needy parents ongovernment benefits, and one of the stated means to end such dependency is "marriage." Anotherof the statutory purposes of TANF is to promote the formation and maintenance of two-parentfamilies. "Promoting marriage" is a currently allowable use of TANF funds. Both the House-passed and Senate Finance Committee versions of H.R. 4 would have carved out special "marriage promotion grants" from existing TANF funding. Both billsincluded $100 million in competitively awarded matching funds for states, territories, and tribes formarriage promotion activities. The bills would have allowed states to use other federal TANF fundsor state funds as the match for these new marriage promotion grants. Both bills also would have provided an additional $100 million for research and demonstrations. The House-passed bill required that these funds be used "primarily" for marriagepromotion; the Senate Finance Committee bill required that 80% of these funds be used for marriagepromotion. Marriage promotion activities listed in both bills were: public advertising campaigns on the value of marriage and skills needed to increase marital stability and health; education in high schoolson the value of marriage; marriage education and marriage and relationship skills programs fornonmarried parents or expectant parents; pre-marital education on marriage for engaged couples;marriage enhancement and marriage skills training for married couples; divorce education programs;and marriage mentoring programs. Programs to reduce the disincentives to marriage in need-basedprograms could only have been funded from these grants if offered in conjunction with othermarriage activities. The language of the two bills was similar, though the Finance Committee billhad additional language requiring that organizations familiar with domestic violence issues beconsulted in developing marriage promotion projects and language to clarify that marriage promotionactivities are to be voluntary. Both the House-passed bill and Senate Finance Committee bill would have made additional amendments to TANF provisions regarding state plans, data reporting, tribal TANF programs, andother provisions of TANF law. These provisions are included in the detailed bill comparison tableshown below. The House-passed and Senate Finance Committee versions of H.R. 4 also included amendments to the Child Care and Development Fund, child support enforcement, theabstinence education program, and transitional Medicaid. These provisions are not addressed in thisreport. Table 1 provides a detailed comparison of the TANF programs of theHouse-passed and SenateFinance Committee reported versions of H.R. 4 . The table provides references towhere current law provisions are found in the Social Security Act (SSA). It also denotes the sectionnumber in each of the bills in which the provision is found. Table 1. Comparison of Current Law with H.R.4, as Passed by the House andas Reported by the SenateFinance Committee (TANF Provisions) Return to CONTENTS section of this Long Report.

The 108th Congress did not complete action on legislation to reauthorize the block grant ofTemporary Assistance for Needy Families (TANF), instead adopting short-term extensions. Thelatest extension funds the program through March 31, 2005. Though welfare reauthorization failedto receive final action, a bill ( H.R. 4 ) did pass the House and a substitute measure wasreported from the Senate Finance Committee. The differences in the two bills highlight some of thecontentious issues in the reauthorization debate. The House-passed and Senate Finance Committee bills were very similar in terms of how they would continue funding under the TANF program. Both bills would have extended basic TANFfunding at current levels ($16.6 billion for the 50 states, the District of Columbia, and the territories)through FY2008 and extended supplemental grants provided to 17 states through FY2007. Both billsalso would have provided new, categorical grants for marriage promotion activities. The majordifference in the funding provisions of the two bills was how they provided extra contingency(recession-related) funding to the states. The House bill essentially extended the current law fundthat provides matching grants to states that experience high and increased unemployment rates andfood stamp caseloads. The Senate Finance Committee bill eliminated the requirements that statesexpend additional money to access contingency funds, and instead based extra funding on the costof increased caseloads for states that meet revised unemployment or food stamp caseload criteria. The two bills would have substantially revised TANF work participation standards that states must meet or be subject to a financial penalty. Under current law, 50% of TANF families with anadult or minor household head must participate, though the 50% rate is reduced by caseloadreductions that have occurred since welfare reform. Both versions of H.R. 4 wouldhave raised this standard to 70%, though under both bills the standard could have been reducedthrough credits (though the credits differ between the two bills). They also both eliminated aseparate 90% participation rate requirement for two-parent families. Both bills would have raisedthe minimum hours required of family members to be considered full participants, though the Houseraised them more than did the Senate Finance Committee bill. The bills also differed in the activitiescountable toward the participation standards: the House narrowed the list of activities countable,requiring recipients to spend at least 24 hours in work, community service, or work experienceprograms except for a short (usually three month) period when states may define what counts asactivities themselves. The Senate Finance Committee bill kept all activities on the current law list,and also allowed states to count activities on an expanded list for three months (six months in somecircumstances). Both bills included non-TANF provisions relating to child support enforcement, responsible "fatherhood" programs, and transitional medical assistance (not addressed herein). This report willnot be updated.

Prior to the September 11, 2001 terrorist attacks, insurance covering terrorism losses wasnormally included in general insurance policies without a specific premium being paid. Essentiallymost policyholders received this coverage for free. The attacks, and the more than $30 billion ininsured losses that resulted from them, caused a rethinking of the possibilities of future terroristattacks. In response to the new appreciation of the threat and the perceived inability to calculate theprobability and loss data critical for pricing insurance, both primary insurers and reinsurers pulledback from offering terrorism coverage. Many argued that terrorism risk is essentially uninsurableby the private market due to the uncertainty and potentially massive losses involved. Becauseinsurance is required for a variety of economic transactions, many feared that a lack of insuranceagainst terrorism loss would have wider economic impact, particularly on large-scale developmentsin urban areas that would be tempting targets for terrorism. Congress responded to the disruption in the insurance market by passing the Terrorism RiskInsurance Act of 2002 (1) (TRIA), which was signed by the President in November 2002. TRIA created the Terrorism RiskInsurance Program, which was enacted as a temporary program, expiring at the end of 2005, to calmthe insurance markets through a government backstop for terrorism losses and give the privateindustry time to gather the data and create the structures and capacity necessary for private insuranceto cover terrorism risk. Terrorism insurance has become widely available under TRIA and the insurance industry hasgreatly expanded its financial capacity in the past three years. It appears, however, that less progresshas been made on creating terrorism models that are sufficiently robust for insurers to return tooffering widespread terrorism coverage without a government backstop, and that practically noprogress has been made on a private pooling mechanism to cover terrorism risk. Some see the pastthree years as proof of the argument that the private market will never be able to offer insurance tocover terrorism risk and continue to see the possibility of wider economic consequences if terrorisminsurance again is unavailable. Others, notably the U.S. Treasury Department, respond that TRIAitself is retarding the growth of this private market and should be allowed to expire, or at least bereduced from its current form. Congress responded to the impending expiration of TRIA with two different bills thatinitially passed the respective houses. The Senate bill, Senator Christopher Dodd's S. 467 , was approved by the Senate on November, 18, 2005. The large majority of the language fromthe House bill, Representative Richard Baker's H.R. 4314 , was inserted into S.467 and passed by the House on December 7, 2005. S. 467 was entitled theTerrorism Risk Insurance Extension Act, whereas H.R. 4314 was entitled the TerrorismRisk Insurance Revision Act and the titles did reflect essential differences between the two bills. Senator Dodd introduced S. 467 on February 18, 2005. As introduced, it wasidentical to a bill, S. 2764 , introduced by Senator Dodd in the 108th Congress. S.467, as introduced, would have explicitly extended TRIA for two years, until the end of2007, and would have added a "soft landing" year by changing the definition of an insured loss sothat policies written in the second year and extending into a third year would be covered. Theindividual insurer deductible was to remain at 15% of earned premiums during the extension, whilethe insurance industry aggregate loss retention amount was to increase from the current $15 billionin 2005 to $17.5 billion for 2006 and finally $20 billion for 2007. S. 467 also would havedirected the Treasury to promulgate new rules including group life insurance under TRIA. On June 30, 2005, the Department of the Treasury released a report on TRIA accompaniedby a letter from Secretary Snow indicating that TRIA had achieved its goal of stabilizing theinsurance market and that the Administration would not support an extension without significantchanges reducing the taxpayer exposure from the program. On November 16, 2005, the SenateCommittee on Banking, Housing, and Urban Affairs marked up S. 467 and substitutedan amendment by Chairman Richard Shelby for the original text. It then reported the bill favorablyto the full Senate by voice vote. As amended, S. 467 would have extended the current program two years andfurther increased the private sector's exposure to terrorism risk over the life of the act, as did theoriginal legislation. During the three years covered by the initial act, insurance industry deductiblesand aggregate retention rose each year. S. 467 continued to increase these. It would havealso reduced the types of insurance covered by the program and increased the size of a terrorist eventnecessary to trigger the program. Specifically, it removed commercial auto, burglary and theft,surety, farm owners multiple peril, and professional liability (except for directors and officersliability), as covered lines; raised the insurer deductible to 17.5% in 2006 and 20% in 2007;decreased the federal share of insured losses from 10% to 15% for 2007; and raised the event triggerto $50 million in 2006 and $100 million in 2007. S. 467 was brought to the Senate floor and passed by unanimous consent onNovember 18, 2005. The House brought the bill to floor and amended it with most of the text of H.R. 4314 before passing it on December 7, 2005. H.R. 4314 was introduced by Representative Baker on November 14, 2005, andmarked up by the House Financial Services Committee on November 16. Three amendments, byChairman Michael Oxley and Representatives Barney Frank and Debbie Wasserman Schultz, wereadopted in committee by voice vote. (2) Chairman Oxley's amendment made a number of changes,including adjusting the exact deductibles for various insurance lines, reducing the program triggeramount in program years after the second year and striking language that would have preemptedsome state laws relating to rate and form filing. Representative Frank's amendment increased thesize needed by a company or municipality to be considered an "exempt commercial purchaser" ofinsurance. Representative Wasserman Schultz's amendment added the requirement that life insurersnot deny insurance coverage based on lawful overseas travel. The amended bill was favorablyreported to the full House by a vote of 64-3. In the 108th Congress, the committee had reportedfavorably a straightforward extension of TRIA with relatively minor changes. H.R. 4313 , however, went well beyond the previously reported House bill or the changes recommendedby Secretary Snow. H.R. 4314 as reported would have limited the types of insurance covered byremoving commercial auto insurance. However, it would have expanded the program to coverdomestic terrorist events and increased the covered types of insurance to include group life andspecific coverage for nuclear, biological, chemical, and radiological (NBCR) events. It would haveraised the event trigger to $50 million in 2006 and added an additional $50 million to this for everyfuture year the program is in effect. It also would have changed the insurer deductible but wouldhave done so differently for different lines of insurance, raising it to as high as 25% for casualtyinsurance but lowering it to 7.5% for NCBR events. H.R. 4314 would have lowered thefederal share of insured losses to 80% for events under $10 billion but raised it gradually to 95% forevents over $40 billion. In the case of a terrorist act, the deductibles and event triggers would havereset to lower levels, with deductibles possibly as low as 5% in the event of a large attack. It wouldhave removed the cap on the mandatory recoupment provision so that all money expended underTRIA would be recouped by the federal government through a surcharge on insurers in the yearsafter the attack. H.R. 4314 also would have created "TRIA Capital Reserve Funds (CRF),"to allow insurers to set aside untaxed reserves to tap in the case of a terrorist event. With a few changes, notably the addition of language striking Section 107 of the originalTRIA, the language of H.R. 4314 as it was reported was inserted into the Senate-passed S. 467 , and this amended version of S. 467 passed the House 371-49 onDecember 7, 2005. Shortly after passage, the House called for a conference committee to resolvedifferences with the Senate and appointed conferees. The Executive Office of the President issued a Statement of Administration Policy supporting S. 467 on November 17, 2005. It also indicated that the Administration would stronglyoppose "any efforts to add lines of coverage, including group life insurance." On December 7, 2005,a Statement of Administration Policy was issued that specifically opposed the House-passed versionof S. 467. Following the House appointment of conferees on December 7, 2005, the Senate did notappoint conferees. Instead, it took up and passed a further amendment ( S.Amdt. 2689 )to S. 467 by unanimous consent on December 16, 2005. The House followed this withpassage of this version of S. 467 by voice vote on December 17, 2005. S. 467 was signed by the President on December 22, 2005, becoming PublicLaw 109-144. P.L. 109-144 closely follows S. 467 as initially passed by the Senate onNovember 18, 2005. The significant difference is an increase in the aggregate retention amount from$17.5 billion and $20 billion to $25 billion and $27.5 billion for 2006 and 2007. Table 1. Side-by Side: Terrorism Risk Insurance Act of 2002, Initial Senate- and House-passed Legislation,andTerrorism Risk Insurance Extension Act of 2005 Notes: The initial House-passed S. 467 would strike essentially all of 15 U.S.C. 6701 note (which sets out sections 101-108 of P.L. 107-297 )and replaces it with a similar structure, including in some cases, identical language. The section numbers for this House-passed S. 467 citedin this side-by-side are, therefore, those that would appear in the Code if the bill were enacted, except for the provision entitled "Litigation Management." In contrast, both the initial S. 467 and P.L. 109-144 simply amend 15 U.S.C. 6701 note. The section numbers cited in this side-by-side are thusthose of the bill and law.

Prior to the September 11, 2001, terrorist attacks, insurance covering terrorism losses wasnormally included in general insurance policies without cost to policyholders. Following the attacks,both primary insurers and reinsurers pulled back from offering terrorism coverage, citing particularlyan inability to calculate the probability and loss data critical for insurance pricing. Some argued thatterrorism risk would never be insurable by the private market due to the uncertainty and potentiallymassive losses involved. Because insurance is required for a variety of economic transactions, it wasfeared that a lack of insurance against terrorism loss would have wider economic impact. Congress responded to the disruption in the insurance market by passing the Terrorism RiskInsurance Act of 2002 (TRIA). TRIA created a temporary program, expiring at the end of 2005, tocalm the insurance markets through a government backstop for terrorism losses and to give theprivate industry time to gather the data and create the structures and capacity necessary for privateinsurance to cover terrorism risk. From 2002 to 2005, terrorism insurance became widely availableand largely affordable, and the insurance industry greatly expanded its financial capacity. There was,however, little apparent success on a longer term private solution and fears persisted about widereconomic consequences if insurance were not available. To a large degree, the same concerns andarguments that accompanied the initial passage of TRIA were before Congress as it considered TRIAextension legislation. Congress responded to the impending expiration of TRIA with the passage of two differentbills. The Senate bill, S. 467 , was approved by the Senate on November 18, 2005. Thelarge majority of the language from the House bill, H.R. 4314 , was inserted into S.467 and passed by the House on December 7, 2005. S. 467 was titled theTerrorism Risk Insurance Extension Act, whereas H.R. 4314 was titled the Terrorism RiskInsurance Revision Act. These titles did reflect essential differences between the two bills. S.467 extended the current program by two years and further increased the private sector'sexposure to terrorism risk, as did the original act. (During the three years covered by the initial act,insurance industry deductibles and aggregate retention rose each year.) S. 467 continuedto increase these and also reduced the types of insurance covered by the program and increased thesize of terrorist event necessary to trigger the program. H.R. 4314 extended the programfor two or possibly three years and substantially revised many aspects of it. Among the notablechanges, it excluded some lines of coverage and included others that were not covered before. Itsegmented lines of insurance, introducing different deductibles for different lines. It included theconcept of resetting the deductibles and the trigger amount to lower amounts if a terrorist attackoccurs in the future. The final version signed into law closely tracked the Senate legislation. This report briefly outlines the issues involved with terrorism insurance and includes aside-by-side of the initial TRIA, TRIA-extension legislation as considered in the House and Senate,and the final bill as signed by the President. It will not be updated.

Ongoing concern surrounding energy security and the environment have led to sustained Congressional interest in energy tax policy. The 111 th Congress enacted a number of renewable energy tax incentives as part of the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ). A number of expiring renewable energy tax provisions were extended through the end of 2011 in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ). As various incentives for renewable energy, renewable fuels, and energy efficiency are scheduled to expire at the end of 2011, the 112 th Congress may want to explore various policy options for encouraging investment in renewable energy. The Obama Administration has also repeatedly emphasized the importance of investments in clean energy technologies and infrastructure. President Obama has noted that clean energy investments can enhance domestic energy security, promote environmental objectives, and create jobs. One barrier to investments in renewable energy projects is that such projects are highly capital intensive. Capital intensive renewable energy projects continue to face a number of challenges with respect to financing. Policymakers have been exploring various options for increasing the availability and decreasing the cost of financing for the renewable energy sector. One option for attracting additional capital to the renewable energy sector that Congress may consider is allowing renewable energy activities access to the master limited partnership (MLP) business structure. This report explores the policy option of extending the master limited partnership (MLP) business structure option to renewable energy facilities and related activities. Before evaluating the policy, this report provides a brief overview of the MLP structure, highlighting notable tax issues. This report also provides background on the legislative origins of the MLP structure, and legislative changes affecting MLPs that have been made in recent years. The final sections of this report highlight how the MLP structure might be able to attract additional capital to the renewable energy sector, while also discussing some potential policy concerns. A master limited partnership (MLPs) is a type of business structure that is taxed as a partnership, but whose ownership interests are traded on financial markets like corporate stock. Being treated as a partnership for tax purposes implies that MLP income is generally subject to only one layer of taxation. Income passes through the partnership to its business owners who pay taxes according to the individual income tax system. Publically traded C corporations, however, are subject to two layers of taxation. Their earnings are taxed once at the corporate level, according to the corporate tax system, and then a second time at the individual-shareholder level when dividend payments are made or capital gains are realized. This leads to the so-called "double taxation" of corporate profits. Businesses may be able to attract more capital at a lower cost by choosing to organize as an MLP than would otherwise be possible. Ownership interests of MLPs, which are known as units to distinguish them from corporate stock, are traded on regulated financial exchanges in the same manner as shares of corporate stock. MLP units are an attractive alternative to corporate stock for individual investors, since the single layer of taxation can result in higher after-tax returns. The higher returns to investors corresponds to lower financing costs for the business. And the ability to have their units traded on public exchanges is attractive to the MLP itself since it grants them access to larger and more liquid sources of capital, which can be used to pursue investments. MLPs are typically formed as a limited partnership consisting of thousands of limited partners and at least one general partner. The limited partners are public investors who provide most of the capital to the MLP in exchange for publically tradable units. MLP units pay a periodic cash distribution similar to a dividend and are traded on the New York Stock Exchange, NASDAQ, American Stock Exchange, or over-the-counter market, like stocks. Unit holders are also allocated a portion (determined by units owned) of the partnership's income, deductions, and credits. When a unit is traded, the buying investor replaces the selling investor as a limited partner in the MLP. Currently, there are over 100 publically traded MLPs, the majority of which are energy related (see Appendix ). The MLP's general partner manages the partnership in exchange for a percentage of the partnership's income, called an incentive distribution right (IDR). The exact percentage that the general partner will receive is agreed to when the MLP is formed, but typically involves a 2% share of some baseline amount of distributable cash flow. The general partner may then receive an increasing share of distributable cash flow above the baseline if the yield on the limited partner's units exceed certain thresholds. This payment structure is thought to compensate the general partner for taking on certain risks and encourage them to manage the MLP in a way that maximizes the return to investors. The general partner may be another (parent) company or a group of individuals. To be an MLP at least 90% of a business's gross income must be considered "qualifying income." Qualifying income generally includes dividends, interest, rents, capital gains, and mining and natural resource income. Income related to the exploration, development, mining or production, processing, refining, transportation, storage, and marketing of any mineral or natural resource falls under the latter income category. Recently, the definition of qualifying income was expanded. The expanded definition includes income from the transportation and storage of certain renewable and alternative fuels, including ethanol and biodiesel, and activities involving industrial source carbon dioxide. MLPs will typically own and operate their actual business assets indirectly through a subsidiary, known as an operating company. Historically, owning business assets indirectly through a separate company reduced the administrative burden associated with MLPs being publically traded. At one point, direct ownership of the assets might have required that an MLP file change of ownership documents in every state it had operations in whenever investors traded shares. Today, operating companies are often used by MLPs to limit liability among various ventures operating in different states. The use of an operating company also gives MLPs more options and protection when structuring its debt financing since it can subordinate and separate debt along its various lines of business more easily. Additionally, MLPs can use an operating company to "filter" income generated by a subsidiary that would otherwise violate the qualified MLP income restrictions. This can happen when an MLP has business investments in closely related, but unqualified, lines of business. Although MLP units trade alongside corporate stocks on public exchanges, their tax treatment is fundamentally more complex. This treatment potentially limits the investor pool to the most sophisticated investors. As previously mentioned, each year MLP investors are allocated their share of the partnership's income, deductions, and credits, and pay tax on the net income according to ordinary income tax rate. Tax must be paid on partnership income the year it is earned, regardless of whether the net income was actually distributed to investors or retained within the partnership. If an investor's net income is negative then the loss is considered a passive loss and generally can only be used to offset passive income. Thus, an investor generally could not use a $10,000 loss from an MLP to offset $10,000 of salary income, which is considered active income. In addition, MLP passive activity loss rules are applied on an entity-by-entity basis. Thus, losses from one MLP cannot be used to offset active income from another MLP. The taxation of an investor's periodic cash distributions is different than the taxation of their share of partnership income. Cash distributions may be received on a quarterly basis but they are not taxed until the investor sells their MLP units. Furthermore, when the distributions are taxed, they are generally taxed as capital gains and not ordinary income. To compute the capital gain related to distributions an investor will begin with the unit sales price and subtract their adjusted basis in the MLP. An investor's adjusted basis is the original purchase price of the units decreased by the amount of cash distributions received and increased by their share of the partnership's net income. The basis adjustments ensure that all income is only subject to one layer of taxation. Investors may also have to make various other tax computations when they sell units, including determining their share of depreciation deductions that are subject to recapture (taxation). Another potential tax complexity that may limit who invests in MLPs is unrelated business income taxation (UBIT). The term "unrelated business income" generally means income generated by a tax-exempt organization that is unrelated to the organization's regular business. With regard to MLPs, the issue of UBIT primarily concerns pension funds and tax-preferred accounts such as IRAs and college savings plans that invest in MLPs. These tax-preferred investment and saving vehicles must recognize any income greater than $1,000 earned from MLP investments as unrelated business income and pay tax on that income (UBIT). Unrelated business income is taxed according to the corporate rate schedule. The effect on the after-tax return for pension funds and individuals using IRAs may limit these investors in MLPs. The President's 2010, 2011, and 2012 Budget Outlines along with numerous other proposals in prior Congresses proposed changes to the tax treatment of certain types of "carried interest," which some have been concerned would impact energy-related MLPs. Carried interest refers to the percentage of a partnership's earnings that its general partners (managers) receive as a performance fee. Proposals regarding carried interest have generally been aimed at the financial services industries. Hedge funds and private equity funds, which are typically set up as a partnership, pay management a fee that depends on the performance of the fund. This fee, which represents carried interest, is taxed at the more favorable capital gains rate instead of the ordinary income rates since these firms are involved in the buying and selling of financial assets, which results in capital gains. Past Administration and congressional proposals would have taxed carried interest as ordinary income, stating that the payments represent compensation for services and not capital. Attempts to change the tax treatment of carried interest, currently treated as capital gains, would likely have minimal impact on current and future energy-related MLPs. It is true that the IDR payments made to MLP general partners are a form of carried interest since they represent a fee based on the performance of the partnership. These payments, however, are the result of operating business income and not capital gains income from the buying and selling of assets, as is the case with a hedge fund. As a result, IDR payments are already taxed mostly at ordinary income rates. There may be a small fraction of MLP carried interest related to the occasional sale of capital assets used in the operating business that is taxed as a capital gains right, but this amount is likely minimal. Master limited partnerships first appeared in the early 1980s. The Tax Reform Act of 1986 (TRA86) reduced the top marginal individual income tax rate to a level lower than the top marginal corporate tax rate. As a result, the partnership business structure became more favorable for tax purposes than the corporate structure. Other changes enacted as part of the TRA86, however, limited the attractiveness of MLPs for investors. Specifically, the TRA86 introduced passive loss rules, which prevented investors from using deductions associated with businesses in which they are not actively involved, such as MLPs, to offset other types of income. In 1987, Congress enacted IRC SS 7704, which modified the rules publicly traded partnerships (PTPs) and MLPs had been using to avoid being subject to corporate taxation. , Under the new rules, partnerships whose ownership interests were publically traded were to be treated as corporations for tax purposes. An exception was made, however, that allowed partnerships meeting two criteria to continue being taxed as partnerships. The two criteria were (1) the partnership was in existence on December 17, 1987, and (2) at least 90% of its gross income came from passive sources, such as rents, royalties, and natural resource income, among others. If the income criteria was not met, the partnership could be grandfathered for a 10-year period, after which it would be taxed as a corporation or, in the extreme, cease operations. The 1987 rules related to PTPs and MLPs were enacted to address concerns surrounding erosion of the corporate tax base. In the House Report accompanying H.R. 3545 , the 100 th Congress noted "To the extent activities that would otherwise be conducted in the corporate form, and earnings that would be subject to two levels of tax (at the corporate and shareholder levels), the growth of publically traded partnerships engaged in such activities tends to jeopardize the corporate tax base." Further, Congress also observed that PTPs had been used to avoid corporate taxes, noting that the intent of pre-1987 tax law was "being circumvented by the growth in publically traded partnerships that are taking advantage of an unintended opportunity for disincorporation and elective integration of the corporate and shareholder levels of tax." When IRC SS 7704 was enacted, effectively subjecting most PTPs and MLPs to corporate taxation, existing PTPs and MLPs were allowed to continue operating as a partnership for 10 years. In 1997, legislation was passed that allowed PTPs and MLPs that had been grandfathered and allowed to continue operating as partnerships an additional choice. Instead of being forced to choose an alternative organizational form, grandfathered PTPs and MLPs were given the option of paying a 3.5% tax on gross income, as an alternative to corporate income taxes. Legislative changes enacted as part of the American Jobs Creation Act of 2004 ( P.L. 108-357 ) potentially expanded the pool of capital able to invest in MLPs. Provisions in this legislation effectively changed rules related to UBIT, which had previously made it unattractive for mutual funds to invest in MLPs. Specifically, the 2004 Jobs Act allowed partnership distributions to be considered qualifying income for mutual funds, thus allowing funds to invest in MLPs without having to worry about UBIT. This change effectively increased the potential pool of MLP investors. Most recently, the definition of qualifying MLP income was expanded to include the transportation and storage of certain renewable and alternative fuels, including ethanol and biodiesel, and other activities involving industrial source carbon dioxide. This change was made as part of the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ), at an estimated cost of $119 million over 10 years. The purpose of this change was to allow biofuels pipelines to receive the same tax treatment as petroleum pipelines. Previously, the statutory definition of qualifying income had not been expanded since SS 7704 was added to the Internal Revenue Code in 1987. As noted above, policies enacted in the 111 th Congress were designed to support investment and growth in the renewable energy sector. These policies were consistent with the objectives of the Obama Administration, which has emphasized the importance of investments in clean energy technology, including resources and infrastructure. Enhanced use of clean energy resources may be consistent with broader energy policy goals, environmental sustainability, and perhaps domestic energy security. Enhanced investment in and deployment of renewable energy technologies may also have the potential for domestic job creation. During the 111 th Congress, action was taken to address certain challenges in financing renewable energy projects. In the wake of the recent financial crisis, the renewable energy sector was faced with new challenges in financing investment. Prior to 2008, renewable energy investors often relied on tax-equity markets to monetize renewable energy tax benefits (such as the renewable energy production tax credit (PTC)). The ability to monetize federal renewable energy tax incentives was important for renewable energy investors to finance these capital intensive projects. Tax-equity financing became increasingly scarce during 2008 and 2009, leading Congress to enact the Section 1603 grants in lieu of tax credits program. Under this program, qualified taxpayers could elect to receive a one-time grant from the Treasury in lieu of the renewable energy PTC or investment tax credit (ITC). The grant option effectively eliminated the need for tax-equity partnerships for many eligible taxpayers. It has been argued that the Section 1603 grant program prevented what could have been a substantial decline in renewable energy investments, and may have resulted in additional investments in renewable energy generation capacity. Allowing taxpayers to receive a direct grant from the Treasury, and avoid the tax-equity market, has been credited with broadening the pool of renewable energy investors. The success of the Section 1603 program has led some to note the potential value of policies that will attract additional capital to the renewable energy sector. One policy option that proponents note might attract capital to the renewable energy sector would be to allow renewable energy developers to structure as a master limited partnership (MLP). , Should Congress decide to expand the definition of qualifying income to include renewable energy, or make other changes to current tax laws that would allow renewable energy entities to structure as MLPs, Congress may decide to stipulate which clean or renewable energy activities would qualify. In the case of the Section 1603 grant program, qualifying renewable energy technologies were those that were already eligible for the renewable energy PTC or ITC. The MLP structure could be extended to renewable energy technologies already eligible for other renewable energy tax incentives, or expanded to include other technologies that might support expanded use of renewable energy, such as advanced energy storage and transmission technologies. Proponents of extending the MLP structure to renewable electricity generation facilities note that doing so might help attract additional capital to the sector. Additional capital would be attracted to the sector by the higher returns typically offered to investors by MLPs. Additionally, allowing renewable power facilities to structure as MLPs could provide easier access to equity. Being able to sell shares to raise equity is a benefit typically reserved for C-corporations. Given these advantages, MLPs might allow clean energy projects to produce energy at a lower cost, and thus be more competitive with fossil fuels, including coal and natural gas. The MLP structure might also help attract investors to the renewable energy sector, particularly if changes allowing renewables to structure as MLPs were enacted alongside changes to existing passive loss rules. Without accompanying changes to the passive loss rules, the benefits associated with the MLP structure are more limited. As noted above, renewable energy taxpayers have historically turned to the tax-equity market to monetize renewable energy tax incentives (especially prior to the enactment of the Section 1603 grant program in 2009). Under the MLP structure, tax losses pass through to investors. If passive loss rules are restructured to allow investors to use these tax losses to offset other income, renewable energy investments might become more attractive. From this perspective, the renewable energy entity might be able to attract additional capital to the sector with the MLP structure since such a structure could be designed to allow investors to directly benefit from renewable energy tax incentives. While modifications to the passive loss rules would help maximize the benefits investors are able to realize from the MLP structure, extending the MLP structure to renewables without changing the passive loss rules may also provide some benefit, as MLPs are not subject to corporate level taxation and can raise capital by selling additional shares. Allowing renewables to structure as MLPs may help reduce the cost of capital, thereby increasing investment in renewable energy. While expanding the pool of investors and increasing access to capital may help promote investment in renewable energy, the overall value of the ability to structure as an MLP is likely small relative to existing tax benefits for renewable energy entities. Thus, this has led some to observe that "Because MLP s would only increase the eligible investor pool ... by themselves they would most likely not supplant the tax incentives currently in place." Expanding the definition of qualifying income to allow renewable energy producers to structure as MLPs could raise concerns with respect to the size of the corporate tax base. As was noted above, the rules generally treating MLPs as corporations were enacted in 1987 to address concerns about the long-term erosion of the corporate tax base. Expanding the definition of qualifying income and allowing more firms to structure as MLPs would likely result in a decrease in the size of the corporate tax base, and result in federal revenue losses. Under current law, the tax expenditure (revenue loss) associated with allowing certain energy companies to structure as MLPs is estimated to be around $2.8 billion over the 2010 through 2014 time period. The increasing proportion of income flowing through passthroughs as opposed to corporate entities has caught the attention of the Administration and Congress. Senator Max Baucus, chairman of the Senate Finance Committee, in the context of tax reform, has noted "We're going to have to look at passthroughs--say they've got to be treated as corporations if they earn above a certain income. It's one possibility." Treasury Secretary Timothy Geithner has also made reference to the issue of allowing corporations alternative organizational forms, stating "I think, fundamentally, Congress has to revisit this basic question about whether it makes sense for us as a country to allow certain businesses to choose whether they're treated as corporations for tax purposes or not." While much of this concern has been directed at large passthrough entities (those with $50 million or more in revenues), it may still be important to consider when it is appropriate to allow entities to structure as passthroughs, alongside the associated revenue cost. If the concern is that allowing fossil fuel energy entities to structure as MLPs puts renewables at a disadvantage, preventing publicly traded fossil fuel entities from structuring as passthrough entities is another option. Requiring publicly traded companies (energy and other types of MLPs) to structure as C-corporations would broaden the corporate tax base, and ensure that such fossil-fuels energy-related MLPs do not have better access to capital or a preferred tax status not available to renewable energy alternatives. This policy change, however, could place greater capital constraints on, and potentially reduce investment in, industries currently able to use the MLP structure. Allowing renewable energy facilities to structure as MLPs, if enacted jointly with policies that would exempt renewable energy tax benefits from passive activity loss rules, could raise concerns surrounding "gold plating" of renewable energy projects or the possible use of tax shelters. Gold plating can occur when investors look to invest in renewable energy property for the purpose of tax benefits without regard to performance and production. Specifically, if investors are able to use renewable energy tax benefits to offset active income from other sources, the potential for tax shelter opportunities may emerge. During the 1980s, investors using debt to finance large wind projects could generate tax benefits through investment tax credits that were available at the time. The tax benefits were valuable in and of themselves, even if the wind facility did not produce electricity. , Removing passive activity loss rules for renewables eligible for generous investment tax credits could create opportunities for tax shelters like those seen in the 1980s. One final point of potential concern is that MLPs have typically been used to finance proven technologies with stable cash flows. Since the financing structure is particularly well suited to entities with predictable cash flows, many existing MLP operations are involved in transportation of fuels or other midstream operations. Renewable energy technologies that pose technology risk may not be well suited to take advantage of the MLP structure. Capital is most scarce for energy technologies that have been developed beyond the research & development (R&D) laboratory phase, but have not yet reached commercialization. MLPs are not likely to attract additional capital to this capital-scarce sector comprised of technologies that have moved beyond field testing but have not yet been deployed at scale. Additional access to capital has the potential to stimulate investment and growth in the renewable energy sector. MLPs could have the potential to attract additional capital to the renewable energy sector. MLPs could also allow investors to benefit from other renewable energy tax incentives, and thereby avoid tax-equity markets for monetization of renewable energy tax benefits, if changes to existing passive loss restrictions were enacted. Extending the definition of qualifying income to allow renewable energy facilities to structure as MLPs might raise policy concerns. Specifically, expanding the definition of MLPs to include other types of activity could be viewed as a narrowing of the corporate tax base. Further, if changes in current law regarding qualifying income under the MLP structure are coupled with changes in passive activity loss rules, there are concerns that such changes could lead to tax shelter opportunities. The MLP universe has grown and changed in recent decades. In the energy sector alone, the number of energy MLPs increased from 6 in 1994 to 72 in 2010. Over that same time period, total market capitalization of energy MLPs grew from $2 billion to roughly $220 billion. Additionally, since the 1990s, the universe of MLPs has changed to include a larger proportion of energy MLPs, specifically those involved in midstream operations. Figure A-1 illustrates the proportion of MLPs in different industry groups in 1990 and 2010. Over the 20-year period, the share of MLPs in the energy industry has increased. Further, energy MLPs have become more likely to be involved in midstream or transportation activities over time, as opposed to extraction and production. In 1990, 10% of MLPs were oil and gas midstream operations. By 2010, this share had increased to 44%. Over the same period, the proportion of MLPs involved in oil and gas exploration and production decreased from 21% to 10%. Nearly 90% of market capital in MLPs is attributable to energy and natural resources, with more than 70% of total market capitalization attributable to midstream oil and gas operations (see Figure A-2 ).

Expanded investment in clean and renewable energy resources continues to be a policy priority of the Obama Administration and an area of interest to the 112th Congress. In recent years, the primary policy vehicle for promoting investment in renewable energy has been tax credits, particularly the renewable energy investment and production tax credits. A lack of tax liability, however, has limited the renewable energy sector's ability to fully take advantage of these and other tax benefits. The result has been an increased interest in exploring other options for promoting investment in renewable energy. One option might be to allow renewable energy entities access to the master limited partnership (MLP) business organizational form. An MLP is a type of business structure that is taxed as a partnership, but whose ownership interests are traded on financial markets like corporate stock. Being treated as a partnership for tax purposes implies that MLP income is generally subject to only one layer of taxation in contrast to publically traded C corporations, which are subject to two layers of taxation. The ability to access equity markets in a manner similar to corporations allows MLP to obtain greater amounts of capital. Access to a greater pool of capital, when combined with the favorable partnership tax treatment, may allow MLPs to secure capital at a lower cost than similar businesses operating under a different organizational structure. The lower cost of capital, in turn, could increase investment in the renewable energy sector. Congress first established rules relating to MLPs in the 1980s. At that time, the MLP structure was limited to businesses deriving 90% of their income from primary sources, which included dividends, interest, rents, capital gains, and mining and natural resources income. Effectively, this definition allowed oil and gas extraction and transportation activities access to the MLP structure, while renewable energy resources were generally excluded. The Emergency Economic Stabilization Act of 2008 (P.L. 110-343) expanded the definition of income from qualifying sources to include transportation of certain renewable and alternative fuels, such as ethanol and biodiesel. Provisions enacted under the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) enhanced the value of certain renewable energy tax credits for many renewable energy projects. By transforming existing tax credits into cash grants, the Section 1603 grants in lieu of tax credits program enhanced access to capital for many in the renewable energy sector. The Section 1603 grant program is scheduled to expire at the end of 2011. As Congress evaluates other policies to attract additional capital to the renewable energy sector, allowing renewable energy entities to structure as MLPs might be one option. Extending the MLP structure to renewables could possibly attract additional capital to and stimulate investment in the renewable energy sector. There are, however, a number of potential policy concerns to consider. First, expanding access to the MLP structure could narrow the corporate tax base, which is one of the reasons access to this structure was limited in the first place. Second, if changes to the tax code allowing renewable entities to access the MLP structure are enacted alongside changes to current passive activity loss rules, there may be concerns about the possibility of renewable energy investments being used as a tax shelter. Finally, if the concern is that renewable entities are disadvantaged relative to fossil fuels currently able to use the MLP structure, one option would be to prevent other energy entities from structuring as MLPs.

The U.S. military justice system exercises jurisdiction over criminal cases pursuant to Article I of the U.S. Constitution and the Uniform Code of Military Justice (UCMJ). Military courts' jurisdiction is limited to trying people connected to the armed forces for crimes defined by the UCMJ. Within these constraints, military courts' jurisdiction is relatively broad. For example, it extends to retired servicemembers such as the defendant in United States v. Stevenson , a case in which military courts convicted a man on the Navy's temporary disability retired list. In Stevenson , the Navy prosecuted the defendant for rape, a crime routinely tried in non-military courts with civilian defendants. In general, the military justice system, including its system of appellate review, is separate and distinct from the civilian judicial system. Some constitutional safeguards and Supreme Court interpretations are inapplicable in military courts. Also, after following appellate review through the military court system, military defendants may appeal to the U.S. Supreme Court only in limited circumstances. Companion bills introduced in the 111 th Congress, H.R. 569 and S. 357 , would have broadend the Supreme Court's statutory jurisdiction by authorizing Supreme Court review of most military cases. This report surveys military courts' jurisdiction, the structure of appellate review for military cases, interactions between military and civilian courts, the Stevenson case, and past legislative proposals. Most criminal cases in the United States are tried either in state courts or in civilian federal courts. The latter derive authority from Article III of the U.S. Constitution. However, the armed forces may prosecute defendants with military connections in military courts, which derive authority from Article I, sec. 8 of the Constitution. The UCMJ, passed by Congress and implemented by the President through the Manual for Courts-Martial (MCM), governs military courts' jurisdiction and procedures. Military courts exercise jurisdiction over officers and enlisted servicemembers on active duty. However, the scope of their jurisdiction may extend beyond individuals serving on active duty. Specifically, such jurisdiction extends to cases involving retired servicemembers who receive military pay or hospital care from an armed force; specified members of reserve units; enemy combatants; and other individuals with connections to military operations or benefits. As noted below in the discussion of United States v. Stevenson , questions remain regarding the scope of military courts' power over retired servicemembers. However, it is clear that military courts' jurisdiction extends to military veterans only when a veteran maintains at least some current relationship with the military. If a defendant's connection with the armed forces is sufficient to establish jurisdiction, a military court may try that defendant for a broad range of offenses, including conduct not related to official military duties, as long as the alleged conduct constitutes a crime under the UCMJ. The UCMJ includes some crimes that are unique to military service. For example, under the UCMJ, a defendant might be prosecuted for effecting unlawful enlistment, appointment, or separation; desertion; or absence without leave. However, the armed forces may also prosecute defendants under the UCMJ for conduct over which civilian courts could also exert jurisdiction. For example, the UCMJ criminalizes murder, rape, robbery, and other common law crimes. Article I military courts handle military cases throughout the chain of appellate review. Appeal to the U.S. Supreme Court is permitted at the end of the process only in specified circumstances. The UCMJ creates various military courts and provides appellate procedures for them. After an initial investigation and a court-martial, which is a trial-level proceeding, military cases undergo various stages of review within the military justice system. First, each court-martial proceeding has a "convening authority," who is a commissioned officer (other than the defendant's accuser) who convenes the investigation and court-martial proceeding and then approves or modifies the court-martial's findings and sentences. Convening authorities do not provide legal review; instead, they provide the equivalent of sentencing determinations by giving "full and fair consideration to matters submitted by the accused and determining appropriate action on the sentence." Under the UCMJ, convening authorities have "substantial discretion" to modify sentences and findings. After a convening authority approves or modifies a court-martial decision, a Court of Criminal Appeals offers the first opportunity for legal review in military cases. Each branch of the armed services has a Court of Criminal Appeals, comprised of panels of military judges established by the Judge Advocate General for each branch. The Courts of Criminal Appeals review cases in panels or, occasionally, en banc . Review is not discretionary; each Judge Advocate General "shall refer" to the relevant Court of Criminal Appeals every case involving a conviction that imposes the death penalty or confinement for one year or more; a bad-conduct or dishonorable discharge; or, in certain cases, dismissal from the respective service. Unlike convening authorities, Courts of Criminal Appeals provide legal review of military cases. They "may affirm only such findings of guilty, and the sentence ... as [they] fin[d] correct in law and fact and determin[e], on the basis of the entire record, should be approved." After a Court of Criminal Appeals has reviewed a case, the United States Court of Appeals for the Armed Forces (CAAF) provides the final opportunity for appellate review within the military court system. The CAAF is an Article I court, housed within the Department of Defense. However, unlike other military courts, the CAAF is comprised of civilian judges, whom the President appoints. In general, the CAAF has discretion to grant or deny petitions for appeals, analogous to the U.S. Supreme Court's discretion to grant or deny writs of certiorari. However, the CAAF must accept appeals in two circumstances: (1) all cases in which the relevant Court of Criminal Appeals has affirmed a death sentence; and (2) all cases in which a Judge Advocate General has sent a case to the CAAF for review after a final Court of Criminal Appeals decision. The CAAF's appellate review is limited. The CAAF must act "only with respect to the findings and sentence as approved by the [court-martial's] convening authority and as affirmed or set aside as incorrect in law by the Court of Criminal Appeals." In other words, appeals to the CAAF must involve issues originally heard by a court-martial and affirmed or denied by a convening authority and the relevant Court of Criminal Appeals. The CAAF cannot hear appeals based on the All Writs Act or other jurisdictional authority unless they aid direct review of court-martial decisions. For example, in Clinton v. Goldsmith , the Air Force had dropped from its rolls a servicemember who had served an earlier sentence for engaging in unprotected sex without telling his partners of his HIV-positive status. The servicemember had petitioned the Air Force Court of Criminal Appeals for injunctive relief under the All Writs Act, but that court denied relief, holding that it lacked jurisdiction. The CAAF then granted injunctive relief enjoining the President and other officials from dropping the servicemember from the active duty rolls. The U.S. Supreme Court held that the CAAF had exceeded its jurisdiction in granting injunctive relief because the relief did not involve review of a court-martial decision. In so holding, the Supreme Court rejected the CAAF's argument that jurisdiction was proper because the Air Force's dropping of the servicemember related to conduct at issue in an earlier court-martial proceeding; instead, the Court emphasized that "there is no source of continuing jurisdiction for the CAAF over all actions administering sentences that the CAAF at one time had the power to review." With respect to appeals from the CAAF, the U.S. Supreme Court has jurisdiction to grant certiorari in four specific circumstances: (1) cases in which a death sentence has been affirmed by the relevant branch's Court of Criminal Appeals; (2) cases that a Judge Advocate General has certified to the CAAF; (3) cases in which the CAAF granted a petition for review; and (4) cases that do not fall in the other categories but in which the CAAF has granted relief. The first two categories represent the two circumstances in which the CAAF must grant appeals. The second category represents cases in which the CAAF has exercised its discretion to grant an appeal. And the final category is a catch-all provision for other cases in which the CAAF might grant relief. Because the Supreme Court's jurisdiction is limited to these four circumstances, its power to review military cases generally extends only to cases that the CAAF has also reviewed. For this reason, the CAAF's discretion over the acceptance or denial of appeals often functions as a gatekeeper for military appellants' access to Supreme Court review. If the CAAF denies an appeal, the U.S. Supreme Court will typically lack the authority to review the decision. In contrast, criminal appellants in Article III courts have an automatic right of appeal to federal courts of appeals and then a right to petition the Supreme Court for review. The U.S. armed forces have a long history of self-regulation. Except for limited interaction with the U.S. Supreme Court, Article I military courts operate separately from the Article III judicial system. As discussed above, military courts have distinct trial procedures and structures for appellate review. In addition, because military courts' jurisdictional authority arises under Article I rather than Article III, defendants in military cases do not have the benefit of certain Article III safeguards, such as lifetime appointments for judges. In addition, although military defendants are entitled to due process rights under the Fifth Amendment to the Constitution, the Supreme Court has upheld a narrowed interpretation of such rights in the context of military courts. Furthermore, legal interpretations by Article III courts do not necessarily create binding precedent for Article I courts, and vice versa. The only Article III court holdings that bind military courts are those of the U.S. Supreme Court. However, military courts sometimes reject even Supreme Court precedents as inapplicable in the military context. For example, in United States v. Marcum , the CAAF declined to follow an interpretation of the constitutional right to privacy that the Supreme Court had handed down a short while earlier. In Marcum , a court-martial had convicted a servicemember of various crimes, including non-forcible sodomy. On appeal, the servicemember argued that with respect to the non-forcible sodomy charge, he was protected by a constitutional right to privacy in intimate relations under the Supreme Court case Lawrence v. Texas . However, the CAAF declined to follow Lawrence . The CAAF's rationale for diverging from Supreme Court precedent in Marcum was that constitutional protections "may apply differently to members of the armed forces than they do to civilians." Thus, although "constitutional rights identified by the Supreme Court generally apply to members of the military," such rights do not apply when "by text or scope they are plainly inapplicable." Similarly, Article III courts are not bound by military courts' decisions. The Supreme Court may consider CAAF decisions or UCMJ provisions as potentially persuasive. For example, the Supreme Court ordered briefs to examine the impact of a military code provision after it handed down its decision in Kennedy v. Louisiana , a case involving the question of a death penalty sentence for a child rapist. In Kennedy , the Supreme Court held that the Eighth Amendment prohibits punishment by death penalty for a defendant who rapes a child but did not cause or intend to cause a child's death. In so holding, the Court emphasized the "national consensus" against the death penalty in such cases. In its petition for rehearing, Louisiana argued that Congress's recent amendment of the UCMJ to include a death penalty punishment in military cases for the rape of a child undermined the Court's "national consensus" argument. However, the Supreme Court decided not to reconsider its Kennedy decision, instead reaffirming its prior ruling with only minor modifications. In its opinion accompanying its denial of rehearing, the Supreme Court disagreed with Louisiana's interpretation of the death penalty language in the UCMJ amendment, but it also emphasized that "authorization of the death penalty in the military sphere does not indicate that the penalty is constitutional in the civilian context." United States v. Stevenson highlights two issues relevant to jurisdiction in military cases. First, it raises questions regarding the scope of military courts' jurisdiction over retired servicemembers. Second, it raises a question regarding Supreme Court jurisdiction to review legal questions when the CAAF denied review. The first question was the basis for the Stevenson appellant's petition to the Supreme Court for certiorari. The United States raised the second question in its brief opposing appellant's certiorari petition. Although the U.S. Supreme Court clearly has jurisdiction over cases in which the CAAF granted review, it is unclear whether the Supreme Court's jurisdiction extends to specific issues that the CAAF declined to address. In Stevenson , Naval Criminal Investigative Service officials had investigated the appellant, a man on the Navy's temporary disability retired list, while he received treatment at a Veterans Affairs hospital. A military court-martial then tried and convicted the appellant for rape. On appeal, the CAAF remanded the case for fact finding regarding blood draws taken while appellee was a patient at the VA hospital. After the United States Navy-Marine Corps Court of Criminal Appeals affirmed the court-martial's decision on remand, the CAAF granted a second review of the case. However, exercising its discretion, the CAAF limited the issues on appeal to potential Fourth Amendment violations, declining to review the question of the military court's jurisdiction over a man on the temporary disability retired list. In his petition to the Supreme Court for certiorari, the appellant in Stevenson requested review of only the issue that the CAAF had declined to address--namely, the issue of military courts' jurisdiction over a case involving a person on the temporary disability retired list. In response, the United States argued in its opposing brief that the Supreme Court's appellate review power does not extend to issues that the CAAF declined to review. Thus, because the CAAF had declined to review that portion of the Criminal Court of Appeals' decision, the United States argued that the Supreme Court lacked jurisdiction over the appeal. Ultimately, the Supreme Court declined to hear the case. On remand to the Navy-Marine Corps Court of Criminal Appeals, for the second time, the court set aside both the findings and the sentence and authorized a rehearing. The questions raised by the petition to the Supreme Court for certiorari remain unanswered. Bills introduced during the 111 th Congress, the Equal Justice for Our Military Act of 2010 ( H.R. 569 ) and the Equal Justice for United States Military Personnel Act of 2009 ( S. 357 ), would have expanded the U.S. Supreme Court's appellate jurisdiction over military cases. Specifically, the legislation would have amended the UCMJ to authorize appeals to the Supreme Court in military cases, regardless of the CAAF's acceptance or denial of an appeal. Bill sponsors emphasized the need for the law to address the "disparity" between the broad right to appeal to the Supreme Court in civilian cases, on one hand, and the limited ability to appeal to the Supreme Court in military cases, on the other hand. When introducing S. 357 , Senator Feinstein stated that because "our U.S. service personnel place their lives on the line in defense of American rights[, it] is unacceptable for us to continue to routinely deprive our men and women in uniform one of those rights." H.R. 569 , reported to the House on July 15, 2010, as amended, included language not found in the companion bill, S. 357 . The amended bill authorized the Supreme Court, through its rules, to prescribe the time limit for application for a writ of certiorari of a decision of the CAAF, or the refusal of the CAAF to grant a petition of review. The bill would have been effective at the conclusion of the 180-day period beginning on the date of enactment and then only to decisions of the CAAF handed down on or after that date. Additionally, the bill provided that the authority of the Supreme Court to prescribe necessary rules shall take effect on the date of enactment of the act. To date, similar legislation has not been introduced in the 112 th Congress. Courts have recognized compelling justifications for a military justice system that is distinct from Article III courts. For example, in Marcum , the CAAF emphasized the importance of ensuring discipline and obedience in the armed forces. The Marcum court also stressed the military's interest in disciplining servicemembers differently according to their rank. However, it is unclear whether such arguments justify a disparity in access to Supreme Court review, especially in the context of servicemembers no longer on active duty or crimes that exist under both military and civilian laws. Military cases follow a unique process of appellate review, moving from courts-martial through the following steps: (1) automatic appeals to Courts of Criminal Appeals for each armed forces branch; (2) potential discretionary review by the highest military court, the CAAF; and (3) review by the U.S. Supreme Court in limited circumstances, usually only when the CAAF has also granted review. Legislative proposals in the 111 th Congress would expand Supreme Court jurisdiction over military cases by authorizing review even if the CAAF denies an appeal. If the proposals became law, they would make moot the question highlighted by United States v. Stevenson regarding the Supreme Court's jurisdiction over specific issues that the CAAF had declined to review.

Military courts, authorized by Article I of the U.S. Constitution, have jurisdiction over cases involving military servicemembers, including, in some cases, retired servicemembers. They have the power to convict for crimes defined in the Uniform Code of Military Justice (UCMJ), including both uniquely military offenses and crimes with equivalent definitions in civilian laws. For example, in United States v. Stevenson, military courts prosecuted a retired serviceman for rape, a crime often tried in civilian courts. The military court system includes military courts-martial; a Criminal Court of Appeals for each branch of the armed services; and the U.S. Court of Appeals for the Armed Forces (CAAF), which has discretionary appellate jurisdiction over all military cases. With the exception of potential final review by the U.S. Supreme Court, these Article I courts handle review of military cases in an appellate system that rarely interacts with Article III courts. Criminal defendants in the Article III judicial system have an automatic right to appeal to federal courts of appeal and then a right to petition the Supreme Court for final review. In contrast, defendants in military cases typically may not appeal their cases to the U.S. Supreme Court unless the highest military court, the CAAF, had also granted discretionary review in the case. Companion bills introduced in the 111th Congress, the Equal Justice for Our Military Act of 2010 (H.R. 569) and the Equal Justice for United States Military Personnel Act of 2009 (S. 357), would have authorized appeals to the U.S. Supreme Court for all military cases, including cases that the CAAF declined to review. While neither of the companion bills passed their respective chamber, the House passed a similar measure, H.R. 3174, during the 110th Congress. To date, however, similar legislation has not been introduced in the 112th Congress.

Medicaid case management consists of services to assist eligible beneficiaries in obtaining medical and other services necessary for their treatment. Case management is not the direct provision of medical and related services, but rather is assistance to help beneficiaries receive care by identifying needed services, finding providers, and monitoring and evaluating the services delivered. Targeted case management (TCM) refers to case management that is restricted to specific beneficiary groups. Targeted beneficiary groups can be defined by disease or medical condition, or by geographic regions, such as a county or a city within a state. Targeted populations, for example, may include individuals with HIV/AIDS, tuberculosis, chronic physical or mental illness, developmental disabilities, children receiving foster care, or other groups identified by a state and approved by the Centers for Medicare and Medicaid (CMS). TCM and case management are optional services that states may elect to cover, but which must be approved by CMS through state plan amendment (SPAs). The Medicaid statute covering case management has been amended a number of times, most recently by the Deficit Reduction Act of 2005 (DRA, P.L. 109-171 ). Section 6052 of DRA added new language that further defined case management services (including TCM) and directed the Secretary of Health and Human Services to develop rules for states to follow in claiming reimbursement for case management expenditures under Medicaid. To this end, CMS issued an interim final rule governing the use and claiming of Medicaid case management services. As stipulated in DRA, the Secretary's case management interim final rule was open for public comment for 60 days, until February 4, 2008. It became effective March 3, 2008. Almost all states cover TCM benefits. Medicaid expenditures for TCM have increased rapidly. As shown in Table 1 , total federal and state Medicaid TCM expenditures more than doubled between FY1999 ($1.4 billion) and FY2005 ($2.9 billion). Nationally, during the same period, the number of beneficiaries receiving TCM increased 62.6%, from approximately 1.7 million in FY1999 to approximately 2.7 million in FY2005. Average TCM expenditures per beneficiary also increased from FY1999 to FY2005, rising by 26.9%. In comparison, overall Medicaid expenditures also increased rapidly over the same period, rising from approximately $147 billion in FY1999 to $276 billion in FY2005, an approximate 87% increase. The number of Medicaid beneficiaries also increased during this period, rising by 43.1%, from FY1999 (40.3 million) to FY2005 (57.7 million). During the same time period, average spending per Medicaid beneficiary increased by approximately 30.7%, from $3,657 in FY1999 to $4,781 in FY2005. Based on CMS reported data, total federal and state expenditures for TCM services in FY2005 ranged from approximately $535 million in California to approximately $872,000 in Hawaii (see Table 2 ). During the same period, the number of beneficiaries receiving TCM services ranged from 820,000 individuals in Illinois to 1,463 in Hawaii. National per beneficiary TCM expenditures were $1,058 in FY2005, but per beneficiary expenditures for TCM expenditures varied considerably by state, ranging from $5,778 in Massachusetts to $116 per beneficiary in Ohio. In Figure 1 , for comparison, states' per beneficiary expenditures for TCM are displayed in six expenditure level groupings. The majority of states that reported TCM expenditures in FY2005 spent between $500 to $1,500 per beneficiary on TCM. Although most states cover TCM, some do not show TCM expenditures in the Medicaid Statistical Information System (MSIS) database compiled by CMS from state-reported information. As shown in Table 2 , six states and the District of Columbia reported no TCM expenditures in FY2005. Of these seven, Delaware is the only state that indicates it does not cover TCM. In the last days of the Clinton Administration (January 19, 2001), the CMS Director of Medicaid and State Operations issued a letter to state Medicaid and Child Welfare directors. Although the state Medicaid director letter (SMDL) addresses TCM claiming for children in foster care, it is often cited as guidance for states on how to claim TCM expenditures under Medicaid more generally. The SMDL reiterated statutory language that broadly defined TCM and left states substantial flexibility on whether to cover and how to structure TCM services. In addition, the 2001 SMDL described examples that would be considered appropriate claiming of TCM expenditures. Subsequently, in the early years of the Bush Administration, states received indirect guidance on TCM expenditure claiming from GAO and Health and Human Services Office of Inspector General (HHS/OIG) reports that were critical of state and CMS practices on TCM, as well congressional testimony presented by CMS officials. Moreover, in 2004, Maryland's state plan amendment to provide TCM services to children in the state's foster care program was denied, and an administrative appeal upheld that decision. The denial of Maryland's SPA for foster care TCM provided states additional unofficial information but, as found by GAO, contributed to ambiguity on TCM because other states were allowed to continue similar practices. For example, GAO reviewed a sample of Massachusetts and Georgia TCM claims and found a number of claims where TCM services billed to Medicaid were integral parts of other programs, such as foster care. Nevertheless, TCM expenditures continued to increase, raising questions about whether some states were delivering direct medical and social services to beneficiaries through other social services programs (e.g., child welfare, foster care, juvenile justice, special education) and classifying those expenditures as Medicaid TCM. Subsequent HHS/OIG audits found state practices for TCM claiming inconsistent with current CMS policy, federal, or state laws, and/or Medicaid rules. Moreover, Bush administration officials testified that state practices for claiming TCM and other Medicaid services were abusive and violated the federal-state Medicaid partnership by inappropriately shifting costs for other federal programs to Medicaid and claiming services directly delivered by other federal programs as TCM. In 2005, Congress passed DRA, which contained Section 6052, "Reforms of the Case Management and Targeted Case Management." Sec. 6052 refined the case management definition by adding new language that narrowed what services could be considered case management. The DRA case management provision identified case management services, such as assessment, development of care plans, referral and related activities, and monitoring and follow up of beneficiaries, and elaborated on the overall content of these services. The DRA also reiterated that case management, including TCM, excluded the direct delivery of underlying medical, educational, social, and other services. The DRA also specifically explained that federal matching payments would not be permitted to assist non-eligible individuals, including those individuals ineligible for a TCM target group. The DRA also reiterated that Medicaid third-party rules applied to case management, so payments for TCM would be permitted only if no other third parties are available to pay. DRA Section 6052 also specifically noted that states should cost-allocate when costs for case management services were shared between another federally funded program in accordance with OMB circular A-87. The DRA also instructed the Secretary of HHS to promulgate interim final regulations to implement the case management changes. The TCM interim final rule was published on December 4, 2007. The case management interim final rule elaborates on changes to the TCM definition authorized and initiated in DRA by providing specific guidance on how states may claim federal financial participation (FFP) for TCM expenditures. It also directly addresses case management issues that previously might have been considered open to interpretation. CMS stipulated that the case management interim final rule applies to all Medicaid authorities, so that all case management, including TCM and services delivered through waivers, would be covered under the rule. CMS estimated that the case management regulation will reduce federal Medicaid expenditures by approximately $1.28 billion between FY2008 and FY2012. CMS also estimated that federal foster care expenditures would increase by $369 million between FY2008-FY2012. Some of the changes addressed in the proposed rule are outlined below. Federal financial participation (FFP) would be paid for case management provided to individuals who reside in community settings or who want to transition from institutions to community settings. In general, states may not receive FFP for beneficiaries residing in inpatient acute care facilities, although there is an exception for individuals with complex or chronic medical needs (as defined by states). The interim final rule permits states to receive FFP to assist individuals who are able to transition from an institution to a community setting. This provision would enable states to claim FFP to assist individuals in transitioning to community settings during either the last 14 days (for beneficiaries institutionalized for short-term stays) or the last 60 days (for beneficiaries who were institutionalized for long-term stays). However, for states to receive FFP for beneficiaries transitioning to the community, the beneficiary must receive the TCM services for terms that span their inpatient and community placement. In addition, under the new regulations, FFP would be payable only after the date on which beneficiaries' community residence begins. States may use TCM to help coordinate other services, such as housing and transportation, for individuals transitioning to community settings. States that now cover case management services and want to continue to do so after March 2009 would need to amend their Medicaid state plans, specifying, among other things, whether services are or are not targeted (and what beneficiary group is targeted, if applicable), the geographic area served, the kinds of case management services offered, frequency of assessments and monitoring by case managers, the qualifications of service providers, and the payment methodology. States also must prepare separate SPAs for each case management target group and subgroup. States need to establish qualifications for providers who will deliver case management services. In addition, the rule specifies the services case managers can provide, such as assessments to determine beneficiaries' needs, development of specific care plans, referral and related activities, and monitoring and follow-up activities. To ensure beneficiaries have a unified planning process, as well as to reduce fragmentation and maintain quality of care, states would need to assign each beneficiary only one case manager. However, case managers may not serve as gatekeepers or make medical necessity determinations. Further, beneficiaries must have free choice of all qualified case managers, and beneficiaries' access to case management can not be contingent upon use of certain providers. If beneficiaries might fit in several target groups, states must decide which target group to assign beneficiaries. The new regulations would allow for a delayed compliance date for states to transition to one case manager to provide comprehensive services to individuals. Case managers may not provide direct medical and related services, unless such services are billed to Medicaid as services other than case management (e.g., rehabilitation). Medicaid beneficiaries receiving case management services must have treatment plans. Case management excludes diagnostic testing (but testing might be covered under other Medicaid benefit categories). Case managers must maintain detailed case records that document beneficiaries' dates of service; progress toward treatment goals; units of case management delivered; timelines for services described in the treatment plan, as well as reassessment dates; and needs for coordination with case managers of other programs. States may not use bundled payment methodologies. When case management is reimbursed on a fee-for-service basis, the new rules would require states to use unit-of-time reimbursement methodologies based on time intervals of 15 minutes or less. For beneficiaries included in managed care/capitated contracts, states may not claim FFP for case management of medical services. The interim rule indicates that case management is an implicit part of managed care and capitation, and additional FFP for such case management of medical services under managed care would be considered duplicate payment. However, an exception to the managed care exclusion could be made when the case management services extend beyond the medical components of typical managed care contracts to include gaining access to educational, social, and other (non-medical) services. The interim final rule would prohibit FFP to states for the direct delivery of underlying medical, social, educational, or other services funded by other programs. DRA specifically addressed foster care, but the interim final rule would extend the rule to include other programs, such as child welfare and protective services, parole and probation, public guardianship, and special education. In addition, this FFP prohibition would apply to therapeutic foster care because these activities would be considered inherent to the foster care program and are separate from Medicaid. This provision would apply to paying for services delivered by staff of other social service agencies, but the rules would permit FFP for referral services, overseeing placements, training of workers, supervision, court attendance, and compensation for foster care patients. Moreover, the rule would prohibit FFP to states for administrative components of other programs, such as foster care, juvenile justice, parole and probation, guardianship, courts, and special education. Estimates of the financial impact of the interim final rule vary. Some argue that CMS underestimated the impact of the case management and other regulations, and that CMS is attempting to shift Medicaid costs to states. CMS estimated that the TCM changes in the interim final rule will reduce federal Medicaid outlays by $1.28 billion over five years, whereas CBO estimated that the TCM provision in DRA would reduce federal expenditures by $760 million. CBO's estimate of the impact of DRA provisions was for the period FY2006-FY2010, whereas CMS's estimate was for the five year period FY2008-FY2012. In a more recent estimate for the period FY2008-FY2012, CBO forecasted that gross Medicaid outlays would decrease by $2.0 billion for the five year period, with a $1.5 billion net reduction (including effects in foster care administration) in Medicaid outlays for that time period. A survey of state Medicaid directors by the House Committee on Oversight and Government Reform estimated the financial impact of the TCM regulation to be approximately $3.1 billion over the five years from FY2009-FY2013. There are at least three distinct perspectives on TCM policy issues: (1) the perspective of advocates representing children and adults who could receive Medicaid TCM services, (2) state governments and Medicaid agencies, and (3) the federal regulatory agency (CMS) responsible for implementing DRA and enforcing states' compliance with federal Medicaid statutes. As CMS indicates in the interim final rule, DRA required the agency to write regulations. Specific guidance and definitions, CMS contends, were needed to avoid further "excessive" federal outlays. CMS points out that the proposed rule clarifies when Medicaid will, and will not, pay for case management services. CMS further claims the proposed rule will reduce past confusion about the overlap between Medicaid TCM and non-Medicaid programs. Moreover, CMS cites GAO studies, OIG audits, and review of SPAs that document past abuses of Medicaid TCM claiming. Advocates for children and adult Medicaid beneficiaries who receive TCM services contend that the rule is more restrictive than what Congress intended in DRA. Advocates also fear that reduced federal Medicaid funding for TCM will need to come from other programs or services that do not have funding, resulting in cuts to TCM services. States cite administrative complexities of the rule that will increase state costs while decreasing provider participation and beneficiaries' quality of care. Further, states and advocates also believe that the complexity of the rule will make it difficult for states to implement within the specified time frame. Child welfare advocates and organizations representing mentally retarded and developmentally disabled individuals, many of whom need Medicaid TCM, believe that the interim final rule will cut TCM services for these beneficiaries. Child welfare advocates argue that by requiring Medicaid to reimburse providers based on 15-minute billing segments, costs of care would increase and provider participation would decrease. They also argue that new requirements for record keeping and claims processing will discourage provider participation and reduce actual beneficiary services. Advocates claim that states already cannot afford to fund enough TCM services and that with more restrictions, states will be forced to cut services further. According to advocates, with less TCM available, children receiving foster care and protective services will get fewer health care services, causing their existing medical and related conditions to deteriorate. Moreover, they argue, without TCM, these beneficiaries will ultimately require more costly health care treatment in the future. Some Medicaid and other state officials believe that the CMS case management rule will increase costs by creating additional administrative activities. For example, Medicaid agencies have raised objections to the additional reporting requirements and other administrative complexities contained in the interim final rule because they believe these rules will make it harder for them to provide TCM to beneficiaries. Medicaid agencies claim that new delayed billing requirements for providers who assist TCM beneficiaries in transitioning from institutions are burdensome and may reduce patient access to TCM services. As noted earlier, the interim final rule proposes to permit states up to two years to comply with the one-provider provision for case management. The additional time for states to comply suggests that CMS recognizes the complexity for states to adapt their systems and administratively comply with the proposed rules. In the same vein, state Medicaid agencies believe that the effective date of the interim final rule is inadequate to permit states sufficient time to comply with the regulations, so that states' FFP for case management will be withdrawn suddenly or recovered later under auditors' disallowances. Observers maintain that an extension of time for states to comply might help to moderate stakeholder concerns, while giving states the opportunity to provide an orderly transition and realistically comply with the regulations that have been under development for some time. In January 2008, legislation was introduced ( H.R. 5173 and S. 2578 ) that would impose a moratorium on changes to Medicaid case management services until April 1, 2009. The Indian Health Care Improvement Act Amendments of 2008 ( S. 1200 ) was to delay implementation of the case management interim final rule until April 1, 2009. A bill, Protecting the Medicaid Safety Net Act of 2008 ( H.R. 5613 ), was introduced in March that would impose a moratorium until April 1, 2009, on implementation of the TCM and other Medicaid regulations. The House Energy and Commerce Committee voted on April 16, 2008, to send H.R. 5613 to the full House. H.R. 5613 would require the Secretary to submit a report by July 1, 2008, to the House Energy and Commerce and the Senate Finance Committees. The Secretary's report would be required to cover three topics: (1) an outline of specific problems the TCM and other Medicaid regulations were intended to correct, (2) an explanation of how the regulations would address these problems, and (3) the legal authority for the regulations. In addition, H.R. 5613 would require the Secretary to retain an independent contractor to prepare a comprehensive report to be completed by March 1, 2009, which also would be submitted to the House Energy and Commerce and the Senate Finance Committees. The independent contractor's report would describe the prevalence of the specific problems identified in the Secretary's report, identify existing strategies to address these problems, and assess the impact of the Medicaid regulations on each state and the District of Columbia. In the Senate, a similar measure to H.R. 5613 , the Economic Recovery in Health Care Act of 2008 ( S. 2819 ), was introduced in April. Like H.R. 5613 , S. 2819 , would impose a moratorium until April 1, 2009, on implementation of the case management, TCM and five other Medicaid regulations until April 1, 2009. On May 22, 2008, the Senate passed the Supplemental Appropriations Act of 2008 ( H.R. 2642 ). H.R. 2642 included a moratorium until April 1, 2009, on implementation of the TCM and six other Medicaid regulations. The provision in H.R. 2642 covering Medicaid regulations included requirements, similar to H.R. 5613 , for the Secretary to submit reports to the House Energy and Commerce and the Senate Finance Committees. H.R. 2642 was amended by the House and passed on June 19, 2008. The House amendments included moratoria on implementation of six Medicaid regulations, including case management and TCM, until April 1, 2009. In addition, H.R. 2642 retained requirements from H.R. 5613 for the Secretary to report to the House Energy and Commerce and Senate Finance Committees, and to hire an independent contractor to report on the specific impact of Medicaid regulations. On June 26, 2008, the Senate passed H.R. 2642 without changes to the latest House measure, including the moratoria on implementation of six Medicaid regulations (until April 1, 2009). H.R. 2642 also retains the requirements for the Secretary and an independent contractor to submit reports on the Medicaid regulations to the House Energy and Commerce and Senate Finance Committees. The President signed P.L. 110-252 into law on June 30, 2008. Earlier, on June 4 and 5, 2008, the Senate and House, respectively, adopted the final version of the budget resolution ( H.Rept. 110-659 accompanying S.Con.Res. 70 ). Among other provisions, the conference agreement establishes a number of deficit-neutral reserve funds and a sense of the Senate provision that would delay Medicaid administrative regulations, including Medicaid case management and TCM. In addition to the interim final rule, the Bush Administration's FY2009 federal budget submission proposed that legislation is needed to restrict Medicaid TCM claiming to the lower 50% rate provided for administrative activities, rather than federal medical assistance percentage rates for covered benefits. The Administration has not offered legislation restricting TCM claiming rates yet.

Case management services assist Medicaid beneficiaries in obtaining needed medical and related services. Targeted Case Management (TCM) refers to case management for specific Medicaid beneficiary groups or for individuals who reside in state-designated geographic areas. Over the past seven years of available data (1999-2005), total expenditures on Medicaid TCM increased from $1.4 billion to $2.9 billion, an increase of 107%. In comparison, over the same period, total Medicaid spending increased by 87%, from $147.4 billion to $275.6 billion. TCM has been an active concern for both the executive and legislative branches. For instance, the Bush Administration proposed legislative changes to reduce Medicaid TCM expenditures in recent annual budget submissions. In the Deficit Reduction Act of 2005 (DRA, P.L. 109-171), Congress added new statutory language to clarify the definition of case management and directed the Secretary of Health and Human Services to promulgate regulations to guide states' claims for federal Medicaid matching funds for TCM. As a result of DRA requirements, the Centers for Medicare and Medicaid Services (CMS) issued an interim final rule on December 4, 2007 for case management, which took effect March 3, 2008. In the interim final rule, CMS estimated that the new case management rules would reduce federal Medicaid expenditures by approximately $1.3 billion between FY2008 and FY2012. In April, the Economic Recovery in Health Care Act of 2008 (S. 2819), was introduced in the Senate, which would impose a moratorium on implementation of the TCM regulation until April 1, 2009. On May 22, 2008, the Senate passed the Supplemental Appropriations Act of 2008 (H.R. 2642). H.R. 2642 included a moratorium until April 1, 2009, on implementation of the TCM and other Medicaid regulations. H.R. 2642 was amended by the House and passed on June 19, 2008. The House amendments to H.R. 2642 included moratoria on implementation of six Medicaid regulations, including case management and TCM, until April 1, 2009. On June 26, 2008, the Senate passed H.R. 2642 without changes to the House legislation, so that implementation of six Medicaid regulations, including case management and TCM, would be delayed until April 1, 2009. The President signed P.L. 110-252 into law on June 30, 2008. Earlier, on June 4 and 5, 2008, the Senate and House, respectively, adopted the final version of the budget resolution (H.Rept. 110-659 accompanying S.Con.Res. 70). The conference agreement established budget-neutral reserve funds that could be used to impose moratoria on Medicaid rules and administrative actions and also includes a sense of the Senate provision on delaying Medicaid administrative regulations including case management and TCM. This report describes Medicaid case management services, presents major provisions of the proposed Medicaid case management regulation, and provides various perspectives on the TCM interim final rule. This report will be updated to reflect legislative and regulatory activity.

The ADA Amendment Act (ADAAA), P.L. 110-325 , was enacted in 2008 to amend the Americans with Disabilities Act (ADA). The Americans with Disabilities Act (ADA) is a broad civil rights act prohibiting discrimination against individuals with disabilities. As stated in the act, its purpose is "to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities." The ADAAA reiterated this purpose, and also emphasized that it was "reinstating a broad scope of protection" for individuals with disabilities. The threshold issue in any ADA case is whether the individual alleging discrimination is an individual with a disability. Several Supreme Court decisions interpreted the definition of disability, generally limiting its application. Congress responded to these decisions by enacting the ADA Amendments Act, P.L. 110-325 , which rejects the Supreme Court and lower court interpretations and amends the ADA to provide broader coverage. Two of the major changes made by the ADA Amendments Act are to expand the current interpretation of when an impairment substantially limits a major life activity (rejecting the Supreme Court's interpretation in Toyota ), and to require that the determination of whether an impairment substantially limits a major life activity must be made without regard to the use of mitigating measures (rejecting the Supreme Court's decisions in Sutton , Murphy , and Kirkingburg ). On March 25, 2011, the Equal Employment Opportunity Commission (EEOC) issued final regulations implementing the ADA Amendments Act. The ADA Amendments Act defines the term disability with respect to an individual as "(A) a physical or mental impairment that substantially limits one or more of the major life activities of such individual; (B) a record of such an impairment; or (C) being regarded as having such an impairment (as described in paragraph (3))." Paragraph (3) discusses the "regarded as" prong of the definition and provides that an individual is "regarded as" having a disability regardless of whether the impairment limits or is perceived to limit a major life activity, and that the "regarded as" prong does not apply to impairments that are transitory and minor. Although this is essentially the same statutory language as was in the original ADA, P.L. 110-325 contains new rules of construction regarding the definition of disability, which provide that the definition of disability shall be construed in favor of broad coverage to the maximum extent permitted by the terms of the act; the term "substantially limits" shall be interpreted consistently with the findings and purposes of the ADA Amendments Act; an impairment that substantially limits one major life activity need not limit other major life activities to be considered a disability; an impairment that is episodic or in remission is a disability if it would have substantially limited a major life activity when active; and the determination of whether an impairment substantially limits a major life activity shall be made without regard to the ameliorative effects of mitigating measures, except that the ameliorative effects of ordinary eyeglasses or contact lenses shall be considered. The findings of the ADA Amendments Act include statements indicating a determination that the Supreme Court decisions in Sutton and Toyota as well as lower court cases had narrowed and limited the ADA from what was originally intended by Congress. P.L. 110-325 specifically states that the then-current Equal Employment Opportunity Commission (EEOC) regulations defining the term "substantially limits" as "significantly restricted" are "inconsistent with congressional intent, by expressing too high a standard." The EEOC issued final ADAAA regulations on March 25, 2011, which will become effective on May 24, 2011. Proposed regulations were published in the Federal Register on September 23, 2009, and the EEOC received over 600 comments and held a series of "Town Hall Listening Sessions." In general, the final regulations streamlined the organization of the proposed regulations, and moved many examples from the regulation to the appendix. The EEOC notes that the appendix will be published in the Code of Federal Regulations (CFR), and "will continue to represent the Commission's interpretation of the issues discussed in the regulations, and the Commission will be guided by it when resolving charges of employment discrimination under the ADA." The final regulations track the statutory language of the ADA but also provide several clarifying interpretations. Several of the major regulatory interpretations are as follows: including the operation of major bodily functions in the definition of major life activities; adding rules of construction for when an impairment substantially limits a major life activity, and providing examples of impairments that will most often be found to substantially limit a major life activity; interpreting the coverage of transitory impairments; interpreting the use of mitigating measures; and interpreting the "regarded as" prong of the definition. The first prong of the statutory definition of disability, referred to by EEOC as "actual disability," provides that an individual with "a physical or mental impairment that substantially limits one or more of the major life activities of such individual" is an individual with a disability. The final regulations provide a list of examples of major life activities. In addition to those listed in the statute (caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working), the EEOC includes sitting, reaching, and interacting with others. Major life activities also include major bodily functions. In addition to the statutory examples (functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions), the EEOC includes special sense organs, genitourinary, cardiovascular, hemic, lymphatic and musculoskeletal. The final regulations also provide that the operation of a major bodily function includes the operation of an individual organ within a body system. The EEOC emphasizes that the ADAAA requires an individualized assessment but notes that because of the statute's requirement for broad coverage, some impairments will almost always be determined to be a disability. The final regulations list impairments that fall within this category. They include deafness, blindness, an intellectual disability, missing limbs or mobility impairments requiring the use of a wheelchair, autism, cancer, cerebral palsy, diabetes, epilepsy, HIV infection, multiple sclerosis, muscular dystrophy, major depressive disorder, bipolar disorder, post-traumatic stress disorder, obsessive compulsive disorder, and schizophrenia. In addition, the EEOC provides that the focus when considering whether an activity is a major life activity should be on "how a major life is substantially limited, and not on what outcomes an individual can achieve." For example, the EEOC noted that an individual with a learning disability my achieve a high level of academic success but may be substantially limited in the major life activity of learning. The final regulations provide rules of construction to assist in determining whether an impairment substantially limits an individual in a major life activity. Generally, the regulations provide that not every impairment is a disability but an impairment does not have to prevent or severely limit a major life activity to be considered substantially limiting. The term substantially limits is to be broadly construed to provide expansive coverage, and requires an individualized determination. The ADAAA specifically provides that an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active. In its appendix to the regulations, the EEOC states that "[t]he fact that the periods during which an episodic impairments is active and substantially limits a major life activity may be brief or occur infrequently is no longer relevant to determining whether an impairment substantially limits a major life activity." For example, the EEOC notes that an individual with post-traumatic stress disorder who has intermittent flashbacks is substantially limited in brain function and thinking. A mitigating measure, for example, a wheelchair or medication, eliminates or reduces the symptoms or impact of an impairment. The ADAAA provided that when determining when an impairment substantially limits a major life activity, the ameliorative effects of mitigating measures shall not be used. However, ordinary eyeglasses and contact lenses may be considered. The EEOC final regulations track the statutory language, and also provide that the negative side effects of a mitigating measure may be taken into account in determining whether an individual is an individual with a disability. Although the EEOC would not allow a covered entity to require the use of a mitigating measure, if an individual does not use a mitigating measure, this may affect whether an individual is qualified for a job or poses a direct threat. The third prong of the statutory definition of disability is "being regarded as having an impairment." The ADAAA further describes being regarded as having an impairment by stating that an individual meets this prong of the definition "if the individual establishes that he or she has been subjected to an action prohibited under this Act because of an actual or perceived physical or mental impairment whether or not the impairment limits or is perceived to limit a major life activity." The statute also provides that the "regarded as" prong does not apply to transitory or minor impairments, and a transitory impairment is defined as an impairment with an actual or expected duration of six months or less. The EEOC final regulations echo the statutory language, and encourage the use of the "regarded as" prong when reasonable accommodation is not at issue. The EEOC emphasizes that even if an individual is regarded as having a disability, there is no violation of the ADA unless a covered entity takes a prohibited action, such as not hiring a qualified individual because he or she is regarded as having a disability. A covered entity may challenge a claim under the "regarded as" prong by showing that the impairment is both transitory and minor, or by showing that the individual is not qualified or would pose a direct threat. However, it should be noted that the defense that an impairment is transitory and minor is only available under the "regarded as" prong. The rules of construction discussed previously concerning the first or actual prong specifically state that the effects of an impairment lasting fewer than six months can be substantially limiting.

The ADA Amendment Act (ADAAA), P.L. 110-325, was enacted in 2008 to amend the Americans with Disabilities Act (ADA) definition of disability. On March 25, 2011, the Equal Employment Opportunity Commission (EEOC) issued final regulations implementing the ADAAA. The final regulations track the statutory language of the ADA but also provide several clarifying interpretations. Several of the major regulatory interpretations are, including the operation of major bodily functions in the definition of major life activities; adding rules of construction for when an impairment substantially limits a major life activity and providing examples of impairments that will most often be found to substantially limit a major life activity; interpreting the coverage of transitory impairments; interpreting the use of mitigating measures; and interpreting the "regarded as" prong of the definition.

When a President dies, a number of activities and events are set in motion. The vast majority of these activities and events are governed by custom rather than statute, and may be influenced by the wishes of the deceased President's family. Typically, the incumbent President issues a presidential proclamation that serves as an official announcement of the death. By federal law, U.S. flags should be flown at half-staff for 30 days. In recent decades, presidential proclamations have also given specific guidance where the flag should be flown at half-staff, such as "at the White House and on all buildings, grounds, and naval vessels of the United States for a period of 30 days from the day of his death. I also direct that for the same length of time, the representatives of the United States in foreign countries shall make similar arrangements for the display of the flag at half-staff over their Embassies, Legations, and other facilities abroad, including all military facilities and stations." The Commanding General, Military District of Washington, U.S. Army is responsible for state funeral arrangements, as described in detail in the Army pamphlet entitled State, Official, and Special Military Funerals . According to this document, the current President, ex-President, President-elect, and any other person specifically designated by the current President are entitled to an official state funeral. An excerpt from the pamphlet on key responsibilities and delegations follows: 3. Responsibilities. a. The President notifies the Congress that he has directed that a State Funeral be conducted. The Congress, which has sole authority for use of the U.S. Capitol, makes the Rotunda available for the State Ceremony through its own procedures. b. The Secretary of Defense is the designated representative of the President of the United States. The Secretary of the Army is the designated representative of the Secretary of Defense for the purpose of making all arrangements for State Funerals in Washington, D.C. This includes participation of all Armed Forces and coordination with the State Department for participation of all branches of the Government and the Diplomatic Corps. c. The Commanding General, Military District of Washington, U.S. Army as the designated representative of the Secretary of the Army, will make all ceremonial arrangements for State Funerals in Washington, D.C. and will be responsible for the planning and arranging of State Funerals throughout the continental United States. Many variations of ceremonies and traditional events and activities honoring the former President are possible. A short list of possibilities may include the following: A former President's remains may lie in repose for one day and then be moved to the Capitol Rotunda to lie in state , during which time a funeral ceremony and public viewing may occur . A former President, as former C ommander-in- C hief, is entitled to burial and ceremony in the Arlington National Cemetery. If , however, the former President is to be buried outside of Washington, DC , honors may be rendered at a train station, terminal, or airport that serves as a point of departure for the remains.Other honors that may be rendered during ceremonies include musical honors , gun and cannon salutes , and a U.S. Air Force coordinate d flyover . Most recently, following former President Gerald R. Ford's death on December 26, 2006, President George W. Bush announced the death, and also issued a proclamation that U.S. flags on all federal facilities be flown at half-staff. Two days later, President Bush issued Executive Order 13421, which proclaimed January 2, 2007, a day of respect and remembrance for the former President and ordered the closing of federal offices and agencies. A funeral took place in the Capitol Rotunda on December 30, 2006, where former President Ford lay in state, with subsequent services on January 2, 2007, at Washington National Cathedral. Funeral services for the former President were conducted on January 3, 2007, in Grand Rapids, MI, with interment at the Gerald R. Ford Presidential Library and Museum. Note: .mil web addresses may be more easily accessed using Internet Explorer This website contains information on the evolution of state funerals, military honors for former Presidents, ceremonial traditions of past state funerals (including lying in state or repose), military honors, and FAQs. http://www.usstatefuneral.mdw.army.mil/ This Army pamphlet outlines state and official funeral policy, and it contains detailed information on funeral eligibility, procedures, and sequences of events. http://armypubs.army.mil/epubs/DR_pubs/DR_a/pdf/web/p1_1.pdf The White House Historical Association has published a number of online articles and other content on past funerals. A few selected articles are as follows: A Presidential Funeral https://www.whitehousehistory.org/a-presidental-funeral Arlington ' s Ceremonial Horses and Funerals at the White House https://www.whitehousehistory.org/arlingtons-ceremonial-horses-and-funerals-at-the-white-house-1 Modern Mourning Observations at the White House https://www.whitehousehistory.org/modern-mourning-observations-at-the-white-house To view images, documents, and other materials on presidential funerals, see the Association's digital library: https://www.whitehousehistory.org/digital-library Since 1901, Washington National Cathedral has been the location of funeral and memorial services for several U.S. Presidents: https://cathedral.org/history/prominent-services/presidential-funerals/ Presidential libraries and museums provide preservation of and access to historical materials, including funeral information. Similar or other materials may be viewable online within digital collections at each individual library's website: https://www.archives.gov/presidential-libraries The Library of Congress contains a number of historical papers, images, audio recordings, films, narratives, and other content related to Presidents and corresponding funerals and ceremonies. For help with finding specific items, librarian and reference specialists at the main reading room can provide assistance: http://www.loc.gov/rr/main/ Gerald R. Ford: https://www.c-span.org/video/?195963-1/gerald-ford-michigan-service-burial Ronald W. Reagan: https://www.c-span.org/video/?182165-1/ronald-reagan-funeral-service Richard M. Nixon: https://www.c-span.org/video/?56426-1/president-nixon-funeral Lyndon B. Johnson: https://www.c-span.org/video/?182212-1/lyndon-johnson-funeral-service Harry S. Truman: https://www.youtube.com/watch?v=4Nfo1UjjJXE Dwight D. Eisenhower: http://www.dwightdeisenhower.com/155/Final-Post Herbert Hoover: https://www.youtube.com/watch?v=AtZLxjsX39Q John F. Kennedy: https://www.jfklibrary.org/asset-viewer/archives/JFKWHF/WHN28/JFKWHF-WHN28/JFKWHF-WHN28 Franklin D. Roosevelt: https://www.c-span.org/video/?298665-1/president-franklin-roosevelt-funeral Eleven U.S. Presidents have "lain in state" at the U.S. Capitol Rotunda: http://history.house.gov/Institution/Lie-In-State/Lie-In-State/ The Architect of the Capitol (AOC) provides a brief history of President Lincoln's funeral and his catafalque (currently on display at the U.S. Capitol Visitor's Center): https://www.aoc.gov/blog/lincoln-catafalque-us-capitol Concurrent resolutions have authorized commemorative compilations of tributes delivered in Congress for several former Presidents. These volumes are prepared by the Congressional Research Service under the direction of the Joint Committee on Printing. For example, see President Ford's tribute collection: https://www.gpo.gov/fdsys/pkg/CDOC-110hdoc61/pdf/CDOC-110hdoc61.pdf For further assistance in locating these tribute collections for Presidents (or other individuals), please contact CRS. The AOC has an onsite database of approximately 1,000 images of state funerals at the Capitol for the following presidents: Kennedy, Hoover, Eisenhower, Lyndon B. Johnson, Reagan and Ford. The images depict presidents lying in state in the Rotunda and related funerary ceremonies occurring at the Capitol. For more inquiries into accessing the images, congressional staff may fill out an agency contact form at https://www.aoc.gov/contact-form . Martin Nowak, The White House in Mourning: Deaths and Funerals of Presidents in Office (Jefferson, NC: McFarland, 2010). Brady Carlson, Dead Presidents: A n American A dventure I nto the S trange D eaths and S urprising A fterlives of O ur nation 's L eaders (New York: W.W. Norton, 2017). Brian Lamb and C-SPAN, Who 's Buried in Grant 's Tomb : a Tour of Presidential Gravesites. (New York: Perseus Books Group, 2010). Ambassador Mary Mel French, "Ceremonies: State and Official Funerals," in United States Protocol: The Guide to Official Diplomatic Etiquette (Lanham, MD: Rowman and Littlefield, 2010).

This fact sheet is a brief resource guide for congressional staff on funerals and burials for Presidents of the United States. It contains an overview of past practices for presidential funerals and selected online information resources related to official and ceremonial protocols, past presidential funerals, congressional documents, and other documents and books.

The length of time a congressional staff member spends employed in Congress, or job tenure, is a source of recurring interest among Members of Congress, congressional staff, those who study staffing in the House and Senate , and the public. There may be interest in congressional tenure information from multiple perspectives, including assessment of how a congressional office might oversee human resources issues, how staff might approach a congressional career, and guidance for how frequently staffing changes may occur in various positions. Others might be interested in how staff are deployed, and could see staff tenure as an indication of the effectiveness or well-being of Congress as an institution. This report provides tenure data for 16 staff position titles that are typically used in House Member offices, and information for using those data for different purposes. The positions include the following: Administrative Director Casework Supervisor Caseworker Chief of Staff Communications Director Counsel District Director Executive Assistant Field Representative Legislative Assistant Legislative Correspondent Legislative Director Office Manager Press Secretary Scheduler Staff Assistant Publicly available information sources do not provide aggregated congressional staff tenure data in a readily retrievable or analyzable form. The most recent publicly available House staff compensation report, which provided some insight into the duration which congressional staff worked in a number of positions, was issued in 2010 and relied on anonymous, self-reported survey data. Data in this report are instead based on official House pay reports, from which tenure information arguably may be most reliably derived, and which afford the opportunity to use complete, consistently collected data. Tenure information provided in this report is based on the House's Statement of Disbursements (SOD), published quarterly by the House Chief Administrative Officer, as collated by LegiStorm, a private entity that provides some congressional data by subscription. House Member staff tenure data were calculated for each year between 2006 and 2016. Annual data allow for observations about the nature of staff tenure in House Member offices over time. For each year, all staff with at least one week's service on March 31 were included. All employment pay dates from October 2, 2000, to March 24 of each year are included in the data. Utilizing official salary expenditure data from the House may provide more complete, robust findings than other methods of determining staff tenure, such as surveys; the data presented here, however, are subject to some challenges that could affect the interpretation of the information presented. Tenure information provided in this report may understate the actual time staff spend in particular positons, due in part to several features of the data. Overall, the time frame studied may lead to some underrepresentation in tenure duration. Figure 1 provides potential examples of congressional staff, identified as Jobholders A-D, in a given position. Since tenure data are not captured before October 2, 2000, some individuals, represented as Jobholder A, may have an unknown length of service prior to that date that is not captured. This feature of the data only affects a small number of employees within this dataset, since many tenure periods completely begin and end within the observed period of time, as represented by Jobholders B and C. The data last capture those who were employed in House Members' personal offices as of March 31, 2016, represented as Jobholder D, and some of those individuals likely continued to work in the same roles after that date. Data provided in this report represent an individual's consecutive time spent working in a particular position in the personal office of a House Member. They do not necessarily capture the overall time worked in a House office or across a congressional career. If a person's job title changes, for example, from staff assistant to caseworker, the time that individual spent as a staff assistant is recorded separately from the time that individual spent as a caseworker. If a person stops working for the House for some time, that individual's tenure in his or her preceding position ends, although he or she may return to work in Congress at some point. No aggregate measure of individual congressional career length is provided in this report. Other data concerns arise from the variation across offices, lack of other demographic information about staff, and lack of information about where congressional staff work. Potential differences might exist in the job duties of positions with the same or similar title, and there is wide variation among the job titles used for various positions in congressional offices. The Appendix provides the number of related titles included for each job title for which tenure data are provided. Aggregation of tenure by job title rests on the assumption that staff with the same or similar title carry out the same or similar tasks. Given the wide discretion congressional employing authorities have in setting the terms and conditions of employment, there may be differences in the duties of similarly titled staff that could have effects on the interpretation of their time in a particular position. As presented here, tenure data provide no insight into the education, age, work experience, pay, full- or part-time status of staff, or other potential data that might inform explanations of why a congressional staff member might stay in a particular position. Staff could be based in Washington, DC, district offices, or both. It is unknown whether or to what extent the location of congressional employment might affect the duration of that employment. Tables in this section provide tenure data for selected positions in the personal offices of House Members and detailed data and visualizations for each position. Table 1 provides a summary of staff tenure for selected positions since 2006. The data include job titles, average and median years of service, and grouped years of service for each positon. The "Trend" column provides information on whether the time staff stayed in a position increased, was unchanged, or decreased between 2006 and 2016. Table 2 - Table 17 provide information on individual job titles over the same period. In all of the data tables, the average and the median length of tenure columns provide two different measures of central tendency, and each may be useful for some purposes and less suitable for others. The average represents the sum of the observed years of tenure, divided by the number of staff in that position. It is a common measure that can be understood as a representation of how long an individual remains, on average, in a job position. The average can be affected disproportionately by unusually low or high observations. A few individuals who remain for many years in a position, for example, may draw the average tenure length up for that position. A number of staff who stay in a position for only a brief period may depress the average length of tenure. The median represents the middle value when all the observations are arranged by order of magnitude. Another common measure of central tendency, the median can be understood as a representation of a center point at which half of the observations fall below, and half above. Extremely high or low observations may have less of an impact on the median. Generalizations about staff tenure are limited in at least three potentially significant ways, including: the relatively brief period of time for which reliable, largely inclusive data are available in a readily analyzable form; how the unique nature of congressional work settings might affect staff tenure; and the lack of demographic information about staff for which tenure data are available. Considering tenure in isolation from demographic characteristics of the congressional workforce might limit the extent to which tenure information can be assessed. Additional data on congressional staff regarding age, education, and other elements would be needed for this type of analysis, and are not readily available at the position level. Finally, since each House Member office serves as its own hiring authority, variations from office to office, which for each position may include differences in job duties, work schedules, office emphases, and other factors, may limit the extent to which aggregated data provided here might match tenure in a particular office. Despite these caveats, a few broad observations can be made about staff in House Member offices. Between 2006 and 2016, staff tenure, based on the trend of the median number of years in the position, appears to have increased by six months or more for staff in three position titles in House Member offices. The median tenure was unchanged for 13 positions. This may be consistent with overall workforce trends in the United States. Although pay is not the only factor that might affect an individual's decision to remain in or leave a particular job, staff in positions that generally pay less typically remained in those roles for shorter periods of time than those in higher-paying positions. Some of these lower-paying positions may also be considered entry-level positions in some House Member offices; if so, House office employees in those roles appear to follow national trends for others in entry-level types of jobs, remaining in the role for a relatively short period of time. Similarly, those in more senior positions, which often require a particular level of congressional or other professional experience, typically remained in those roles comparatively longer, similar to those in more senior positions in the general workforce. There is wide variation among the job titles used for various positions in congressional offices. Between October 2000 and March 2016, House and Senate pay data provided 13,271 unique titles under which staff received pay. Of those, 1,884 were extracted and categorized into one of 33 job titles used in CRS Reports about Member or committee offices. Office type was sometimes related to the job titles used. Some titles were specific to Member (e.g., District Director, State Director, and Field Representative) or committee (positions that are identified by majority, minority, or party standing, and Chief Clerk) offices, while others were identified in each setting (Counsel, Scheduler, Staff Assistant, and Legislative Assistant). Other job title variations reflect factors specific to particular offices, since each office functions as its own hiring authority. Some of the titles may distinguish between roles and duties carried out in the office (e.g., chief of staff, legislative assistant, etc.). Some offices may use job titles to indicate degrees of seniority. Others might represent arguably inconsequential variations in title between two staff members who might be carrying out essentially similar activities. Examples include: Seemingly related job titles, such as Administrative Director and Administrative Manager, or Caseworker and Constituent Advocate Job titles modified by location, such as Washington, DC, State, or District Chief of Staff Job titles modified by policy or subject area, such as Domestic Policy Counsel, Energy Counsel, or Counsel for Constituent Services Committee job titles modified by party or committee subdivision. This could include a party-related distinction, such as a Majority, Minority, Democratic, or Republican Professional Staff Member. It could also denote Full Committee Staff Member, Subcommittee Staff Member, or work on behalf of an individual committee leader, like the chair or ranking member. The titles used in this report were used by most House Members' offices, but a number of apparently related variations are included to ensure inclusion of additional offices and staff. Table A-1 provides the number of related titles included for each position used in this report or related CRS Reports on staff tenure. A list of all titles included by category is available to congressional offices upon request.

The length of time a congressional staff member spends employed in a particular position in Congress--or congressional staff tenure--is a source of recurring interest to Members, staff, and the public. A congressional office, for example, may seek this information to assess its human resources capabilities, or for guidance in how frequently staffing changes might be expected for various positions. Congressional staff may seek this type of information to evaluate and approach their own individual career trajectories. This report presents a number of statistical measures regarding the length of time House office staff stay in particular job positions. It is designed to facilitate the consideration of tenure from a number of perspectives. This report provides tenure data for a selection of 16 staff position titles that are typically used in House Member offices, and information on how to use those data for different purposes. The positions include Administrative Director, Casework Supervisor, Caseworker, Chief of Staff, Communications Director, Counsel, District Director, Executive Assistant, Field Representative, Legislative Assistant, Legislative Correspondent, Legislative Director, Office Manager, Press Secretary, Scheduler, and Staff Assistant. House Members' staff tenure data were calculated as of March 31, for each year between 2006 and 2016, for all staff in each position. An overview table provides staff tenure for selected positions for 2016, including summary statistics and information on whether the time staff stayed in a position increased, was unchanged, or decreased between 2006 and 2016. Other tables provide detailed tenure data and visualizations for each position title. Between 2006 and 2016, staff tenure appears to have increased by six months or more for staff in three position titles in House Member offices, based on the trend of the median number of years in the position. For 13 positions, the median tenure was unchanged. These findings may be consistent with overall workforce trends in the United States. Pay may be one of many factors that affect an individual's decision to remain in or leave a particular job. House Member office staff holding positions that are generally lower-paid typically remained in those roles for shorter periods of time than those in generally higher-paying positions. Lower-paying positions may also be considered entry-level roles; if so, tenure for House Member office employees in these roles appears to follow national trends for other entry-level jobs, which individuals hold for a relatively short period of time. Those in more senior positions, where a particular level of congressional or other professional experience is often required, typically remained in those roles comparatively longer, similar to those in more senior positions in the general workforce. Generalizations about staff tenure are limited in some ways, because each House office serves as its own hiring authority. Variations from office to office, which might include differences in job duties, work schedules, office emphases, and other factors, may limit the extent to which data provided here might match tenure in another office. Direct comparisons of congressional employment to the general labor market may have similar limitations. An employing Member's retirement or electoral loss, for example, may cause staff tenure periods to end abruptly and unexpectedly. This report is one of a number of CRS products on congressional staff. Others include CRS Report R43947, House of Representatives Staff Levels in Member, Committee, Leadership, and Other Offices, 1977-2016 and CRS Report R44323, Staff Pay Levels for Selected Positions in House Member Offices, 2001-2014.

Technology using electrical energy to power automobiles has been in existence for over a century. However, for a number of reasons, including the energy density of petroleum fuels, the internal combustion engine has been the power source of choice for automobiles and most other vehicles. However, with the oil shocks of the past few decades, as well as an increasing awareness of the emissions of air pollutants and greenhouse gases from cars and trucks, interest in the use of electrical power train systems has grown. While there are other potential replacements for the internal combustion engine, such as compressed air, these other technologies have not been the subject of much interest scientifically or politically. Much of the federal advanced vehicle research has come through the Partnership for a New Generation of Vehicles (PNGV) and the FreedomCAR program, consortia of the federal government and the "Big Three" American automobile manufacturers. PNGV focused on near-term goals and the development of hybrid electric vehicles, while FreedomCAR, which replaced PNGV in 2002, focuses on long-term research on fuel cells and hydrogen fuel. The United States is not alone in pursuing these new technologies. Japanese manufacturers were the first to introduce high-efficiency gasoline-electric hybrid vehicles in the U.S. market. The development of these vehicles is a response to global pressures to lower emissions and improve fuel economy. In that context, it is worth noting that in most developed countries, gasoline and diesel fuel prices are considerably higher than they are in the United States. Four advanced propulsion technologies of key interest are electric vehicles, hybrid vehicles, plug-in hybrids, and fuel cell vehicles. In an electric vehicle, the vehicle runs exclusively on electricity that is supplied from an electric utility provider, eliminating combustion on-board the vehicle. A hybrid vehicle integrates an electrical system with an internal combustion engine to utilize the benefits of each system. A plug-in hybrid system allows a vehicle to be charged in the same manner as a pure electric vehicle, allowing an all-electric range. The additional hybrid system allows for the vehicle to use a combustion engine when the batteries are depleted. In a fuel cell vehicle, instead of combustion, a chemical conversion process is used, leading to higher levels of efficiency. In addition to altering the propulsion system, many other efficiency-related technologies, such as improved aerodynamics and low-resistance tires can be incorporated into both new and conventional vehicles. While these various technologies are promising, they must overcome certain obstacles before they will be competitive in the marketplace. There are three main barriers to their widespread use: cost, infrastructure, and performance. Cost is a factor since without subsidies, consumers are unlikely to purchase new vehicles in large numbers if the new vehicles are not cost-competitive with conventional vehicles. Also, convenient infrastructure must exist for both fueling and maintenance of these vehicles. Finally, the performance of the new vehicles must be comparable to that of conventional vehicles. An electric vehicle (EV) is powered by an electric motor, as opposed to a gasoline or diesel engine. Power is supplied to the motor by batteries, which are charged through a central charging station (which can be installed in the owner's garage) or through a portable charger on board the vehicle, which is plugged into an electrical outlet. Because no fuel is consumed in EVs, and the vehicles therefore do not produce emissions, they are considered to be zero emission vehicles (ZEVs) in certain air quality control regions. Although there are emissions attributable to the production of electricity to charge the vehicles, the overall fuel-cycle of EVs tends to lead to lower levels of toxic and ozone-forming emissions--as well as greenhouse gases--than those of conventional vehicles. Also, since pollution attributable to electric vehicles occurs at power plants, it is generally emitted in areas with relatively low population density. Another potential public policy benefit of electric vehicles is that they can reduce U.S. dependence on foreign oil, since only about 3% of electricity in the United States is generated from petroleum. Furthermore, transportation dependence on all forms of fossil fuels can be reduced, since approximately 30 to 35% of electricity in the U.S. is generated from non-fossil fuels. However, high electricity costs in recent years have led to questions about the long-term viability of EVs. Commercially, these vehicles have not been well-received by consumers. By 1998, only about 4,200 EVs were on the road, mainly in California. By 2005, this number had increased to roughly 51,000. However, only a few car companies currently produce electric vehicles, and most of those are only available for lease by large fleets. EVs for personal use have declined as automakers have taken most personal EVs off the market. While the number of EVs has increased, the amount of fuel used per vehicle has decreased, as have, presumably, miles traveled per vehicle. Between 1998 and 2005, while the number of EVs increased more than 10-fold, electricity for vehicle fuel increased only about five-fold. One of the most significant barriers to wide acceptance of electric vehicles is their higher purchase cost. For example, the manufacturer's suggested retail price for a 1999 General Motors EV1 was approximately $33,995, which was considerably higher than a comparable 1999 Chevrolet Cavalier at $13,670. However, fuel costs tend to be much lower for EVs than for conventional vehicles. In 2002, a small conventional vehicle could achieve a fuel cost of approximately $690 per year. An electric vehicle, however, could achieve a considerably lower cost of $390 to $480 per year. This difference, while significant, fails to make up for the additional purchase or lease cost for an electric vehicle. With increased petroleum prices, the cost savings for EVs may make them more attractive. However, its is unlikely that even a very large increase in petroleum prices would be sufficient to make the current generation of electric vehicles cost-competitive. In terms of maintenance costs, electric vehicles have fewer moving parts, which reduces wear. However certain parts, such as replacement batteries, tend to be expensive. Through 2006, there was a federal tax credit for the purchase of an electric vehicle. The federal credit was worth 10% of the purchase price of the vehicle, up to $2,000. This credit was part of the Energy Policy Act of 1992. In some areas, EVs are also exempted from high occupancy vehicle (HOV) lane restrictions, parking restrictions, and/or vehicle registration fees, which may provide an additional incentive for their use. Another key obstacle to more widespread use of electric vehicles is the lack of fueling (charging) and maintenance infrastructure. For example, there were approximately 700 public charging stations in 2004, mostly in California and Arizona. Currently, that number is only 440. This represents less than 1% of the roughly 125,000 gasoline stations nationwide. The lack of recharging infrastructure is not only inconvenient, but also limits long-distance travel, since Arizona and California account for the vast majority of all recharging sites currently in operation. Adding to the problem of fueling infrastructure, is the lack of maintenance infrastructure. Few mechanics have experience servicing EVs, and most work must be done at a certified dealer. For this reason, most EV leases include free dealer maintenance over the period of the contract. On the other hand, one advantage of electric vehicles is that they have fewer moving parts and thus may be more durable, and require less frequent maintenance. Another major concern with electric vehicles is their performance. The batteries used to power the vehicles tend to be quite heavy, limiting the range of these vehicles. While a conventional passenger car can travel 300 to 400 miles before refueling, until recently, electric cars generally could only travel about 100 to 150 miles before needing to be recharged. With new developments in battery technology, EV range has increased. However, even new EVs are unlikely to have the range of a conventional vehicle. Furthermore, while refilling the tank of a conventional vehicle requires only a few minutes, a full residential recharge for an electric vehicle can take five to eight hours, although new chargers may shorten this time significantly. For fleet vehicles, or for short-distance commuting, these performance characteristics might not greatly affect their marketability, but the feasibility of EVs for long-distance, intercity travel is unlikely with current technology, even if the fueling infrastructure is greatly expanded. A lesser concern with electric vehicles is an unconventional driving style. To provide maximum efficiency and range, the driver must accelerate and brake very smoothly, or range is significantly diminished. Because of this, some drivers may not be comfortable or proficient operating an electric vehicle. The greatest performance benefit from an EV is that, as was stated above, there are no emissions from the vehicle itself. Furthermore, the overall toxic and ozone-forming emissions tend to be much lower than with conventional vehicles since it can be easier to control emissions at a power plant than it is to control combustion vehicle emissions. An added benefit is a reduction in noise pollution since EVs are significantly quieter than conventional vehicles. Greenhouse gas emissions caused by EVs tend to be lower than those from conventional vehicles, depending on the local fuel mix used in power generation and the efficiency of the power distribution grid. But if electricity transmission and distribution losses are high, total energy consumption attributable to electric vehicles may exceed conventional vehicles. A major issue for vehicle manufacturers, and a motivation for increased research and development on electric vehicles, is California's zero-emissions mandate. This mandate would require manufacturers to sell ZEVs and other super-low-emission vehicles. However, many technical and market barriers have hindered the implementation of the program. Most recently, the California Air Resources Board amended the program, allowing manufacturers two methods to certify compliance. First, manufacturers were able to generate credits for future use by introducing a limited number of fuel cell vehicles (see discussion below on fuel cells) by 2005. Second, the manufacturers must produce a mix of vehicles, with 2% of sales coming from ZEVs, 2% from other advanced-technology vehicles, and 6% from conventional super-low-emission vehicles (SULEVs). Environmentalists have criticized the most recent amendments to the program for not requiring more extensive mandates. The original legislation required 2% of MY 1998 vehicle sales to be ZEVs and SULEVs, and 5% of MY 2001 sales, but these initial requirements were removed in 1996 to encourage market-based introduction of ZEVs. Other states have adopted the California program, including New York, Maine, Massachusetts, New Jersey, and Maryland. A type of vehicle that can address some of the problems associated with electric vehicles is a hybrid electric vehicle (HEV). HEVs combine an electric motor and battery pack with an internal combustion engine to improve efficiency. In current HEVs, the batteries are recharged during operation, eliminating the need for an external charger. In development are plug-in hybrids (PHEVs) that combine some of the benefits of HEVs and pure EVs (see the next section). Either way, range and performance can be significantly improved over electric vehicles. The combustion and electric systems of HEVs are combined in various configurations. In one configuration (series hybrid), the electric motor supplies power to move the wheels, while the combustion engine is connected to a generator that powers the motor and recharges the batteries. In another configuration (parallel hybrid), the combustion engine provides primary power, while the electric motor adds extra power for acceleration and climbing, or the electric motor is the primary power source, with extra power provided by the engine. In some parallel hybrid systems, the engine and electric motor work in tandem, with either system providing primary or secondary power depending on driving conditions. The hybrid drive train allows the combustion engine to operate at or near peak efficiency most of the time. This can lead to significantly higher levels of overall vehicle system efficiency. The higher efficiency of these vehicles allows them to achieve very high fuel economy and lower emissions. For example, the hybrid Honda Civic is rated at 40 miles per gallon (mpg) in the city, and 45 mpg on the highway. A gasoline-fueled Honda Civic sedan, by comparison, achieves a rating of 25 mpg city and 36 mpg highway. Fuel economy improvements can help cut demand for foreign petroleum, and the higher efficiency enables hybrid vehicles to attain, and even surpass, the range of conventional vehicles, even with a smaller fuel tank. Furthermore, since these vehicles utilize conventional fuel, the fueling infrastructure problems associated with electric vehicles can be eliminated. HEV sales have increased significantly over the past several years. From the introduction of the Honda Insight in the United States in 1999 through the end of 2006, approximately 650,000 HEVs were sold in the United States. Several hybrid vehicles are currently available in the U.S. market, and most major manufacturers have introduced hybrid models or plan to do so over the next few years. Currently, purchasers of an HEV may qualify for a tax credit. The credit, established in the Energy Policy Act of 2005, is based on the fuel economy and projected fuel savings compared to a baseline conventional vehicle. The value of the tax credit is up to $3,400, depending on those factors. The number of vehicles produced by a single manufacturer eligible for the tax credit is limited. Once an automaker produces 60,000 vehicles, the credit begins to phase out. Toyota reached the limit in 2006, and tax credits for Toyota hybrids were completely phased out October 1, 2007. One of the key selling points for hybrids is that while they are more expensive than conventional vehicles, they are much less expensive than pure electric vehicles. However, these vehicles are still relatively expensive. All of the current hybrids are priced several thousand dollars above comparable conventional vehicles. Further, it has been claimed that current hybrid prices are subsidized by the manufacturers. The higher purchase price of these vehicles is offset, to some degree, by lower fuel costs. Due to the higher fuel efficiency of hybrids, fuel can be significantly lower with hybrids than with conventional vehicles (see Table 1 ). These savings, along with proposed tax credits for the purchase of hybrids, could cover the incremental cost of purchasing a hybrid as opposed to a conventional vehicle. Furthermore, some consumers may be willing to pay a premium for a more "environmentally friendly" car. Another key advantage of hybrid vehicles over pure electrics is that no new fueling infrastructure must be installed, since the vehicles are fueled by gasoline or diesel. This allows hybrid owners to purchase and operate these vehicles anywhere in the country, and long-distance travel will not be limited by the fueling infrastructure. Furthermore, maintenance of the combustion components in the vehicle can rely on the existing service infrastructure. However, as with pure electric vehicles, maintenance of the electric components in hybrid vehicles generally must happen at licensed dealers, who will have more access to the technology. This may limit the acceptability for rural customers who may live a good distance from the dealership, but is less likely to harm acceptance of urban and suburban customers. The most notable features of hybrid vehicles are higher fuel economy and extended range. The efficiency of the hybrid drive system allows a significant increase in fuel economy compared to conventional vehicles, cutting fuel costs. Also, the improved fuel economy means that vehicle range is greatly extended with hybrids, even if a slightly smaller fuel tank is used. This higher efficiency also leads to lower emissions of greenhouse gases, as well as lower emissions of toxic and ozone-forming pollutants. Further, depending on design, the hybrid system can also be used to boost horsepower and acceleration. A recent development in advanced vehicle technologies is the expected introduction in the next few years of plug-in hybrid electric vehicles (PHEVs). A PHEV uses a much higher-capacity battery pack than a typical hybrid, and adds the ability to charge the vehicle on grid power. With the larger batteries, an all-electric range of 20 to 40 miles (or more) could be achieved. In this way, most commuters might be able to travel to and from work solely on electrical grid power. Only when traveling long distances might the combustion engine be necessary. Potential advantages include the ability to use electric power, which tends to be less expensive per mile than gasoline. Thus, some of the increased purchase cost of a PHEV over a conventional vehicle could be made up in future fuel savings. In addition, PHEVs could provide some of the environmental benefits of pure electric vehicles, including lower fuel-cycle pollutant and greenhouse gas emissions, without some of the performance drawbacks. It is expected that because of the higher-capacity batteries necessary for PHEVs compared to hybrids, costs could be several thousand dollars more than a hybrid, and thus significantly more expensive than a conventional vehicle. Some or all of this additional cost could be made up through energy cost savings over the life of the vehicle. Electricity tends to be less expensive than gasoline per mile, and it is expected that most consumers would be able to run most of the time on electricity. One key concern is that the duty cycle of PHEV batteries is far more rigorous than that of "conventional" hybrids, and thus the batteries may need to be replaced more often, increasing life-cycle costs. A key question on the infrastructure for PHEVs is whether they will be able to be plugged into a standard household outlet, or whether an additional charging station would be necessary. If no additional charging station is required, then presumably consumers could recharge their vehicles overnight at their homes. Beyond those requirements, concerns have been raised over the additional electric power needed if a large number of PHEVs are plugged into the grid. A key benefit of a PHEV is that it can run on electric power, but without the range limitations of a pure EV. A PHEV's all-electric range would likely be limited to commuting distances, with the combustion engine engaging on longer trips. Another key benefit to PHEVs is that by relying mainly on electric power, total fuel cycle pollutant and greenhouse gas emissions will likely be lower than those of conventional vehicles, although the degree of reduction will depend on the source of the electric power (coal, natural gas, nuclear, or renewable), and the amount of electric vs. gasoline fuel used by the vehicle. An advanced vehicle further from commercialization is a fuel cell vehicle (FCV). A fuel cell can be likened to a "chemical battery." Unlike a battery, however, a fuel cell can run continuously, as long as the fuel supply is not exhausted. In a fuel cell, hydrogen reacts with oxygen to generate an electric current. Hydrogen is supplied to the fuel cell as either pure hydrogen or a through hydrogen-rich fuel (such as methanol, natural gas, or gasoline) that is processed (reformed) on-board the vehicle. There is a physical limit to the voltage that one fuel cell can provide, so fuel cells are arranged in "stacks" to generate a high voltage that is used to power an electric motor. This chemical process eliminates the need for charging a battery, which is necessary with electric vehicles, while producing much lower emissions than combustion vehicles. In fact, if pure hydrogen fuel is used, the only product from the reaction will be water. With hydrogen fuel, an FCV would qualify as a zero emission vehicle. Using other fuels, while the vehicle is no longer a ZEV, emissions would still be drastically cut as compared to conventional vehicles. Furthermore, because potential fuel supplies for FCVs include natural gas, methanol, or pure hydrogen--the latter two produced from natural gas --another potential benefit from fuel cells will be their ability to reduce the transportation demand for foreign petroleum. While currently available only to a few consumers (on a demonstration basis), fuel cells have been touted as likely to be one of the most important technologies in the history of the automobile. They are currently very expensive, and thus there has been a great deal of interest in research and development to improve their marketability. Because of their potential to revolutionize the automotive industry, all major manufacturers are working to develop fuel cell vehicles, and some manufacturers have introduced a limited number of vehicles for lease; others intend to introduce vehicles for limited leases in the near future. Demonstration projects are ongoing with fuel cell passenger cars, sport utility vehicles, and transit buses. Many of these demonstrations are in conjunction with the California Fuel Cell Partnership, a consortium of auto manufacturers, fuel providers, fuel cell developers, and state and federal agencies. Arguably, the largest barrier to the production of FCVs is cost. It currently costs approximately $2,000 to $3,000 to produce a gasoline engine for a conventional passenger car. In the early 2000s, a comparable fuel cell stack cost around $35,000, according to industry estimates, but a leading producer of fuel cells estimates that costs could be cut to $3,500 in the future. Since there are fewer moving parts in a fuel cell vehicle, maintenance costs would likely be lower, so the added cost of the fuel cell system may be offset by lower maintenance costs. Further research and development would be necessary to achieve these benefits. Another key cost issue will be fuel costs. Fuel costs are a concern because there is no hydrogen fueling infrastructure currently, and the use of methanol and natural gas as transportation fuels is currently limited. Consumers might have to pay a premium for these fuels, in order to support a growing infrastructure. However, since hydrogen fuel and methanol would likely be produced from natural gas, price fluctuations caused by changing supply in petroleum markets could be dampened, although natural gas price fluctuations would certainly have an effect. Another major barrier to the use of FCVs is that there is no infrastructure for the distribution of hydrogen fuel, and little methanol or natural gas infrastructure for transportation. As of December 2007, there were only about 750 natural gas refueling sites in the United States, and few, if any, methanol sites. The feedstock for methanol, and the likely feedstock (in the near future) for hydrogen fuel is natural gas, although other feedstocks, such as biomass or coal, could be used. Hydrogen derived from renewable energy could also be possible in the future, but that technology is far from commercialization. Until the distribution infrastructure for hydrogen, methanol, or natural gas is developed, it is possible that gasoline will be the fuel of choice for fuel cell passenger vehicles. As with electric vehicles, no maintenance infrastructure exists for servicing these vehicles. The technology is radically different from conventional vehicles, and most maintenance would likely have to occur at certified dealers. One limit on the performance of fuel cell vehicles has been their weight. Fuel cells have been demonstrated on larger vehicles, such as buses. However, because of size and weight, until recently, passenger and cargo space has been sacrificed in prototypes of smaller fuel cell vehicles. However, many of these issues have been addressed in more recent prototypes. Another potential concern is that on-board reformers for converting gasoline or other fuels to hydrogen are very heavy. Therefore, much research has focused not only on cutting the cost of fuel cell systems, but decreasing their weight, as well. Another performance concern is one of fuel storage. Since hydrogen is not very dense, the fuel must be highly concentrated, and must be compressed (requiring a high-pressure tank), liquified (requiring a cooling system for the storage tank), chemically bonded with a storage material (such as a chemical or metal hydride), or stored in a tank with a complicated geometry (e.g., nanotubules). Each of these storage systems has problems, such as added weight, safety risks, or expensive raw materials that limit their acceptability. Therefore, research is ongoing to improve both the storage capacity and safety of hydrogen fuel. On the environmental side, the emissions from fuel cell vehicles are extremely low. Using hydrogen, there are no emissions of toxic or ozone-forming pollutants. Using other fuels, the reformer limits the efficiency of the fuel cell system, but emissions are still much lower than with conventional engines. Depending on the emissions attributable to the production and distribution of the fuel, fuel cell vehicles may perform better environmentally than any other technology for all types of emissions, including greenhouse gases. However, this is not a guarantee, especially if coal is used to generate hydrogen and no technology is developed to recapture carbon dioxide from the production process. Currently, the main issue for fuel cells is research and development (R&D). All major automobile manufacturers are spending considerable amounts of money on fuel cell R&D. In January 2002, the Bush Administration announced the FreedomCAR program, which focuses federal vehicle research on fuel cell vehicles. To complement this program, in January 2003, the Administration announced the Hydrogen Fuel Initiative, which focuses research on hydrogen fuel and infrastructure, as well as research on fuel cells for other applications (e.g., backup power). Another way to improve the fuel economy and emissions characteristics of vehicles is to use advanced components that reduce friction, decrease vehicle weight, or improve system efficiency. Many high-technology vehicles that are available to the public utilize these technologies, but some of these technologies could also be incorporated into the design of conventional vehicles. An effective way to improve efficiency is to reduce the weight of the vehicle. However, simply reducing weight while using the same materials and structural design can compromise passenger safety. Therefore, newer vehicles are making extensive use of advanced materials such as composite or plastic body panels, and high-strength, lightweight aluminum structural components. The use of some of these materials may even make a vehicle more recyclable. Furthermore, conventional materials can improve safety while reducing weight, if more sophisticated structural designs are used. Another way to improve efficiency is to decrease resistance, both from drag and from friction between the wheels and the road. Wind resistance can be decreased through redesigning the body to a more aerodynamic shape. In addition, the use of "slippery" body panels can further decrease drag, as can decreasing the profile of parts such as side-view mirrors, tires, and the radio antenna. Rolling friction can be limited through the use of low-resistance tires. A key component in the efficiency of electric vehicles (including hybrids and fuel cell vehicles) is a regenerative braking system. This system allows some of the vehicle's kinetic energy to be recaptured as electricity when the brakes are applied. In braking, the motor acts as a generator, taking kinetic energy from the wheels and converting it to electrical energy, which is fed back to the batteries. This technology is already available on consumer EVs and HEVs. Computers can be used to electronically adjust valve timing to optimize engine efficiency. This improved efficiency can be used to lower fuel consumption and/or increase power output. Variable valve timing is currently available on many passenger vehicles. Some new fuel-saving technologies will require more power than is provided by standard 14-volt electrical systems. A 42-volt system would provide the power to these new systems. Further, increasing power requirements from existing and future conveniences such as climate control, power accessories, and audio/video devices will soon require greater power than a 14-volt system can provide. An integrated starter-generator can be used in conventional vehicles to reduce fuel consumption and improve acceleration. As with a hybrid vehicle, using the high-torque device allows the engine to shut off when the vehicle is stopped. When power is applied, the engine can restart in less than one second. It is believed that the integrated starter-generator could improve fuel economy of conventional vehicles by as much as 20%. However, because the integrated starter-generator requires a considerable amount of electrical power, it is being developed concurrently with 42-volt electrical systems. Fuel consumption can also be reduced through cylinder deactivation. When less power is needed, one or more engine cylinders can be deactivated. These cylinders can then be reactivated if power needs increase. This technology could be particularly useful in applications where a six-, eight-, or ten-cylinder engine may be needed to boost acceleration, haul a trailer, or carry a large payload, but is not needed when loads are lighter. Cylinder deactivation is currently available in several vehicles, including certain models of the Chrysler 300 sedan, the GMC Envoy SUV, and the Honda Odyssey minivan. The use of advanced vehicle technologies can help curb consumption of fossil fuels, especially petroleum, and reduce emissions of toxic and ozone-forming pollutants, as well as greenhouse gases. In general, the most promising current technologies incorporate electric motors and batteries in their design, while all take advantage of new design techniques and advanced materials to reduce resistance, cut vehicle weight, and better conserve energy. However, most of these technologies are still in various stages of development and have not yet proven marketable to most consumers. The three key issues for the marketability of advanced technology vehicles are cost, infrastructure, and performance. Consumers must be willing and able to purchase the vehicles, so purchase cost and overall life-cycle cost of these vehicles must be competitive. In addition, consumers must be able to expect that refueling and servicing these vehicles will be relatively convenient. Finally, the overall performance of the vehicles--in terms of fuel economy, range, driveability, safety, and emissions--must be acceptable. While most advanced vehicles meet some of these requirements, no new vehicle has yet met all of them. Therefore, research and development has been a key issue in the discussion of these vehicles, as have efforts to make the vehicles more affordable and the infrastructure more accessible. These vehicles may help the federal government in its role of promoting energy security and environmental protection if research and development can bring them to a point where they can be successfully marketed to American consumers.

Research and development of cleaner and more efficient vehicle technologies has been ongoing for the past few decades. Much of this research started in response to the oil shocks of the 1970s, which triggered concerns about rising fuel costs and growing dependence on imported fuel. The urgency of those concerns was lost as fuel prices declined in the 1980s and 1990s. At the same time, however, rising concerns about vehicle contributions to air pollution and global climate change added a new dimension to the issue. Recently, instability in world oil prices and political concerns have reawakened the energy dependence concerns of the 1970s. Meanwhile, research on new technologies continues, with a particular focus on commercialization. Despite widespread agreement in principle on the benefits of decreased dependence on petroleum and the internal combustion engine, the practical challenges posed by a transition to advanced vehicle technologies are formidable. Nonetheless, significant research and development progress has been made since the 1970s. These new technologies have sparked more interest as some major auto manufacturers have introduced high-efficiency production vehicles to the American market, and others have plans to introduce similar vehicles in the future. Furthermore, interest has grown recently as a result of higher petroleum prices, and the announcement of new emission regulations for passenger vehicles. In January 2002, the Bush Administration announced the FreedomCAR initiative, which focuses federal research on fuel cell vehicles. In conjunction with FreedomCAR, in January 2003, President Bush announced the Hydrogen Fuel Initiative, which focuses federal research on hydrogen fuel and fuel cells for stationary applications. The goal of these initiatives is to improve the competitiveness of hydrogen fuel cell vehicle technologies. However, fuel cell vehicles share many components with hybrid and pure electric vehicles. Thus, this research will likely promote advanced vehicle technologies in general. This report discusses four major vehicle technologies--electric vehicles, hybrid electric vehicles, plug-in hybrids, and fuel cell vehicles--as well as advanced component technologies. Each technology is discussed in terms of cost, fueling and maintenance infrastructure, and performance.

Prior to 1993, homosexuality was banned in the military under Department of Defense (DOD) regulations. The then-existing policy had been in place since the Carter Administration. During his campaign for the presidency, Bill Clinton promised that, if elected, he would "lift the ban." In response, Congress began considering legislation on the issue. Following his election, President Clinton implemented an interim policy seemingly suspending the existing policy until Congress could finish its work. Following a lengthy public consideration of the issue, Congress passed P.L. 103-160 , codified in 10 United States Code Section 654. This language codified the grounds for discharge from the military as follows: (1) the member has engaged in, attempted to engage in, or solicited another to engage in a homosexual act or acts; (2) the member states that he or she is a homosexual or bisexual; or (3) the member has married or attempted to marry someone of the same sex. In implementing the law, the Clinton Administration added language in regulations that went beyond the law and prohibited questioning military members and recruits about their sexuality. This policy became known as "Don't ask, Don't tell" or DADT. On January 27, 2010, during his State of the Union speech, President Obama stated his desire to work with Congress "to finally repeal the law that denies gay Americans the right to serve the country they love because of who they are." Shortly thereafter, on March 2, 2010, the Secretary of Defense appointed the Honorable Jeh Charles Johnson (General Counsel) and General Carter F. Ham to co-chair a working group to "undertake a comprehensive review of the impacts of repeal, should it occur, of Section 654 of Title 10 of the United States Code." The unidentified group formed to conduct this study became known as the Comprehensive Review Working Group or CRWG. The CRWG report was issued on November 30, 2010, although certain "findings" were leaked to the media before that date. Legislation was introduced ( H.R. 2965 ), modified, and after congressional passage, signed into law by President Obama as P.L. 111-321 on December 20, 2010, setting in motion the process for repealing Section 654, Title 10 United States Code and the "Don't Ask, Don't Tell" policy that was promulgated as a result of this law. According to P.L. 111-321 , repeal would take effect 60 days after the President, Secretary of Defense, and Chairman of the Joint Chiefs of Staff certify that they have "considered the recommendations contained in the CRWG report and the report's proposed plan of action," "the Department of Defense has prepared the necessary policies and regulations to exercise [the repeal of section 654, title 10 USC]," and; the policies and regulations pursuant to such a repeal are "consistent with the standards of military readiness, military effectiveness, unit cohesion, and recruiting and retention of the Armed Forces." The then-Secretary of Defense, Robert M. Gates, released a memorandum calling on DOD military and civilian leaders to deliver a plan for carrying out the repeal by February 4, 2011. This memorandum called for the creation of a Repeal Implementation Team (RIT) to develop plans for the repeal, update policies for publication following the repeal, train and prepare members of the force, and provide bi-weekly progress reports. (It is also noteworthy that the Pentagon would not keep statistics on gay service members.) The certification occurred on July 22, 2011. As a result, Section 654 and the DADT policy were repealed on September 20, 2011, 60 days after certification. According to reports, the Department of Defense decided on a three-tiered approach to implementing the repeal of DADT that focused on training and education of its personnel. Under this plan, tier one focused on those in senior leadership positions having to deal with the overall repeal process; this group includes military lawyers and chaplains. Tier two was for senior leadership who will oversee the education and training of troops in their commands. Finally, tier three was for the rank and file active duty, reserve component, and civilian defense employees. The enactment of P.L. 111-321 and subsequent DOD actions on DADT raise questions, including the following: What is the role of Congress in the oversight of the repeal process? Does DADT repeal apply to state National Guardsmen when not in federal service? What benefits are available to gay service members and their partners/dependents? Does the federal statute prohibiting the recognition of gay marriages create equal treatment issues? How will language in the Uniform Code of Military Justice, particularly the article prohibiting sodomy, be affected? Will a lack of federal language on the topic possibly allow administrative regulations prohibiting certain behaviors to be reinstated? This report will examine these issues. Under the Constitution, Congress has the authority "To make Rules for the Government and Regulation of the land and naval Forces." Congress, via its Members and committees, maintains oversight of the Armed Forces. It is the duty of the President to execute the laws and to draft the means of implementing these laws. In the case of the repeal of Section 654, Congress is removing the statutory language prohibiting open homosexuality and allowing the Administration to implement the rules and regulations, subject to this oversight. (Congress did not add new language to federal statutes.) Prior to the adoption of Section 654 (and the DADT policy), there were no federal statutes banning gay individuals from serving openly in the military. Instead, the ban was contained in various military regulations. Repeal of Section 654 returns to a situation in which there are no federal statutes regarding open service by gays. In this environment, it could theoretically be possible for this or any future Administration to draft regulations that resemble the pre-1993 ban or any number of similar restrictions. Some have suggested that it is necessary for Congress to go beyond repealing Section 654 and put into place statutory language that prevents a return to restrictions on service based on sexuality. Others dismiss the possible return to a gay ban as unlikely, particularly given such a change would be vulnerable to legal challenges, and therefore claim that the need for such legislation is unnecessary. Still others have noted that, lacking any prohibitions in law, it is possible for state governors to establish such rules for state National Guard members. Advocates for repeal of Section 654 suggested that Congress could go further in considering language that would prevent a governor from taking such actions. Concerns have also been expressed that such actions could potentially challenge or usurp a governor's authority when the National Guard is under state control. Congress may also respond to the repeal by exercising its oversight duties. For example, it could hold hearings, as well as propose legislative changes to laws/policies affected by the repeal of Section 654. To date, Congress has taken a number of actions: The House Armed Services Committee included the following proposed language in its version of the 2012 National Defense Authorization Act ( H.R. 1540 ): Section 533--Additional Condition on Repeal of Don't Ask, Don't Tell This section would amend the Don't Ask, Don't Tell Repeal Act of 2010 ( P.L. 111-321 ) to require the Chief of Staff of the Army, the Chief Naval Operations, the Commandant of the Marine Corps, and the Chief of Staff of the Air Force to submit to the congressional defense committees their written certification that repeal of the Don't Ask, Don't Tell law specified in section 654 of title 10, United States Code, will not degrade the readiness, effectiveness, cohesion, and morale of combat arms units and personnel of their respective armed force that are engaged in combat, deployed to a combat theater, or preparing for deployment to a combat theater. However, the final version of the National Defense Authorization Act did not contain this language. Other steps Members of Congress have taken include the following: During this repeal process, Representative Joe Wilson, chairman of the House Armed Services Committee's Military Personnel Subcommittee, stated that he planned to hold hearings on the repeal declaring it "'irresponsible' for Congress to repeal the ban on openly gay service without giving the House of Representatives time to hold hearings." To date, no hearings have been scheduled specifically on the topic of the repeal. On January 19, 2011, Representative Duncan Hunter introduced H.R. 337 , a bill that would amend P.L. 111-321 to expand the list of those needed to certify the repeal to include other members of the Joint Chief of Staff (JCS): the Chief of Staff of the Army, the Chief of Staff of the Air Force, the Chief of Naval Operations, and the Commandant of the Marine Corps. Supporters of H.R. 337 contend that it was important to have all military leaders in agreement and they have criticized relying on the certification of only three individuals who stated their support for repeal before the CRWG's work was underway. Opponents of H.R. 337 , and the earlier attempts to add similar language requiring the consent of the entire JCS viewed it as a "poison pill" given the hesitancy expressed by some JCS members during Senate Armed Services Committee hearings on DADT in December 2010. This bill was referred to the Committee on Armed Services without further action. According to a recent report, the chairman of the House Armed Services Committee, Representative Buck McKeon, "is seeking copies of the written assessments performed by each service about the impact of the policy change on recruiting, retention and readiness, which he believes could provide ammunition for an attempt to block the scheduled Sept. 20 date when the ban would lift once and for all." Again, it appears that this request has been overtaken by events with the repeal. With repeal of Section 654, Congress retains its oversight authority and may take other actions such as requesting reports or holding hearings with regard to the effects of repeal on military cohesion and effectiveness, disciplinary issues (such as any problems resulting from harassment or assault), and any regulatory changes that arise as a result of repeal, for example. A panoply of pay, benefits, and privileges are available to military personnel. Military dependents are also eligible to receive certain benefits and privileges as a result of their relationship with the military member. In certain cases, the description of the qualifying relationship exists in law. In other cases, a military member may be able to name a beneficiary or beneficiaries. Benefits based upon marriage could prove contentious with the repeal of Section 654. On September 21, 1996, the Defense of Marriage Act (DOMA) became law. Under this law, marriage is defined as the union between one man and one woman. The federal government, therefore, does not recognize same-sex marriages for the purpose of extending benefits and privileges, although several states do. Certain DOD benefits, such as Servicemembers Group Life Insurance (SGLI), require the service member to designate a recipient in the event of his or her death. In other cases, such as the Death Gratuity, the service member may designate a beneficiary. If the service member does not designate a beneficiary, then the law stipulates the beneficiary from a list, beginning with the spouse. The services may use this list to pay the first eligible beneficiary. In the case of a same-sex marriage, the spouse would not be recognized as an eligible beneficiary under this method because federal law does not recognize such marriages. Nevertheless, the military same-sex partner could opt to designate a beneficiary under the Death Gratuity. Other benefits, such as military health care, travel, survivor benefits, and military housing, explicitly designate, in law, who is an eligible beneficiary. In addition, policies on compassionate re-assignment and former spouse protection laws, for example, would not apply to same-sex couples. As a result of the DOMA and the explicit definitions of eligible beneficiaries in service statutes, a member of the military who is in a same-sex marriage will not be afforded the full benefits available to heterosexual couples. Other questions arise. For example, if a military same-sex couple adopts a child, arguably, the child would be eligible to attend DOD Dependent Schools. But the same-sex marriage would not be recognized in considerations for assignments, command-sponsored or otherwise. To go further, if the member dies in such a hypothetical case, the adopted child would be awarded the Death Gratuity ($100,000) unless the service member had explicitly designated the same-sex spouse as the beneficiary. Arguably, such varying treatment creates inequalities among service members that Congress or the courts may be asked to consider. In an effort to contend with the issue of variations in military benefits that may occur as the result of certain states recognizing same-sex marriages, it has been suggested that the most direct way to address the issue is to repeal DOMA. Over the years, various efforts have been made to repeal the law. Recent executive and legislative branch actions related to DOMA follow. In February 2011, Attorney General Eric Holder informed Congress that he considered DOMA to be "unconstitutional." He noted that Members of Congress could, if they wish, defend the law. Shortly after, language was introduced in the House and Senate supporting DOMA, and the Speaker of the House of Representatives, Representative John Boehner, announced that former Solicitor General Paul Clement would represent the House in its defense of DOMA. In February 2012, Attorney General Holder wrote in a letter to House Speaker John A. Boehner, "that the Justice Department shared the view of plaintiffs in a lawsuit in Massachusetts that such laws--including a part of the Defense of Marriage Act, and statutes governing veterans' benefits are unconstitutional." On April 13, 2011, Navy Chief of Chaplains Rear Admiral M. L. Tidd announced a change in policy allowing same-sex marriages to be performed in Navy Chapels. Following criticism by certain Members of Congress, on May 11, 2011, this policy change was "suspended." The House Armed Services Committee has included the following proposed language in its version of the 2012 National Defense Authorization Act ( H.R. 1540 ): Section 534--Military Regulations Regarding Marriage This section would affirm the policy of Section 3 of the Defense of Marriage Act (1 U.S.C. 7) that the word 'marriage' included in any ruling, regulation, or interpretation of the Department of Defense applicable to a service member or civilian employee of the Department of Defense shall mean only a legal union between one man and one woman. Section 535--Use of Military Installations as Site for Marriage Ceremonies and Participation of Chaplains and Other Military and Civilian Personnel in their Official Capacity This section would establish that marriages performed on DOD installations or marriages involving the participation of DOD military or civilian personnel in an official capacity, to include chaplains, must comply with the Defense of Marriage Act (1 U.S.C. 7), which defines marriage as only the legal union between one man and one woman. These sections were not included in the final version of the bill as passed. And lastly, the House Appropriations Committee included language in H.R. 2219 , its proposed FY2012 DOD Appropriations Act, stating, "No funds under the act may be used for activities in contravention of Section 7 of title 1, United States Code (the Defense of Marriage Act)." Section 7 of Title 1, U.S.C., defines marriage as the union of one man and one woman, and states that the term spouse refers to someone of the opposite sex. This language was not enacted. Senate versions of these bills did not contain similar language. The Senate version included the sentence, "A military chaplain who, as a matter of conscience or moral principle, does not wish to perform a marriage may not be required to do so." This language was enacted into law. Section 533 of the National Defense Authorization Act for Fiscal Year 2013 contains language protecting members of the military and chaplains from adverse personnel actions based on their conscience, moral principles, or religious beliefs. Under such language, chaplains cannot be compelled to perform same-sex marriages if such duties are not within their moral or religious beliefs. However, this raises the question as to whether chaplains can perform same-sex marriages in accordance with their beliefs at military facilities, without adverse personnel actions, if such unions are not recognized under DOMA? The issues of privacy and cohabitation were addressed by the CRWG, which recommended against segregated housing for gay and lesbian service members: Accordingly, we recommend that the Department of Defense expressly prohibit berthing or billeting assignments based on sexual orientation, except that commanders should retain the authority to alter berthing or billeting assignments on an individualized case-by-case basis, in the interest of maintaining morale, good order, and discipline, and consistent with performance of mission. In the report, the CRWG received comments from service members regarding privacy and cohabitation. Although the CRWG recommended commanders make such berthing and billeting decisions based on military interests, the recommendation allows for "case-by-case" considerations. The CRWG was concerned that separate facilities would lead to stigmatizing gays and lesbians, citing the "separate, but equal" treatment of blacks. However, privacy and cohabitation issues remain. For example, a same-sex couple could receive billeting or berthing assignments that would allow them to remain together, whereas such arrangements would not be considered for opposite-sex couples who are not married. Congressional treatment of sodomy in the military context has varied over time. In 1917, the Articles of War of 1916 were implemented prohibiting "assault with the intent to commit any felony, or assault with the intent to do bodily harm." In 1919, following revelations of "inappropriate behavior" among naval personnel in Newport, RI, then Assistant Secretary of the Navy Franklin D. Roosevelt organized a group of enlisted men to submit to "immoral acts" as part of the investigation. However, because the men submitted, charges involving "assault" did not apply as specified under the Articles of War. In 1920, Congress prohibited the act of sodomy itself. Later, Congress created the Uniformed Code of Military Justice (UCMJ) and included the sodomy provision as Article 125. Article 125 of the UCMJ prohibits sodomy: (a) Any person subject to this chapter who engages in unnatural carnal copulation with another person of the same or opposite sex or with an animal is guilty of sodomy. Penetration, however slight, is sufficient to complete the offense. (b) Any person found guilty of sodomy shall be punished as a court-martial may direct. However, the CRWG recommended that Congress repeal Article 125 in a manner consistent with the Supreme Court decision in Lawrence v. Texas . Although the Lawrence decision did not address the military context, the court did strike down as unconstitutional a state law that prohibited private consensual homosexual sodomy. Other acts involving sodomy, such as forcible sodomy, sodomy involving minors, or where it is "service discrediting," could be prosecuted under Articles 120, "Rape and carnal knowledge," or 134, "The General Article." The General Article states: Though not specifically mentioned in this chapter, all disorders and neglects to the prejudice of good order and discipline in the armed forces, all conduct of a nature to bring discredit upon the armed forces, and crimes and offenses not capital, of which persons subject to this chapter may be guilty, shall be taken cognizance of by a general, special, or summary court-martial, according to the nature and degree of the offense, and shall be punished at the discretion of that court. Legislative provisions have been included in the Senate version of the FY2012 National Defense Authorization Act that would repeal the crime of sodomy under the UCMJ (Article 125) and expand Article 120 ("Rape and Carnal Knowledge") to include three sections applying to (1) rape and assault against any person, (2) sexual offenses against children, and (3) other non-consensual sexual misconduct. According to the Senate Armed Services Committee report: "All offenses previously punishable as forced sodomy under this statute would be punishable under the proposed changes to Article 120, UCMJ." This language was not included in the final version of the law. However, had Art. 125 been repealed, consensual sodomy could not be prosecuted. In some ways, this change would have returned prosecution of sodomy to the pre-1920s situation where sexual behavior could only be prosecuted if force was used or an assault occurred such as rape, except for those behaviors covered under the mentioned General Article. The act of sodomy itself would no longer have existed as a separate crime under the Uniformed Code of Military Justice. Although Art. 125 remains in effect, prosecutions for "consensual" sodomy have not been reported; rather, cases involving 'forced' sodomy have been reported as being enforced. The repeal of Section 654 has encouraged some to advocate for other changes to the law and/or military policy. Activists have complained that despite the repeal, the military discriminates against transgender individuals. The term transgender, which encompasses a broad range of sexual identities and behaviors, applies to individuals whose gender identity does not conform to their assigned sex at birth. The president of the Transgender American Veterans Association says that with the repeal of the military's ban on open service by gays, transgender and transsexuals are 'the last minority that the Defense Department can and does discriminate against.' ... Opponents of repealing the military's 'don't ask, don't tell' policy on gays have mentioned - usually in an effort to prevent repeal - the possibility that transvestites and transgender people would also have to be accepted. Based on military fitness policies, individuals who have a history of mental disorders that, in the opinion of the medical examiner, would interfere with or prevent satisfactory performance of military duties are not allowed to serve. Among the disorders cited are "sexual and gender identity disorders." (These disorders are listed in the International Classification of Diseases, 9 th Revision, Clinical Modification or ICD-9-CM, 302.) At one time, homosexuality was listed as a psychiatric disorder, but this was removed from the Diagnostic and Statistical Manual (DSM) in 1973. The 1973 decision to make the change concerning the removal of homosexuality from the DSM as a mental disorder was contentious among its members. Any similar change concerning transgender individuals by the APA, or successful court challenges, could affect military policies. (DSM and ICD have merged their codes.) In one example, following the passage of P.L. 111-321 establishing the process of repealing Section 654, a few college/university campus activists have used the "transgender discrimination" argument as a reason for continuing to block military service recruiters or Reserve Officer Training Corps (ROTC) programs from campus. However, there seems to be little evidence of this issue having adverse effects on military-academia relations. (In the past, those institutions that discriminate against the military by denying ROTC or recruiter access were to be reported in the Federal Register . A repeal of reporting requirements for schools that deny ROTC or recruiter access was contained in the National Defense Authorization Act for Fiscal Year 2013, Section 586.) With the enactment of P.L. 111-321 , and following the waiting period, Section 654 is repealed. However, Congress, the Department of Defense, and perhaps the courts may be presented with additional issues to consider. As a result, the final resolution to these additional issues may extend well beyond the repeal of Section 654 of Title 10, United States Code.

On December 22, 2010, President Obama signed P.L. 111-321 into law. It called for the repeal of the existing law (Title 10, United States Code, SS654) barring open homosexuality in the military by prescribing a series of steps that must take place before repeal occurs. One step was fulfilled on July 22, 2011, when the President signed the certification of the process ending the Don't Ask, Don't Tell policy, which was repealed on September 20, 2011. However, in repealing the law and the so-called "Don't Ask, Don't Tell" policy, a number of issues have been raised, but were not addressed by P.L. 111-321. This report considers issues that Congress may wish to consider regarding matters arising as a result of the repeal of SS654. Under the Constitution, Congress has the authority for making "rules for the government and regulation" of the military services. It has been suggested that Congress could hold hearings concerning such matters as the anticipated changes in other laws regarding military benefits, for example. Issues for consideration include, but are not limited to, congressional oversight of the repeal process, differences in benefits and privileges some individuals may experience (especially differences created under the Defense of Marriage Act), changes involving sodomy prohibitions, and efforts by some to expand the repeal to include transgender individuals. Certain military benefits and privileges are extended to spouses as defined by law. Under the Defense of Marriage Act, the federal government recognizes marriage as the union of one man and one woman. However, certain states recognize same-sex marriages. Thus, it is possible for a same-sex couple to be legally married but not eligible for certain military benefits and privileges. Laws prohibiting sodomy (defined as "unnatural carnal copulation") in the military context have varied over time. There existed proposed language in the Senate version of the National Defense Authorization Act in the 112th Congress that would remove sodomy from the Uniformed Code of Military Justice, effectively decriminalizing sodomy. Similar language did not exist in the House version. This language was not included in the final law. Instead, use of the term "forced" sodomy has been cited suggesting violations involving "consensual" sodomy will not be enforced. The repeal of the ban on homosexual behavior has encouraged some to expand efforts to end discrimination against transgender individuals. Based on military fitness policies, individuals who have a history of mental disorders that, in the opinion of the medical examiner, would interfere with or prevent satisfactory performance of military duties are not allowed to serve. Among the disorders cited are "sexual and gender identity disorders." (These disorders are listed in the International Classification of Diseases, 9th Revision, Clinical Modification or ICD-9-CM, 302.) At one time, homosexuality was listed as a psychiatric disorder, but this was removed from the Diagnostic and Statistical Manual (DSM) in 1973. Some have argued that other "gender disorders" should also be removed. Along these lines, advocates believe it is unfair for the military to continue to discriminate against these individuals. Others, however, believe that until the DSM and ICD-9-CM are changed, such individuals should continue to be barred from serving.

Many Members of Congress see continued tension between "free speech" decisions of the Supreme Court, which protect flag desecration as expressive conduct under the First Amendment, and the symbolic significance of the United States flag. Consequently, every Congress that has convened since those decisions were issued has considered measures to permit the punishment of those who engage in flag desecration. This report is divided into two parts. The first gives a brief history of the flag protection issue, from the enactment of the Flag Protection Act in 1968 through current consideration of a constitutional amendment. The second part briefly summarizes the two decisions of the United States Supreme Court, Texas v. Johnson and United States v. Eichman , that struck down the state and federal flag protection statutes as applied in the context punishing expressive conduct. In 1968, in the midst of the Vietnam conflict, Congress enacted the first Federal Flag Protection Act of general applicability. The law was occasioned by the numerous public flag burnings in protest of the war. For the next 20 years, the lower courts upheld the constitutionality of the federal statute and the Supreme Court declined to review these decisions. However, during the 20-year period between enactment of the Flag Protection Act and its Johnson decision, the Supreme Court did visit the flag issue three times. Each time the Court found a way to rule in favor of the protestor and overturn a state conviction on very narrow grounds, avoiding a definitive ruling on the constitutionality of convictions for politically inspired destruction or alteration of the American flag. In Street v. New York , the Court overturned a state conviction for flag-burning, holding that the flag-burner was prosecuted for his words rather than his acts. In 1974, the Court overturned a prosecution by finding that the state statute was vague. In Spence v. Washington , the Court held that the taping of a peace symbol to a flag was expressive conduct and thus protected by the First Amendment. In both of these later cases the Court expressly referred to the federal statute in a positive manner. It was against this background that the Supreme Court took the Johnson case. In 1984, during the Republican National Convention in Dallas, TX, Johnson had participated in a demonstration protesting the policies of the Reagan Administration. In front of the city hall, Johnson unfurled an American flag, which another member of the demonstration had taken from a flag pole and had given to him, doused it with kerosene, and set it on fire. He was charged with the desecration of a venerated object in violation of a Texas statute. Johnson was tried, convicted, and sentenced to one year in prison and fined $2,000. The conviction was upheld by the Court of Appeals of the Fifth District of Texas at Dallas. The Texas Court of Criminal Appeals reversed. In a 5 to 4 decision, the U.S. Supreme Court affirmed this reversal on June 21, 1989, thus, in effect, holding that the flag protection statutes of 47 states and the federal statute could not be applied to a flag burning that was part of a public demonstration. In response to this decision, Congress enacted the Flag Protection Act of 1989. The act changed the focus of the protection granted the flag from protecting it against desecration, which the Court had ruled unconstitutional, to protecting its physical integrity. The primary purpose of amending the federal desecration statute was to remove any language which the courts might find made the statute one that was aimed at suppressing a certain type of expression. If the statute was neutral as to expression--for instance, if it proscribed all burning of flags--then, its proponents argued, the statute's prohibitions might be judged under the constitutional test enunciated by the Court in United States v. O ' Brien. Under the O ' Brien test, which is less strict than First Amendment standards applied in expression cases, the government need only show that the statute furthers an important or substantial governmental interest, and that the restriction on First Amendment freedoms is no greater than is essential to the furtherance of that interest. All of the opinions in Johnson had recognized a governmental interest in protecting the physical integrity of the flag to some degree. Therefore, it was at least arguable that such a neutral statute would meet the second part of the test. The new statute made criminal intentionally mutilating, defacing, physically defiling, burning, maintaining on the floor or ground, or trampling upon the flag of the United States. Exemption was given for conduct consisting of disposal of a worn or soiled flag. The term "flag of the United States" was defined to mean any flag of the United States, or any part thereof, made of any substance, of any size, in a form that is commonly displayed. Provision was made for expedited Supreme Court review of the constitutionality of the act. The Flag Protection Act of 1989 became effective on October 28, 1989. On that date protesters in Seattle, WA, and Washington, DC, were arrested for violation of the new act. These cases were dismissed upon findings that the act was unconstitutional as applied to their burning a United States flag in a protest context. The D.C. and Seattle cases were appealed to the Supreme Court under the act's expedited review provision. On June 11, 1990, the Court announced its ruling. In another 5 to 4 decision, the Court held that the Flag Protection Act of 1989 could not be constitutionally applied to a burning of the flag in the context of a public protest. In the summer of 1990, both houses of Congress considered and failed to pass by the required two-thirds vote an amendment to the Constitution which would have empowered Congress to enact legislation to protect the physical integrity of the flag. In six of the last eight Congresses, the House passed proposed constitutional amendments which would have authorized Congress to enact legislation to protect the flag from physical desecration. In the 104 th Congress, the Senate considered a "flag" amendment, but came three votes short of passing it. In the 106 th Congress, S.J.Res. 14 failed, by a vote of 63-37, to receive the necessary two-thirds vote in the Senate. In the 109 th Congress, S.J.Res. 12 failed by a vote of 66 to 34 (one vote short of the necessary two-thirds required for passage). There were no "flag" amendment votes in the Senate in the 105 th , 107 th , 108 th ,110 th , , or 111 th Congresses. In the 112 th Congress, an amendment to the Constitution of the United States to prohibit desecration of the flag has been introduced in both the House and the Senate. H.J.Res. 13 proposes an amendment to the Constitution of the United States which would authorize the Congress to prohibit the physical desecration of the flag of the United States. On Flag Day of 2011, Senator Hatch introduced an identical bill, S.J.Res. 19 , in the Senate. Should Congress approve a proposed flag protection amendment by the required two-thirds majority of each house, the amendment would only become effective upon ratification by the legislatures of three-fourths of the states. In Texas v. Johnson , the majority of the Court held that Johnson's conviction for flag desecration, under a Texas statute, was inconsistent with the First Amendment and affirmed the decision of the Texas Court of Criminal Appeals that held that Johnson could not be punished for burning the flag as part of a public demonstration. The opinion outlined the questions to be addressed in a case where First Amendment protection is sought for conduct rather than pure speech. First, the Court must determine if the conduct in question is expressive conduct. If the answer is yes, then the First Amendment may be invoked, and the second question must be answered. The second question is whether the state regulation of the conduct is related to the suppression of expression. The answer to this question determines the standard which will be utilized in judging the appropriateness of the state regulation. The test of whether conduct is deemed expressive conduct sufficient to bring the First Amendment into play is whether an intent to convey a particularized message was present, and whether the likelihood was great that the message would be understood by those who viewed it. The opinion emphasized the communicative nature of flags as previously recognized by the Court, but stated that not all action taken with respect to the flag is automatically expressive. The context in which the conduct occurred must be examined. The majority found that Johnson's conduct met this test. The burning of the flag was the culmination of a political demonstration. It was intentionally expressive, and its meaning was overwhelmingly apparent. In these circumstances the burning of the flag was conduct "sufficiently imbued with elements of communication" to implicate the First Amendment. The finding that burning the flag in this circumstance was expressive conduct required the Court next to look at the statute involved to see if it was directly aimed at suppressing expression or if the governmental interest to be protected by the statute was unrelated to the suppression of free expression. If the statute were of the latter type, the government would need only show that it furthered an important or substantial governmental interest, and that the restriction on First Amendment freedoms was no greater than is essential to the furtherance of that interest. If the statute was aimed at suppression of expression, then it could be upheld only if it passed the most exacting scrutiny. Texas offered two state interests which it sought to protect with this statute: prevention of breaches of the peace; and preservation of the flag as a symbol of nationhood and national unity. The majority rejected the first of these interests as not being implicated in the facts of this case. No disturbance of the peace actually occurred or was threatened. The opinion also pointed out that Texas had a statute specifically prohibiting breaches of the peace, which tended to confirm that flag desecration need not be punished to keep the peace. The second governmental interest, that of preserving the flag as a symbol of national unity, was found by the majority to be directly related to expression in the context of activity. The Texas law did not cover all burning of flags. Rather it was designed to protect the flag only against abuse that would be offensive to others. Whether Johnson's treatment of the flag was proscribed by the statute could only be determined by the content of his expression. Therefore, an exacting scrutiny standard of review had to be applied to the statute. The majority held that the Texas statute could not withstand this level of scrutiny. There is no separate constitutional category for the American flag. The government may not prohibit expression of an idea merely because society finds the idea offensive, even when the flag is involved. Nor may a state limit the use of designated symbols to communicate only certain messages. The Court, in reviewing the Flag Protection Act of 1989 in United States v. Eichman , expressly declined the invitation to reconsider Johnson and its rejection of the contention that flag-burning as a mode of expression, like obscenity or "fighting words," does not enjoy the full protection of the First Amendment. The only question not addressed in Johnson , and therefore the only question the majority felt necessary to address, was "whether the Flag Protection Act is sufficiently distinct from the Texas statute that it may constitutionally be applied to proscribe appellees' expressive conduct." The government argued that the governmental interest served by the act was protection of the physical integrity of the flag. This interest, it was asserted, was not related to the suppression of expression, and the act contained no explicit content-based limitations on the scope of the prohibited conduct. Therefore the government should only need to show that the statute furthers an important or substantial governmental interest, and that the restriction on First Amendment freedoms is no greater than is essential to the furtherance of that interest. The majority, while accepting that the act contained no explicit content-based limitations, rejected the claim that the governmental interest was unrelated to the suppression of expression. The Court stated: The Government's interest in protecting the "physical integrity" of a privately owned flag rests upon a perceived need to preserve the flag's status as a symbol of our Nation and certain national ideals. But the mere destruction or disfigurement of a particular physical manifestation of the symbol, without more, does not diminish or otherwise affect the symbol itself in any way. For example, the secret destruction of a flag in one's own basement would not threaten the flag's recognized meaning. Rather, the Government's desire to preserve the flag as a symbol for certain national ideals is implicated "only when a person's treatment of the flag communicates [a] message" to others that is inconsistent with those ideals. In essence the Court said that the interest protected by the act was the same interest which had been put forth to support the Texas statute and rejected in Johnson . The opinion went on to analyze the language of the act itself. Again, while there was no explicit limitation found in this language, the majority found that each of the specified terms, with the possible exception of "burns," unmistakably connoted disrespectful treatment of the flag and thus could not be viewed as neutral as to expression. Therefore, although the act was "somewhat broader" than the Texas statute, it still suffered from the same fundamental flaw, namely it suppressed expression out of concern for its likely communicative impact. This being the case, the majority found that the O ' Brien test was inapplicable and the act must be subject to "the most exacting scrutiny." As in Johnson , the statute in question could not withstand this level of scrutiny.

This report is divided into two parts. The first gives a brief history of the flag protection issue, from the enactment of the Flag Protection Act in 1968 through current consideration of a constitutional amendment. The second part briefly summarizes the two decisions of the United States Supreme Court, Texas v. Johnson and United States v. Eichman, that struck down the state and federal flag protection statutes as applied in the context punishing expressive conduct. In 1968, Congress reacted to the numerous public flag burnings in protest of the Vietnam conflict by passing the first federal flag protection act of general applicability. For the next 20 years, the lower courts upheld the constitutionality of this statute and the Supreme Court declined to review these decisions. However, in Texas v. Johnson, the majority of the Court held that a conviction for flag desecration under a Texas statute was inconsistent with the First Amendment and affirmed a decision of the Texas Court of Criminal Appeals that barred punishment for burning the flag as part of a public demonstration. In response to Johnson, Congress passed the Flag Protection Act of 1989. But, in reviewing this act in United States v. Eichman, the Supreme Court expressly declined the invitation to reconsider Johnson and its rejection of the contention that flag-burning, like obscenity or "fighting words," does not enjoy the full protection of the First Amendment as a mode of expression. The only question not addressed in Johnson, and therefore the only question the majority felt necessary to address, was "whether the Flag Protection Act is sufficiently distinct from the Texas statute that it may constitutionally be applied to proscribe appellees' expressive conduct." The majority of the Court held that it was not. Many Members of Congress see continued tension between "free speech" decisions of the Supreme Court, which protect flag desecration as expressive conduct under the First Amendment, and the symbolic importance of the United States flag. Consequently, every Congress that has convened since those decisions were issued has considered proposals that would permit punishment of those who engage in flag desecration. In six of the last eight Congresses, the House passed proposed constitutional amendments which would have authorized Congress to enact legislation to protect the flag from physical desecration. In the 104th Congress, the Senate considered a "flag" amendment, but came three votes short of passing it. In the 106th Congress, S.J.Res. 14 failed, by a vote of 63-37, to receive the necessary two-thirds vote in the Senate. In the 109th Congress, S.J.Res. 12 failed by a vote of 66 to 34 (one vote short of the necessary two-thirds required for passage). There were no "flag" amendment votes in the Senate in the 105th, 107th, 108th, 110th, or 111th Congresses. In the 112th Congress, an amendment to the Constitution of the United States to prohibit desecration of the flag has been introduced in both the House and the Senate. H.J.Res. 13 proposes an amendment to the Constitution of the United States which would authorize Congress to prohibit the physical desecration of the flag of the United States. An identical bill, S.J.Res. 19, has been introduced in the Senate.

T he Consolidated Appropriations Act of 2016 ( P.L. 114-13 ) made several changes to the tax treatment of Real Estate Investment Trusts (REITs) and the Foreign Investment in Real Property Tax Act (FIRPTA, enacted in the Omnibus Reconciliation Act of 1980, P.L. 96-499 ) as it relates to REITs. REITs are corporations that issue shares of stock, are largely invested in real property, and do not generally pay corporate tax. REITs distribute and deduct most of their earned income as dividends to shareholders. U.S. individual shareholders pay tax at ordinary individual income tax rates on those dividends, rather than the lower rates that normally apply to dividends on corporate stock. Also, FIRPTA imposes a capital gains tax on foreign investments for gains related to real estate, with an exception for a 5% or less ownership of a REIT. The Consolidated Appropriations Act enacted three types of changes to the rules regarding REITs: (1) provisions to prevent tax-free spin-offs of real property into tax-exempt REITs by currently taxable, operating corporations; (2) provisions to increase foreign investment in U.S. REITs by liberalizing FIRPTA rules; and (3) a series of technical revisions to REITs that had been under consideration for some time. Additional modifications to REIT provisions might still be considered in the future if general tax reform is considered. For instance, the REIT provisions proposed in former Ways and Means Chairman Camp's proposed Tax Reform Act of 2014 ( H.R. 1 , 113 th Congress) were generally more restrictive and raised more revenue than the provisions in the Consolidated Appropriations Act. Moreover, other changes made in a tax reform might affect the relative advantage of REITs. This report describes REITs and FIRPTA, provides historical developments, presents an overview of REIT size and activity, explains the provisions in the Consolidated Appropriations Act, and discusses possible policy issues in the future. A REIT is a real estate company that would otherwise be taxed as a corporation, except that it meets certain tests and faces a number of restrictions. These requirements and restrictions are listed in Table 1 . Its primary business is ownership of real estate assets. Unlike ordinary corporations, REITS generally face little or no corporate level tax because distributions to shareholders are treated as deductible expenses. To qualify, a REIT must meet a number of tests, including having at least 75% of its assets and gross income in real estate and distributing at least 90% of profits to shareholders. Dividends paid to individual shareholders are taxed at ordinary individual income tax rates (rather than the lower rates that generally apply to dividends). Basically a REIT is taxed similarly to a partnership in many ways, which is subject to the individual income tax, and largely avoids the corporate-level tax. REITs have a number of restrictions that require concentration of their assets in passive investments, primarily real estate, and ensure broad ownership. The allowance for taxable REIT subsidiaries adopted in 1999, however, has expanded the scope for REITs to operate properties. Over time, the rules governing REITs have been relaxed, both by legislative and regulatory changes, to allow more involvement not just in holding real estate assets, but also in managing properties and services. REITs were originally designed to be passive real estate owners (if they did not simply own mortgages), with properties operated by others. The Tax Reform Act of 1986 allowed REITs to perform customary services and, thus, to operate their properties directly rather than to employ independent contractors. Legislation in the late 1990s, especially allowing taxable REIT subsidiaries, also expanded the scope of operations. Taxable REIT subsidiaries also introduced the possibility of reducing taxes by shifting profits into the REIT parent through higher than market rents, an effect for which some evidence was found (although such transactions are subject to a 100% penalty). These and other changes expanded the scope of assets organized as REITs. Prior to the 2015 legislation and following a regulatory change in 2001, corporations have been able to spin off their real estate assets into a separate REIT through a tax-free reorganization. The number of firms spinning off their properties or considering doing so has been growing. One of the changes in the Consolidated Appropriations Act was to restrict this practice. REITs are organized as equity, mortgage, or hybrid REITs, depending on whether they hold real estate, mortgages, or a combination of both. Today, most REITs are equity REITs. REITs fall into three classes as far as regulation and trading: (1) public REITs traded on the stock exchange, (2) public REITs not traded on the stock exchange but subject to registration with the Securities and Exchange Commission (SEC), and (3) private REITs. REITs are subject to a number of other restrictions and rules. REITs were intended to have passive investments in real estate assets and not to hold property for sale to customers in the ordinary course of business (as a developer would). Gain from these sales would be considered sale of inventory. Such income is not classified as qualified real estate income and there is a 100% prohibited transactions tax on such gain. This tax does not apply to property obtained through foreclosure and there are safe harbors from the tax including limits on the size of the sale and a holding period of two years. In general, a foreign person or corporation is not taxed on U.S. source capital gains income. However, if the income is from selling U.S. real property, the distribution is taxed at the same rates as a U.S. person under the Foreign Investment in Real Property Tax Act (FIRPTA). The FIRPTA rules, adopted in 1980, considered investment in real property to be income effectively connected to business, which is generally subject to U.S. taxes. There is an exception if (1) the investment is made through a qualified investment entity; (2) the U.S. real property is regularly traded on an established U.S. securities market; and (3) the recipient foreign person or corporation did not hold more than 5% of that class of stock or beneficial interest within the one-year period ending on the date of distribution. The American Jobs Creation Act of 2004 ( P.L. 108-357 ) extended the exception to cover capital gains distributions as well as stock sales. Due to a concern that FIRPTA rules discouraged investment in REITs by foreign persons, liberalizing FIRPTA was also included in the Consolidated Appropriations Act. As mentioned above, REITs have changed significantly over time, beginning largely as entities that passively held real estate mortgages, then becoming largely entities holding standard real properties (e.g., apartments and commercial properties) directly, and more recently expanding into entities holding nontraditional assets (such as prisons, timber, billboards, and cell towers). Recent periods have also been marked by a number of tax-free spin-offs of real property of operating corporations, so that their real property was now in a separate tax-exempt REIT. Shortly after the first corporate income tax was introduced in 1909, a Supreme Court Case in 1911, Eliot v. Freeman , ruled that real estate trusts were not taxable entities for purposes of the tax. The issue subsequently came into question again. In 1935, the Supreme Court, in Morrisy v. Commission er , ruled that realty trusts were corporations subject to the corporate tax. (The Court also ruled that RICs were subject to the corporate tax as well, although these firms applied for relief from Congress and received it.) REITs, largely experiencing losses during the depression, and thus not affected by the tax, made no appeals to reverse the treatment through legislation, and most were eventually liquidated. Those that remained appealed to Congress in 1955, but in 1956 President Eisenhower vetoed the first real estate investment trust bill. His veto message contained two reasons for rejecting the legislation. First, he noted that REITs were different from regulated investment companies whose income was derived from the securities of corporations already subject to the tax and thus were not comparable to REITs, who would pay no corporate tax. Secondly, he expressed concern that the provision, although aimed at a small number of trusts, could expand to many other real estate corporations and erode the corporate base. A REIT proposal in 1958 was incorporated into legislation but dropped in conference. Eventually, legislation allowing for REITs that were exempt from the corporate-level tax on distributions was added to the Cigar Excise Tax Act of 1960. The reasons given by legislators were the need for real estate financing due to economic conditions at that time and the creation of a vehicle to allow taxpayers of more modest means to invest in real estate. In addition, the Treasury, which had initially objected to the legislation, withdrew those objections after the resignation of Dan Throop Smith, Under Secretary of Treasury for Tax Policy, who opposed the REIT legislation. REITs were more restricted in the early years than they are today, especially with respect to REITs providing tenant services and taking a more active role in operating properties. REITs were first listed on the stock exchange in 1965, were allowed to acquire and temporarily operate foreclosed property in 1974, and first allowed to organize as corporations in 1976. During the early years, REITs were largely mortgage REITs. By 1971, public equity REITs constituted 22% of total public REIT value (with the remainder about evenly divided between mortgage REITs and hybrids); today they constitute more than 90% of the total and hybrids have virtually disappeared. The growth in equity REITS was in part due to changes in the Tax Reform Act of 1986 which allowed REITs to both own and manage property. Prior to that act, REITs could not provide services to tenants; the 1986 act allowed the provision of customary services, such as heat, light, and trash collection. The first UPREITs, in which a partnership (umbrella partnership) is formed with the REIT as a general partner, were offered in 1992; this structure avoided recognition of capital gains on conversion of debt to equity. In 1993, the five-or-fewer ownership rule was liberalized by counting pensions as multiple investors, reflecting pension beneficiaries. This change made it easier for pension plans to invest in REITs. In 1996, Internal Revenue Service (IRS) guidance began expanding the type of services REITs could provide, beginning with cable television. During the past years, beginning in the late 1990s, REITs began to expand in scope and size, in part due to legislative and regulatory changes. The REIT provisions of the Taxpayer Relief Act of 1997 ( P.L. 105-34 ) expanded the types of services that REITs could offer without being disqualified and made changes that allowed timber REITs. The first timber REIT, Plum Creek, appeared in 1999. In addition, in 1999, taxable REIT subsidiaries were first allowed. These taxable subsidiaries allowed REITs to actively manage and operate properties and provide services beyond customary tenant services. The 1999 legislation also reduced the required distribution from 95% to 90%. In 2004, legislation allowed REITs that violated rules to address them and pay a penalty rather than lose REIT status. In 2008, health care REITs (e.g., REITs that hold assets such as nursing homes) were allowed taxable subsidiaries. In 2001, the IRS held in Revenue Ruling 2001-29 that rental activity was an active business (reflecting changes that expanded the scope of REIT activity), which allowed firms to spin off their real estate assets in a tax-free reorganization. Following this ruling, Georgia Pacific spun off a timber REIT subsidiary, which then merged with Plum Creek to create a Fortune 500 company. Through a series of private letter rulings, IRS also ruled that assets such as billboards, electrical distribution systems, security components, fire protection systems, telecommunications systems, and data storage are real property. Note, however, that related items that might be thought of as nontraditional had long been allowed as real property, including television towers (General Counsel Memorandum 32907, September 1, 1964), railroad property (Revenue Ruling 69-94, in 1969), and microwave towers (Revenue Ruling 75-424). These later rulings led to growth of conversions of parts of ordinary corporations into tax-exempt REIT conversions, spurring concerns about erosion of the corporate base that ultimately led to legislative proposals. Another change in this era that might have adversely affected REITs was the reduction of the tax rate on dividends from ordinary rates to a 15% rate (or zero rate in some cases) in 2003. This change reduced the relative tax advantage of REITs because REIT dividends continued to be taxed at ordinary rates. In 2013, the top rate on dividends (and capital gains) was increased to 20% for high-income taxpayers. Tax law has in some cases encouraged and in others discouraged investment in REITs by foreigners. In 1980, Congress enacted the FIRPTA provisions, which imposed capital gains taxes and a capital gains withholding tax on real estate investments, including those made through REITs. There was an exception for sale of REIT stock of publicly traded U.S. real estate corporations by owners with a 5% or less share. Its general rationale was to equalize the treatment of foreign and domestic investors, although it was also partly in response to concerns about purchases of U.S. farm land by foreign investors. In 1997, amid concerns about the doubling of the 15% withholding tax rate on dividends paid by REITs to foreign investors (the standard withholding rate in the absence of a treaty provision is 30%), the rate in the Model U.S. Tax Convention was set at 15% for investors with a 5% or less interest in a publicly traded REIT or a 10% or less interest in a diversified REIT. In 2003, a U.S.-UK treaty provided no dividend withholding taxes for UK pension funds (for REIT investments, so long as the pension plan owned 10% of less of the REIT), and this provision was later extended to other treaties. The 2004 tax legislation (the American Jobs Creation Act) allowed an exemption from capital gains tax for capital gains distributions to foreign REIT investors with a 5% or less share of the firm. The National Association of Real Estate Investment Trusts (NAREIT), as of November 2015, estimates the current market capitalization of public REITs at $935 billion. Equity REITs (i.e., REITs that invest in property rather than mortgages) account for 94% or the total ($875 billion). REITs traded on the stock market account for 95% of public REITs ($890 billion). These REITs own $1.8 trillion of real estate. In 2014, public traded REITS paid $42 billion in dividends, and public non-traded REITs paid $4 billion. On average, 67% of the annual dividends paid by REITs qualify as ordinary taxable income, 17% qualify as return of capital, and 16% qualify as long-term capital gains. NAREIT data do not include private REITs, but they appear to be worth less than $100 billion. The tax benefits from a REIT vary depending on the taxpayer's circumstances. From a tax perspective, tax-exempt investors have the largest benefit from REIT treatment compared with treatment as a regular corporation because they have a zero personal level tax and are not subject to the unrelated business income tax. Without REIT treatment, income would be subject to a 35% corporate tax rate. An individual investor with a high tax rate investor who receives all income in dividends would pay a tax of 50.47% with a regular corporate investment (a 35% corporate tax and a 23.8% individual level tax, including the 39.6% income tax and the additional 3.8% tax enacted in the Affordable Care Act, on the remaining profit of 65%). With REIT treatment, dividends would be taxed at 39.6% plus the 3.8% tax, which is a 7.17 percentage point difference. (For earnings received as capital gains the difference is greater.) For an investor in an ordinary corporate firm that pays little or no dividends and where gains are not realized, the tax rate for a REIT can be higher than for an ordinary corporation: 43.4% (39.6% plus 3.8%) versus 35%. In general, therefore, for individual taxpayers, REIT tax treatment is most advantageous when ordinary individual income tax rates are low and the investor prefers dividend payouts. Although data on ownership of shares are not consistently available, evidence does not suggest that tax-exempt investors invest heavily in REITs. According to one study, defined benefit (DB) pension fund holdings in REITs were 0.6% of their portfolios. DB and other pension fund assets were reported at $18.8 trillion, suggesting that about 11% of REIT shares are held by pension funds if DC pension plans invest at a similar rate. The majority of REIT assets are in more traditional asset types: 24% in retail (largely shopping centers), 15% each in industrial and office and residential (largely apartments), 11% in health (such as nursing homes), and 8% in self-storage. Recently, attention has been directed to nontraditional REITs and spin-offs, such as timber, data centers, cell towers, prisons, hotels, document storage, casinos, billboards, and communications. As noted earlier, however, these might be viewed as nontraditional not as a legal matter (since many of these types of assets had long been considered real estate assets) but as not the common passive building rentals. Nontraditional REIT asset types account for 4% in timber, 11% in infrastructure, and 4% in lodging and resorts. In a 2014 paper that identified 20 recent nontraditional or recently converted REITs for the years 1999-2015, four timber REITs' market capitalization was $31.4 billion (with Weyerhaeuser accounting for about two-thirds of the total). Five data center REITs accounted for $35.7 billion; two cell tower for $65.4 billion; one real estate for $6.3 billion; two prison for $6.9 billion; one hotel for $2.5 billion; one document storage facility for $6.9 billion; one casino for $3.7 billion; two billboards for $9.0 billion; and one communication center for $6.8 billion. The nontraditional or recently converted REITs amount to a value of $175 billion, or approximately a fifth of REIT valuations, and appeared to be accelerating. A New York Times article has a somewhat overlapping list of spin-offs since 2010, which included an additional 13 tax-free spin-offs, totaling $15.8 billion. Although they were spin-offs from operating companies (such as Darden restaurants, owner of Olive Garden restaurants), many were in more traditional REIT activities, such as health centers, shopping malls, and apartments. That same article noted that several additional spin-offs appeared to be grandfathered in the recent legislation, including Caesars Casinos, MGM Resorts, Boyd Gaming, Hilton, and Energy Future Holdings Corporation. This section summarizes the recent revisions enacted in the Consolidated Appropriations Act ( P.L. 114-13 ) along with the revenue gain or loss estimates by the Joint Committee on Taxation (JCT). The JCT also has a more detailed explanation of each of the changes. As a general rule, a corporation (i.e., the distributing corporation) may spin off part of its business into a separate corporation (i.e., the controlled corporation) without paying taxes on any capital gain from the transaction. Among the conditions required is that the firm be engaged in an active business. Spin-offs into REITs were not allowed until 2001, when the IRS determined that rental of property constituted an active business, which led to an increasing number of spinoffs of real property into REITs. The Consolidated Appropriations Act makes REITs generally ineligible to participate in a tax-free spin-off and this restriction raises $1,902 million in federal tax revenue from FY2016-FY2025. There are some exceptions. The restriction does not apply if, after the spin-off, both the distributing and controlled corporations are REITs. Second, a REIT can spin off its taxable REIT subsidiary if the distributing corporation has been a REIT for three years, the subsidiary has been a taxable REIT subsidiary the entire time, and the REIT had control of the subsidiary. The provision grandfathers firms that had submitted letters requesting private rulings to the IRS on or before December 7, 2015. Subsequent to the enactment of the Consolidated Appropriations Act, the Treasury issued regulations addressing potential methods of circumventing the restrictions on tax free spin-offs, for example, by first participating in a tax exempt spin-off not involving a REIT and subsequently merging into a REIT. The regulations required recognition of gain on transferred assets if the reorganization with a REIT occurs within 10 years before or after a tax exempt merger. Five provisions affect the treatment of foreign shareholders of REITs and taken together cost $2,923 million in federal revenue forgone over 10 years. Two major changes lose significant revenue. One provision increases the share of ownership in REITs that will still avoid taxation under FIRPTA from 5% to 10%. This provision loses $2,297 million in revenue over FY2016-FY2025. The second provision exempts foreign pension funds from FIRPTA at a cost of $1,953 million over the same period. With this change, taxes on capital gains on real estate will not be imposed on foreign pension funds. Withholding provisions will also be adjusted to eliminate withholding of tax by the seller on sales to pension funds. The remaining three provisions gain revenue, and do not arise specifically from the treatment of REITs. The third provision applies in general to real property sales with gain to foreign interests. These sales require a withholding rate of 10% of gross sales in certain circumstances, and this rate is increased to 15%, for a revenue gain of $209 million over FY2016-FY2025. The fourth provision excludes REITs (and RICs) from the so-called cleansing rule that allows an interest in a corporation not to be a U.S. real property interest if the corporation does not hold any real property interests as of the date of disposition and past sales under certain time periods have recognized gains. This provision gains $256 million over the same period. The final (and fifth) provision relates to the dividends-received deduction, which is designed to prevent multiple levels of taxation due to intercorporate ownership. Dividends received from a corporation that holds stock in another corporation (which may be its controlled subsidiary) are fully or partially deductible depending on ownership (e.g., fully deductible for 100% ownership, 80% deductible for ownership between 80% and 20%, and 70% deductible for ownership of less than 20%). Dividends from a REIT are not eligible for the deduction and dividends from a RIC are eligible for a 70% deduction to the extent received from other corporations. In general, dividends from foreign corporations are not eligible for the dividends-received deduction because this income has not been taxed under U.S. law. Dividends that reflect income earned in the United States by that foreign corporation (and thus taxed) are, however, eligible. Treasury regulations indicate that this dividend deduction is not available if attributable to interest income of a RIC and not available at all for dividends from a REIT. The law clarifies, going forward, that dividends from RICs and REITs do not qualify. This provision raises $762 million in federal tax revenue from FY2016 to FY2025. A num ber of minor provisions in the new law affect REITs that have, in most cases, relatively little revenue impact (revenue gain over FY2016-FY2025 is in parentheses). 1. Taxable REIT Subsidiaries: This provision reduces the permissible asset share for taxable REIT subsidiaries from 25% to 20% ($167 million). 2. Safe Harbor from Prohibited Transactions Tax: One of the rules for avoiding the prohibited transactions tax is to limit the affected sales to 10% of asset value. The revision increases the limit to 20%, but retains an average 10% limit over three years ($7 million). 3. Preferential Dividends: REITs are denied deductions for distributions that are not proportional across shareholders. This provision repeals that rule for publicly offered REITs and allows remedies other than loss of deduction for other REITs (-$4 million). 4. Designation of Distributions: A REIT may designate some distributions as capital gains subject to the lower rate capital gains rate (limited to net capital gains), and may also designate some dividends as qualified dividends subject to the lower rate based on dividend income or income subject to the corporate level tax. The IRS has allowed these amounts combined to exceed dividend distributions and has also required proportional designations. The provision limits the total to the amount of dividends designated by a REIT to current dividends paid and provides regulatory authority to the IRS to require proportional designations across shares ($4 million). 5. Asset Test: Debt instruments issued by publicly offered REITs and interests in mortgages on interests in real property (such as a lease) are treated as real property (-$7 million). 6. Asset and Income Test: Interest on a mortgage in which personal property is leased along with real property will be considered real property as long as the personal property is less than 15% of the total, a rule that already applies to rents (-$8 million). 7. Hedging Transactions: Under current law, hedging indebtedness incurred to acquire real estate assets or manage the risk of currency fluctuations is disregarded as part of gross income for the income tests. This provision expands the definition of hedging income that is disregarded to positions that manage risk related to certain prior hedges (-$2 million). 8. Earnings and Profits: The earnings and profits measure determines the extent to which a dividend is a return of capital. Because of an anomaly in the way earnings and profits are measured for REITs, the amount of dividend that is a return on investment can be overstated when dealing with provisions with timing differences. This issue is corrected (-$4 million). 9. Services Provided by Taxable REIT Subsidiaries: Among the rules for safe harbor from the prohibited transactions tax under some circumstances is the requirement that development costs or management of foreclosed property be done by independent contractors. This provision allows this activity to be done by taxable REIT subsidiaries. The base for the current 100% tax on the difference between actual and arm's length rents between a REIT and its taxable subsidiary is expanded to include non-arms-length prices relating to services (-$65 million). The revisions in the Consolidated Appropriations Act may lead to a period with no further REIT revisions. Nevertheless, in the context of tax reform, REITs might be affected directly or indirectly. For example, some of the revenue-raising REIT provisions in former Chairman of the House Ways and Means Committee Dave Camp's proposed Tax Reform Act of 2014 ( H.R. 1 , 113 th Congress) were not enacted in the Consolidated Appropriations Act and might be potential base broadening targets in a tax reform. The major differences between that bill and the recently enacted provisions were a more restrictive limit on spin-offs (the revenue gain was estimated at $5.9 billion in the 2014 bill) by applying the spin-off rules to all transactions including existing REITs and imposing a tax on gain for conversions from regular corporate to REIT status. The 2014 bill also had provisions aimed at restricting nontraditional assets in qualifying for REIT status by disallowing any asset with a life of less than 27.5 years. Billboards, for example, have a life of 20 years and would have been no longer eligible to be treated as real estate qualifying for REIT status. This change was estimated, assuming the spin-off and gains provisions were adopted, to raise $0.6 billion. The bill also specifically disallowed timber REITs, with a delay in implementation. One provision that was included in an earlier version of the tax amendments to the appropriations bill and in the 2014 proposal, but not in the final act, was a cap on the amount of rent or interest based on a fixed percentage of income or sales that qualifies as rental income. A major change in how corporations are taxed could also affect REITs indirectly or even lead to proposals for fundamental changes in REIT treatment. For example, a lowering of the corporate tax rate would reduce the relative tax benefit for REITs and even make taxes on REITs with respect to dividends higher than those on ordinary corporations. A reduction in individual tax rates would benefit REITs. The 2014 proposal reduced the top individual rate to 35% and the corporate rate to 25%. A tax-exempt investor would see the tax benefit of a REIT fall from 35% to 25%, and a high-income individual would see the benefit fall from 7.17 percentage points to 4.05 percentage points. Proposals for fundamental changes in the tax law, perhaps as an element of tax reform, could also have consequences for REITs. For example, Senate Finance Committee Chairman Orrin Hatch has indicated interest in a corporate tax integration proposal that might allow corporate dividend deductions (and presumably taxation at ordinary rates for dividends), a treatment that would move ordinary corporations closer to the treatment of REITs.

The Consolidated Appropriations Act of 2016 (P.L. 114-13) made several changes to the tax treatment of Real Estate Investment Trusts (REITs) and the Foreign Investment in Real Property Tax Act (FIRPTA, enacted in the Omnibus Reconciliation Act of 1980, P.L. 96-499) as it relates to REITs. REITs are corporations that issue shares of stock, are largely invested in real property, and do not generally pay corporate tax. REITs distribute and deduct most income as dividends to shareholders. U.S. individual shareholders pay tax at ordinary individual income tax rates on those dividends (rather than the lower rates normally applied to dividends on corporate stock). REITs were initially introduced, in part, to allow taxpayers of more modest means to invest in real estate. The size and scope of REITs has been increasing in past years, due in part to legislative and regulatory changes. REITs today are estimated to own $1.8 trillion in real estate. Legislative changes have meant REITs are increasingly not only owning and renting property as a passive investment, but also managing it through taxable subsidiaries. U.S. corporations have been spinning off (transferring to a separate corporation organized as a REIT) buildings (and other assets defined as real estate) in a tax-free reorganization. The expanding scope and size of REIT activities has raised issues as to whether the intent of the preferred treatment is still appropriate. Another issue concerning REITs is that provisions in FIRPTA have been discouraging foreign investors from purchasing REIT shares by taxing investments that exceed 5% of the REIT's shares. Capital gains paid to foreign investors are generally exempt from U.S. tax. FIRPTA, however, imposes a capital gains tax on foreign investments for gains related to real estate, with an exception for a 5% or less ownership of a REIT. Investment in other types of securities is not subject to the U.S. capital gains tax. The Consolidated Appropriations Act makes several changes in response to these issues. The act disallows tax-free spin-offs of assets into a tax-exempt REIT by a regular corporation; increases from 5% to 10% the amount of ownership in a REIT by a foreign investor before the capital gains tax applies; and exempts foreign pension funds investing directly or indirectly in real estate from the FIRPTA capital gains tax. These provisions, taken together, result in federal tax revenue losses. There are also some smaller (in revenue effect) provisions affecting foreign investors that gain revenue. In addition to these rules, P.L. 114-13 includes some minor provisions, the most significant of these changes relating to the treatment of taxable REIT subsidiaries. The changes in the Consolidated Appropriations Act may lead to a period with no further REIT revisions. If tax reform is considered, however, additional REIT base broadening provisions might be considered. For example, former Chairman of the House Ways and Means Committee Dave Camp's proposed Tax Reform Act of 2014 (H.R. 1, 113th Congress) contained more restrictive provisions relating to spin-offs as well as other provisions primarily focused on the definition of real estate. Changes in a tax reform, such as lowering the corporate rate or allowing a corporate dividend deduction, could also affect the relative tax benefit of REITs. This report describes REITs and FIRPTA, provides historical developments, presents an overview of REIT size and activity, explains the provisions in the Consolidated Appropriations Act, and discusses possible policy issues in the future.

Foreign assistance is one of the tools the United States has employed to advance U.S. interests in Latin America and the Caribbean, with the focus and funding levels of aid programs changing along with broader U.S. policy goals. Current aid programs reflect the diversity of the countries in the region. Some countries receive the full range of U.S. assistance as they continue to struggle with political, socioeconomic, and security challenges. Others, which have made major strides in democratic governance and economic and social development, no longer receive traditional U.S. development assistance but continue to receive some support for security challenges, such as combating transnational organized crime. Although U.S. relations with the nations of Latin America and the Caribbean have increasingly become less defined by the provision of assistance as a result of this progress, foreign aid continues to play an important role in advancing U.S. policy in the region. Congress authorizes and appropriates foreign assistance to the region and conducts oversight of aid programs and the executive branch agencies charged with managing them. Efforts to reduce budget deficits in the aftermath of the recent global financial crisis and U.S. recession have triggered closer examination of competing budget priorities. Congress has identified foreign assistance as a potential area for spending cuts, placing greater scrutiny on the efficiency and effectiveness of U.S. aid programs. This report provides an overview of U.S. assistance to Latin America and the Caribbean. It analyzes historical and recent trends in aid to the region as well as the Obama Administration's FY2016 request for State Department and U.S Agency for International Development (USAID)-administered assistance. It also examines legislative developments on foreign aid appropriations for Latin America and the Caribbean in FY2016, and raises questions Congress may examine as it considers future appropriations for the region. The United States has long been a major contributor of foreign assistance to countries in Latin America and the Caribbean. Between 1946 and 2013, it provided the region over $160 billion in constant 2013 dollars (or nearly $78 billion in historical, non-inflation-adjusted, dollars). U.S. assistance to the region spiked in the early 1960s following the introduction of President Kennedy's Alliance for Progress, an anti-poverty initiative that sought to counter Soviet and Cuban influence in the aftermath of Fidel Castro's 1959 seizure of power in Cuba. After a period of decline, U.S. assistance to the region increased again following the 1979 assumption of power by the leftist Sandinistas in Nicaragua. Throughout the 1980s, the United States provided considerable support to the Contras , who sought to overthrow the Sandinista government, and to Central American governments battling leftist insurgencies. U.S. aid flows declined in the mid-1990s following the dissolution of the Soviet Union and the end of the Central American conflicts (see Figure 1 ). U.S. foreign assistance to Latin America and the Caribbean began to increase once again in the late 1990s and remained on a generally upward trajectory through the past decade. The higher levels of assistance were partially the result of increased spending on humanitarian and development assistance. In the aftermath of Hurricane Mitch in 1998, the United States provided extensive humanitarian and reconstruction aid to several countries in Central America. The establishment of the President's Emergency Plan for AIDS Relief (PEPFAR) in 2003 and the Millennium Challenge Corporation (MCC) in 2004 provided a number of countries in the region with new sources of U.S. assistance. More recently, the United States provided significant amounts of assistance to Haiti in the aftermath of a massive January 2010 earthquake. Increased funding for counternarcotics and security programs also contributed to the rise in U.S. assistance through 2010. Beginning with President Clinton and the 106 th Congress in FY2000, successive Administrations and Congresses have provided substantial amounts of foreign aid to Colombia and its Andean neighbors in support of "Plan Colombia"--a Colombian government initiative to combat drug trafficking, end its long-running internal armed conflict, and foster development. Spending on counternarcotics and security assistance received another boost in FY2008 when President George W. Bush joined with his Mexican counterpart to announce the Merida Initiative, a package of U.S. counterdrug and anticrime assistance for Mexico and Central America. In FY2010, Congress and the Obama Administration split the Central America portion of the Merida Initiative into a separate Central America Regional Security Initiative (CARSI) and created a similar program for the countries of the Caribbean known as the Caribbean Basin Security Initiative (CBSI). After more than a decade of generally increasing aid levels, U.S. assistance to Latin America and the Caribbean began to decline in FY2011. This was partially the result of reductions in the overall U.S. foreign assistance budget. The Obama Administration and Congress have sought to reduce budget deficits in the aftermath of the recent global financial crisis and U.S. recession and have identified foreign assistance as a potential area for spending cuts. U.S. assistance to Latin America and the Caribbean decreased each year between FY2010 and FY2014. While aid to the region increased slightly in FY2015, spending caps and across-the-board cuts that were included in the Budget Control Act of 2011 ( P.L. 112-25 ), as amended, could place downward pressure on the aid budget for the foreseeable future. The recent decline in U.S. assistance to Latin America and the Caribbean also reflects changes in the region. As a result of stronger economic growth and the implementation of more effective social policies, the percentage of people living in poverty in Latin America fell from 44% in 2002 to 28% in 2013. Likewise, electoral democracy has been consolidated in the region; every country except Cuba now has a democratically elected government (although some elections have been controversial). These changes have allowed the U.S. government to concentrate its resources in fewer countries and sectors. For example, USAID closed its mission in Panama in 2012 following the country's graduation from foreign assistance, and the agency has largely transitioned out of providing support for family planning and elections administration as many governments throughout the region have demonstrated their ability to finance and carry out such activities on their own. Some Latin American nations, such as Brazil, Chile, Colombia, Mexico, and Uruguay, have begun providing foreign aid to other countries. The United States has partnered with these nations through so-called "trilateral cooperation" initiatives to jointly plan and fund development and security assistance efforts in third countries. Other countries, such as Bolivia and Ecuador, have demonstrated less interest in working with the United States, leading to significant reductions in U.S. assistance and the closure of USAID missions. As a result of these developments in the region and competing U.S. foreign policy priorities elsewhere in the world, U.S. assistance to Latin America and the Caribbean as a proportion of total U.S. foreign assistance dropped from 12% in FY2004 to 7% in FY2014. The Obama Administration's FY2016 budget request would increase assistance to Latin America and the Caribbean for a second consecutive year and reverse the reductions in aid to the region that have occurred since FY2011. It included nearly $2 billion for Latin America and the Caribbean, a 26% increase over the estimated FY2015 level (see Table 1 ). The requested increase in assistance was almost entirely the result of the Administration's intention to allocate over $1 billion in aid to Central America to promote prosperity, security, and good governance and to address the root causes of migration from the region. The Administration's FY2016 foreign aid request for Latin America and the Caribbean would shift the emphasis of U.S. assistance efforts toward development and humanitarian assistance programs (see Figure 2 ). More than $842 million (about 42%) of the request for the region would go toward such programs. Development assistance seeks to foster sustainable broad-based economic progress and social stability in developing nations. Such funding is often used for long-term projects in the areas of democracy promotion, economic reform, basic education, human health, and environmental protection. This assistance is provided primarily through the Development Assistance (DA) and Global Health Programs (GHP) accounts, which would receive $615 million and $214 million, respectively, under the Administration's FY2016 request. In terms of humanitarian assistance, the Administration requested $13 million through the Food for Peace (P.L. 480) account to address immediate food security needs in the region. While funding provided through the GHP accounts would remain relatively stable, the FY2016 request included nearly $401 million more DA funding than the United States provided to the region in FY2015. The vast majority of the additional DA funding would be used to support development efforts in Central America. Another $597 million (30%) of the Administration's FY2016 request for the region would be provided through the Economic Support Fund (ESF) account, which has as its primary purpose the promotion of special U.S. political, economic, or security interests. In practice, the ESF account generally funds programs that are designed to promote political and economic stability and are often indistinguishable from those funded through the regular development and humanitarian assistance accounts. The Administration's FY2016 request for the region included $14 million more ESF assistance than was provided in FY2015. The remaining $551 million (28%) of the Administration's FY2016 request for Latin America and the Caribbean would support security assistance programs. This includes $464 million requested under the International Narcotics Control and Law Enforcement (INCLE) account, which supports counternarcotics and civilian law enforcement efforts as well as projects designed to strengthen judicial institutions. It also includes $9 million requested under the Nonproliferation, Anti-terrorism, De-mining, and Related programs (NADR) account, which funds efforts to counter global threats, such as terrorism and proliferation of weapons of mass destruction. Additionally, $78 million was requested under the Foreign Military Financing (FMF) and International Military Education and Training (IMET) accounts to provide equipment and personnel training to Latin American and Caribbean militaries. Total security funding for the region would decline by about $8 million, with an increase in FMF aid more than offset by decreases in INCLE, NADR, and IMET assistance. While INCLE aid for Central America, provided through the Central America Regional Security Initiative (CARSI), would increase by $35 million, INCLE aid for Colombia and Mexico would be cut by $18 million and $30 million, respectively, compared to FY2015 estimates. Following a sharp increase in the number of unaccompanied children and other migrants and asylum seekers from Central America arriving at the U.S. border in FY2014, the Administration announced a whole-of-government " U.S. Strategy for Engagement in Central America " that is designed to promote prosperity, security, and good governance in the sub-region. More than $1 billion (51%) of the Administration's FY2016 aid request for Latin America and the Caribbean would be allocated to Central America, with the majority of those funds concentrated in the "northern triangle" countries of El Salvador , Guatemala , and Honduras . Compared to FY2015, bilateral aid for El Salvador would increase from $47 million to $119 million, bilateral aid for Guatemala would increase from $114 million to $226 million, and bilateral aid for Honduras would increase from $71 million to $163 million. As noted above, nearly all of the increased bilateral aid would be provided through the DA account. About half of the Administration's $1 billion aid request for Central America would be provided through regional programs. Assistance provided through the Central America Regional Security Initiative (CARSI) , which has been the principal component of U.S. engagement with Central America in recent years and has yielded mixed results, would increase from $270 million in FY2015 to $287 million in FY2016. Assistance provided through USAID's Central America Regional program would increase from $49 million to $65 million. The request also included an additional $137 million that would be provided through the State Department's Western Hemisphere Regional program in support of the new Central America strategy. Although it is unclear how much funding from the regional programs would go to each country, the majority likely would be allocated to El Salvador, Guatemala, and Honduras. Colombia would continue to be the single largest recipient of U.S. assistance in Latin America under the Administration's FY2016 request, though aid for the country would fall from $301 million in FY2015 to $289 million in FY2016. Colombia has received significant amounts of U.S. assistance to support counternarcotics and counterterrorism efforts since FY2000, but funding levels have declined in recent years as the security situation in Colombia has improved, the Colombian government has taken ownership of programs, and the United States has shifted the emphasis of its aid away from costly military equipment toward economic and social development efforts. According to the FY2016 request, U.S. assistance would support the Colombian government's efforts to eradicate and interdict coca, expand its institutional presence in conflict zones, demobilize and reintegrate ex-combatants, carry out land restitution, implement justice sector reforms, and provide humanitarian aid to conflict victims and vulnerable populations. U.S. assistance would also support the implementation of a potential peace agreement to end Colombia's 50-year internal conflict. Haiti , which has received high levels of aid for many years as a result of its significant development challenges, would once again be the second-largest recipient of U.S. assistance in the region under the FY2016 request. U.S. assistance increased significantly after Haiti was struck by a massive earthquake in January 2010 but has gradually declined from those elevated levels. The Administration's FY2016 request would provide $242 million to support the Post-Earthquake U.S. Government Strategy for Haiti, which includes four strategic pillars: infrastructure and energy, food and economic security, health and other basic services, and governance and rule of law. This would be a slight reduction compared to the estimated $244 million provided in FY2015. U.S. assistance to Mexico would decline considerably under the Administration's FY2016 request. Mexico traditionally has not been a major recipient of U.S. assistance given its status as an upper middle income economy, but it began receiving large amounts of aid through the anticrime and counterdrug program known as the Merida Initiative in FY2008. The Administration's FY2016 request would provide $142 million for Mexico, a 14% reduction compared to FY2015. FY2016 aid would be used to support the Mexican government's efforts to combat transnational crime, reform rule of law institutions, protect human rights, strengthen border security, provide educational and vocational opportunities for at-risk youth, and carry out conservation and clean energy initiatives. U.S. assistance provided through the Caribbean Basin Security Initiative (CBSI) would also decline under the Administration's FY2016 request. CBSI funding supports efforts to increase citizen security and address the root causes of crime and violence in the Caribbean. The FY2016 request would provide $53.5 million to implement community-based policing programs, support police and justice sector reforms, provide equipment and training to partner nation security forces, and offer vocational training and other opportunities to at-risk youth. Compared to the FY2015 funding level, assistance provided through the CBSI would decline by about 10% in FY2016. Since Congress has not enacted a comprehensive foreign assistance authorization measure since FY1985, annual Department of State, Foreign Operations, and Related Programs appropriations bills tend to serve as the primary legislative vehicles through which Congress reviews U.S. assistance and influences executive branch foreign policy. The House Committee on Appropriations reported its bill ( H.R. 2772 ) on June 15, 2015, and the Senate Committee on Appropriations reported its bill ( S. 1725 ) on July 9, 2015. Neither measure received floor consideration. Instead, after several continuing resolutions, Congress chose to include foreign aid funding in the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), which President Obama signed into law on December 18, 2015. The legislation includes $32.9 billion for bilateral economic assistance and international security assistance worldwide. This global funding level is 2.8% higher than the Administration's FY2016 request and about 1% lower than the FY2015 estimated level. It is unclear how much foreign assistance will be directed to Latin America and the Caribbean, since, for the most part, appropriations levels for individual countries and programs are not specified in the legislation or the accompanying explanatory statement. The appropriations levels that are specified in the legislation and explanatory statement differ from the Administration's request in several respects. Perhaps the most noteworthy difference involves funding for Central America. The legislation provides up to $750 million to implement the new U.S. Strategy for Engagement in Central America , which is $250 million less than requested. This includes about $68 million for El Salvador ($51 million less than requested), $128 million for Guatemala ($98 million less than requested), and $98 million for Honduras ($65 million less than requested). It also includes $349 million for CARSI , which is $62 million more than was requested for the initiative. The legislation places a number of conditions on the funds, requiring the State Department to withhold 75% of the assistance for the "central governments of El Salvador, Guatemala, and Honduras" until the Secretary of State certifies that those governments are "taking effective steps" to improve border security, combat corruption, increase revenues, and address human rights concerns, among other actions. There are several other instances where appropriations levels differ from those in the Administration's request. The measure appears to provide $12 million more than was requested for Colombia , $8 million more than was requested for Mexico , and $4 million more than was requested for the CBSI . In all three cases, it shifts the emphasis of aid toward security concerns by providing less assistance than was requested through the ESF account and providing more than was requested through the INCLE account. The act also stipulates that "not more than" $191 million may be provided to Haiti , which is $50 million less than was requested. It requires the State Department to withhold all assistance for the "central Government of Haiti" until the Secretary of State certifies that the Haitian government is "taking effective steps" to hold free and fair elections, strengthen the rule of law, combat corruption, and increase government revenues. While the request did not include any funding to support environmental programs in Brazil , the omnibus provides $10.5 million for such programs. It also provides $6.5 million for democracy programs in Venezuela , which is $1 million above the request. In the coming months, Congress will continue to oversee the implementation of foreign aid programs in Latin America and the Caribbean and begin to consider the Obama Administration's FY2017 foreign assistance request for the region. As Members engage in oversight and contemplate future appropriations, they might consider questions such as: How effective are U.S. assistance programs in the region? To what extent are aid recipients implementing the structural reforms necessary to fully benefit from assistance and sustain programs started with U.S. funding? How do conditions on U.S. assistance influence the policies and actions of recipient governments? To what extent do socioeconomic and security conditions in Latin America and the Caribbean affect the United States? How many years and what levels of U.S. assistance will be necessary to achieve U.S. objectives in the region? How do U.S. policy priorities in the Western Hemisphere compare to U.S. priorities elsewhere in the world? How did the 20% decline in annual U.S. assistance appropriations for Latin American and the Caribbean between FY2011 and FY2014 affect U.S. influence in the region? To what extent have countries in the region taken financial and administrative responsibility for programs that the U.S. government has stopped funding? How successful have recent trilateral cooperation initiatives been and should they be expanded in the future? What other forms of engagement could the U.S. government use to advance its policy priorities in Latin America and the Caribbean as U.S. relations with the region become less defined by the provision of foreign assistance?

Geographic proximity has forged strong linkages between the United States and the nations of Latin America and the Caribbean, with critical U.S. interests encompassing economic, political, and security concerns. U.S. policymakers have emphasized different strategic interests in the region at different times, from combating Soviet influence during the Cold War to advancing democracy and open markets since the 1990s. Current U.S. policy is designed to promote economic and social opportunity, ensure the safety of the region's citizens, strengthen effective democratic institutions, and secure a clean energy future. As part of broader efforts to advance these priorities, the United States provides Latin American and Caribbean nations with substantial amounts of foreign assistance. Trends in Assistance Since 1946, the United States has provided more than $160 billion of assistance to the region in constant 2013 dollars (or nearly $78 billion in historical, non-inflation-adjusted, dollars). Funding levels have fluctuated over time, however, according to regional trends and U.S. policy initiatives. U.S. assistance spiked during the 1960s under President Kennedy's Alliance for Progress, and then declined in the 1970s before spiking again during the Central American conflicts of the 1980s. After another decline during the 1990s, assistance remained on a generally upward trajectory through the first decade of this century, reaching its most recent peak in the aftermath of the 2010 earthquake in Haiti. Aid levels for Latin America and the Caribbean declined in each of the four fiscal years between FY2011 and FY2014 before increasingly slightly in FY2015. FY2016 Obama Administration Request The Obama Administration's FY2016 foreign aid budget request would increase assistance to Latin America and the Caribbean for a second consecutive year. The Administration requested nearly $2 billion to be provided through the State Department and the U.S. Agency for International Development (USAID), which would be a 26% increase over the estimated FY2015 level. The requested increase in assistance is almost entirely the result of the Administration's proposal to provide over $1 billion in aid to Central America to promote prosperity, security, and good governance and to address the root causes of migration from the sub-region. Under the request, the balance of U.S. assistance would shift toward development aid and away from security aid, as three of the four major U.S. security initiatives in the region would see cuts. Aid levels for Colombia, Haiti, and Mexico would decline compared to FY2015, but those countries would continue to be among the top recipients in the region. Congressional Action In recent years, the annual Department of State, Foreign Operations, and Related Programs appropriations measure has been the primary legislative vehicle through which Congress reviews U.S. assistance and influences executive branch policy. Although the House and Senate Appropriations Committees reported out their respective bills (H.R. 2772 and S. 1725) in June and July 2015, no action was taken on those measures. After funding foreign aid programs through a series of continuing resolutions, Congress included foreign assistance appropriations in the Consolidated Appropriations Act, 2016 (P.L. 114-113), which the President signed into law on December 18, 2015. The legislation includes $32.9 billion for bilateral economic assistance and international security assistance worldwide; this funding level is 2.8% higher than the Administration's FY2016 request and about 1% lower than the FY2015 estimated level. It is currently unclear how much foreign assistance will be directed to Latin America and the Caribbean in FY2016, since, for the most part, appropriations levels for individual countries and programs are not specified in the legislation or the accompanying explanatory statement. The appropriations levels that are specified differ from the Administration's request in several respects. The legislation provides $250 million less than was requested for Central America and $50 million less than was requested for Haiti. It also appears to provide slightly more assistance than was requested for Colombia, Mexico, and the Caribbean Basin Security Initiative (CBSI). Given these funding levels it appears as though the region will receive less assistance than the Administration requested for FY2016 but more than it received in FY2015.

In June 2007, the Supreme Court issued its decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc. , a case that involved questions about the timeliness of claims filed under Title VII of the Civil Rights Act, which prohibits discrimination in employment on the basis of race, color, religion, sex, or national origin. By a 5-4 vote margin, the Court rejected the plaintiff's argument that each paycheck she received reflected a lower salary due to past discrimination and therefore constituted a new violation of the statute. Instead, the Court held that "a new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent nondiscriminatory acts that entail adverse effects resulting from the past discrimination." As a result, the Court held that the plaintiff had not filed suit in a timely manner. Initially, the decision appeared to limit some pay discrimination claims based on Title VII, but did not affect an individual's ability to sue for sex discrimination that results in pay bias under the Equal Pay Act. Although the Court's decision made it more difficult for employees to sue for pay discrimination under Title VII, the decision was recently superseded by the Lilly Ledbetter Fair Pay Act of 2009, which amended Title VII to clarify that the time limit for suing employers for pay discrimination begins each time they issue a paycheck. From 1979 until 1998, Lilly Ledbetter worked as a supervisor for the Goodyear Tire & Rubber Company. Although Ledbetter initially received a salary similar to the salaries paid to her male colleagues, a pay disparity developed over time. By 1997, the pay disparity between Ledbetter and her 15 male counterparts had widened considerably, to the point that Ledbetter was paid $3,727 per month while the lowest paid male colleague received $4,286 per month and the highest-paid male colleague received $5,236 per month. In 1998, Ledbetter filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC) alleging that Goodyear had unlawfully discriminated against her on the basis of her sex in violation of Title VII. According to Ledbetter, her current pay was discriminatorily low due to a long series of decisions reflecting Goodyear's pervasive discrimination against female managers in general and Ledbetter in particular. A jury found in her favor, and the district court entered judgment for backpay and damages, but the appellate court reversed. The Supreme Court granted review in order to resolve disagreement among the appellate courts regarding the proper application of the time limit for filing claims in Title VII disparate treatment pay cases. Under Title VII, it is an "unlawful employment practice" for an employer to discriminate "against any individual with respect to his compensation ... because of such individual's race, color, religion, sex, or national origin." Individuals who want to challenge an employment practice as unlawful are required to file a charge with the EEOC within a specified period--either 180 days or 300 days, depending on the state--"after the alleged unlawful employment practice occurred." The question that arose in the Ledbetter case was how to determine precisely what types of activities constitute an unlawful employment practice for purposes of starting the clock on the filing deadline. Ledbetter argued that two different employment practices could qualify as having occurred within the 180-day charging period preceding the filing of her EEOC claim: (1) the paychecks that were issued to her during that period, each of which she alleged constituted a separate act of discrimination, or (2) a 1998 decision denying her a raise, which she contended was unlawful because it perpetuated the discriminatory pay decisions from previous years. In contrast, Goodyear argued that Ledbetter's claim was time barred because the discriminatory acts that affected her current pay had taken place prior to the 180 days that preceded the claim Ledbetter filed with the EEOC. The Supreme Court granted review to resolve the dispute. Ultimately, the Supreme Court ruled in favor of Goodyear, holding that Ledbetter's suit was time barred because no unlawfully discriminatory acts had taken place within the 180-day charging period. In rejecting Ledbetter's claim on statutory grounds, the Court majority relied heavily on the principle that Title VII claims alleging disparate treatment require evidence of discriminatory intent. Because there was no evidence that Goodyear had acted with discriminatory intent when it issued the paychecks Ledbetter received during the charging period or when the company had denied her a raise in 1998, the Court found that Goodyear had not engaged in an unlawful employment practice during the specified time period. As a result, the fact that Ledbetter may have been suffering from the continuing effects of past discrimination was not sufficient for her to establish a claim within the statutorily mandated filing period. In issuing its decision, the Ledbetter majority relied on a series of precedents in analogous employment discrimination cases. For example, one such case, United Air Lines, Inc. v. Evans , involved a female flight attendant who was not granted seniority when she was rehired despite the fact that she had originally been forced to resign when she got married. Although the Court agreed that the company's discriminatory policy had a continuing effect, that effect was not sufficient to establish a present violation. Similarly, in Lorance v. AT&T Technologies, Inc. , the Court rejected a challenge to a discriminatory seniority system because the complaint had been filed when the discriminatory effect was felt, rather than within the charging period established by the original discriminatory act, namely the adoption of the seniority system. In light of these and other precedents, the Court concluded: The EEOC charging period is triggered when a discrete unlawful practice takes place. A new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent nondiscriminatory acts that entail adverse effects resulting from the past discrimination. But of course, if an employer engages in a series of acts each of which is intentionally discriminatory, then a fresh violation takes place when each act is committed.... [C]urrent effects alone cannot breathe life into prior, uncharged discrimination.... Of primary concern to the Court was the question of discriminatory intent. In general, claims such as Ledbetter's, which allege unlawful disparate treatment, must demonstrate discriminatory intent. According to the Court, allowing Ledbetter to shift the intent associated with the discriminatory pay decisions to later paychecks would have the effect of imposing liability in the absence of the required intent. The Court also appeared concerned that allowing Ledbetter's claim to proceed would undermine Title VII enforcement procedures and filing deadlines, which were designed in part to protect employers from defending against discrimination claims that are long past. According to the Court, Title VII's short filing deadline "reflects Congress' strong preference for the prompt resolution of employment discrimination allegations through voluntary conciliation and cooperation." The Court also rejected Ledbetter's reliance on Bazemore v. Friday , a pay discrimination case involving employees who were, prior to enactment of Title VII, separated into a white branch and a black branch, with the latter group receiving lower salaries. Although the Bazemore Court held that an employer who adopts a discriminatory pay structure violates Title VII whenever it issues a paycheck to disfavored employees, the Ledbetter Court distinguished the two cases, arguing that the paychecks in Bazemore reflected the employer's ongoing retention of a discriminatory pay structure--a current violation of the statute--while the paychecks in Ledbetter reflected the continuing effect of an isolated, past violation of the statute. Finally, although the EEOC has interpreted Title VII to allow challenges based on discriminatory pay each time a paycheck is received, the Court declined to defer to the agency's interpretation. In contrast, the dissent in Ledbetter strongly disagreed with the majority's analysis. According to the dissent, treating the actual payment of a discriminatory wage as an unlawful employment practice would be more faithful to precedent, would better reflect workplace realities, and would be more consistent with the overall purpose of Title VII. Specifically, the dissent argued that the Court's holding was inconsistent with the result in Bazemore , contending that Bazemore recognized that paychecks that perpetuate past discrimination constitute a fresh instance of discrimination every time they are issued. The dissent also drew an analogy between pay discrimination claims and sexual harassment hostile work environment claims, which involve a series of discrete acts that recur and are cumulative in impact. Since hostile work environment claims may be filed even when some of the discrete acts that form the basis for a claim have taken place outside of the charging period, the dissent would have allowed Ledbetter's claim to proceed as well. The dissent also distinguished pay bias claims from other types of employment discrimination, arguing that pay discrimination is fundamentally different from other types of employment bias. For example, employees, who are generally aware when they suffer adverse employment actions related to promotion, transfer, hiring, or firing, may not know they have suffered pay discrimination, particularly because salary levels are often hidden from the employee's view and pay disparities become apparent only over time. As a result of these differences, the dissent argued that the precedents upon which the Court relied were inapplicable because those cases involved easily identifiable acts of discrimination. Finally, the dissent criticized the majority's opinion as inconsistent with the overall anti-discrimination purpose of Title VII. Although the Ledbetter decision was subsequently overturned by statute, at the time of the ruling, many commentators noted the possible effects that the case could have on the workplace. First, employees might have had a more difficult time bringing pay discrimination claims under Title VII. If employees brought pay discrimination claims early in order to meet the statutory filing deadline, they might have had difficulty proving discrimination if the pay disparity remained small. If employees brought pay discrimination claims later, however, then they might not have been able to meet the filing deadline. As a result of this dilemma, employers might have experienced an increase in pay discrimination claims being filed against them, since some employees might have filed claims in order to meet the deadline even in cases where discrimination was unclear. It is also important to note that the Ledbetter decision affected more than just pay bias cases involving sex discrimination. Because Title VII applies to discrimination on the basis of race, color, national origin, sex, and religion, many other classes of claimants were potentially affected by the decision. Furthermore, the Ledbetter case also affected pay discrimination under parallel employment discrimination statutes that are patterned on Title VII, such as the Age Discrimination in Employment Act (ADEA), the Rehabilitation Act of 1973, and the Americans with Disabilities Act (ADA). Employees who filed pay discrimination claims alleging race or age discrimination, for example, might have been more negatively affected by the decision than employees who alleged sex discrimination because the latter group still had recourse under the Equal Pay Act (EPA). The EPA, which prohibits discrimination on the basis of sex with regard to the compensation paid to men and women for substantially equal work performed in the same establishment, does contain a statute of limitations for filing claims but has, thus far, been interpreted in such a way that each issuance of an unequal paycheck is treated as a new discriminatory act. In addition, the Ledbetter decision spurred congressional efforts to overturn the ruling. Since Ledbetter was decided on statutory grounds, several legislators who disagreed with the Court's interpretation introduced legislation clarifying that unlawful employment practices under Title VII include each issuance of a paycheck that reflects a discriminatory compensation practice. Such congressional action is not uncommon. For example, the Lorance decision, cited as precedent by the Ledbetter majority, was subsequently superseded by Congress in the Civil Rights Act of 1991. After the Ledbetter decision was handed down, several bills to amend Title VII in light of the opinion were introduced in both the 110 th and 111 th congressional sessions. As passed by Congress and signed into law by President Obama on January 29, 2009, the Lilly Ledbetter Fair Pay Act of 2009 ( H.R. 11 / S. 181 ) clarifies that the time limit for suing employers for pay discrimination begins each time they issue a paycheck and is not limited to the original discriminatory action. This change is applicable not only to Title VII of the Civil Rights Act, but also to the Age Discrimination in Employment Act (ADEA), the Rehabilitation Act of 1973, and the Americans with Disabilities Act (ADA).

This report discusses Ledbetter v. Goodyear Tire & Rubber Co., Inc., a case in which the Supreme Court considered the timeliness of a sex discrimination claim filed under Title VII of the Civil Rights Act, which prohibits employment discrimination on the basis of race, color, religion, sex, or national origin. In Ledbetter, the female plaintiff alleged that past sex discrimination had resulted in lower pay increases and that these past pay decisions continued to affect the amount of her pay throughout her employment, resulting in a significant pay disparity between her and her male colleagues by the end of her nearly 20-year career. Under Title VII, a plaintiff is required to file suit within 180 days after an alleged unlawful employment practice has occurred. Although the plaintiff in Ledbetter argued that each paycheck she received constituted a new violation of the statute and therefore reset the clock with regard to filing a claim, the Court rejected this argument, reasoning that even if employees suffer continuing effects from past discrimination, their claims are time barred unless filed within the specified number of days of the original discriminatory act. On January 29, 2009, President Obama signed the Lilly Ledbetter Fair Pay Act of 2009 (H.R. 11/S. 181). This legislation supersedes the Ledbetter decision by amending Title VII to clarify that the time limit for suing employers for pay discrimination begins each time they issue a paycheck.

Legislatively, the pursuit of reform of the U.S. Postal Service (USPS) began during the 104 th Congress. On June 25, 1996, Representative John McHugh introduced H.R. 3717 , the Postal Reform Act of 1996. The reform movement culminated in the 109 th Congress. On December 9, 2006, Congress enacted H.R. 6407 , the Postal Accountability and Enhancement Act (PAEA). President George W. Bush signed it into law on December 20, 2006 (PAEA; P.L. 109-435 ; 120 Stat. 3198). A number of factors encouraged the movement for postal reform. Perhaps foremost were the financial challenges of the USPS. First class mail use was declining as customers substituted electronic alternatives, such as e-mail and online bill paying, for hard-copy letters. Yet the USPS's costs--about 76% of which were labor-related--rose with the addition of 2 million new addresses each year and mounting obligations for USPS future retiree health benefits. Additionally, the USPS, its board of governors, the Government Accountability Office (GAO), mailers' organizations, postal labor unions, and most recently a presidential commission said that the Postal Reorganization Act of 1970 no longer provided a viable business model. The rate-setting process was criticized for preventing the USPS from responding quickly to an increasingly competitive marketplace. Critics also argued that long-standing political and statutory restrictions impeded efforts to modernize the mail processing network and close unneeded facilities. Finally, passage of the Postal Civil Service Retirement System Funding Reform Act of 2003 (PCSRSFRA; P.L. 108-18 ; 117 Stat. 624) helped sow the seeds for reform. The PCSRSFRA was enacted after it was discovered that the USPS was over-funding its retirees' pensions. The act reduced the USPS's pension outlays. However, it shifted the costs of postal employees' military service-related pension costs from the U.S. Treasury to the USPS--a $27 billion obligation. The PCSRSFRA also required much of the reduction from the previous pension outlay levels to be put toward lowering the USPS's debt and funding an escrow account. The law did not, however, dedicate the escrow fund to any particular use (e.g., postal worker benefits), meaning that the USPS had to make a large annual payment that neither provided operational benefits nor generated revenues. According to a CRS analysis using CQ.com's "Law Track" tool, the PAEA makes more than 150 changes to current federal law. The law's major changes include the following: Definition of the term "Postal Service." Section 101 of the law defines "postal service" to mean "the delivery of letters, printed matter, or mailable packages, including acceptance, collection, sorting, transportation, or other functions ancillary thereto." This provision is significant because previously the law did not define "postal service," an omission, critics have contended, that permitted the USPS to undertake nonpostal activities (e.g., the sale of prepaid phone cards) to the detriment of private-sector firms. Alteration of the USPS's budget submission p rocess. Section 603 altered the budget submission process for the USPS's Office of Inspector General (USPSOIG) and the Postal Rate Commission (PRC). In the past, the USPSOIG and the PRC submitted their budget requests to the USPS's Board of Governors. Accordingly, past presidential budgets did not include the USPSOIG's or PRC's funding requests or appropriations. Under the PAEA, both the USPSOIG and the PRC--which the PAEA renamed the Postal Regulatory Commission--must submit their budget requests to Congress and to the Office of Management and Budget, and they are to be paid from the Postal Service Fund. The law further requires USPSOIG's budget submission to be treated as part of USPS's total budget, while the PRC's budget, like the budgets of other independent regulators, is treated separately. Return of m ilitary o bligations to the Treasury. Section 802 of the law relieves the USPS of the $27 billion cost of paying postal worker pension benefits that are attributable to military service. Repeal of the e scrow account . Section 804 of the law abolished the escrow account established by P.L. 108-18 . Establishment of the Postal Service Retiree Health Benefits Fund . Sections 801 to 803 of PAEA change the USPS from funding its retirees' health care costs from an out-of-pocket or pay-as-you-go basis to prefunding these obligations. To this end, the PAEA requires the USPS to pay more than $5 billion annually from FY2007 and FY2016 to build a retiree health benefits fund (RHBF) from which both USPS employees and USPS retirees will be paid come FY2017. The funds previously deposited in the escrow account were used to seed this new fund. A s tronger r egulator. Title VI of the law replaces the Postal Rate Commission with the Postal Regulatory Commission (PRC). The new regulator has subpoena power and a broader scope for the regulation of the USPS and the examination of the USPS's activities. For example, the PAEA requires the PRC to curb the USPS's issuance of nonpostal products, and to annually determine the USPS's compliance with the PAEA's requirements. Separation of USPS p roduct t ypes and rate-setting . Title II of the law divides USPS products into "market-dominant" and "competitive" classes. Market-dominant products include those products and services that the USPS need not compete with the private sector to provide. Market-dominant products include (1) first-class mail letters and sealed parcels, (2) first-class mail cards, (3) periodicals, (4) standard mail, (5) single-piece parcel post, (6) media mail, (7) bound printed matter, (8) library mail, (9) special services, and (10) single-piece international mail. Competitive products include those for which a competitive market exists. They include (1) priority mail, (2) expedited mail, (3) bulk parcel post, (4) bulk international mail, and (5) mailgrams. This separation of products into two types is significant because critics have said that the USPS has used revenues from market-dominant products (e.g., first class mail) to cross-subsidize competitive products (e.g., overnight package delivery). This, they contend, is unfair competition. Under PAEA, the USPS may raise the rates (prices) of products in the market-dominant class by no more than the Consumer Price Index for All Urban Consumers (CPI-U). Prices of products in the competitive class must be based on market-type factors, such as "costs attributable," which Section 202 of the statute defines as "the direct and indirect postal costs attributable to such products through reliably identified causal relationships." An e xpedited r ate- s etting p rocess. Under the former rate-setting system, the USPS would submit a request to the Postal Rate Commission to raise postage prices that detailed the proposed increases and the justifications for them. This began a quasi-judicial process in which all interested parties, including citizens and business firms, would submit testimony to the commission concerning USPS's proposed postage rates. The Postal Rate Commission would hold a hearing, take testimony from witnesses, and issue a recommended decision, which the USPS's Board of Governors could accept or reject. Frequently, the entire process took more than six months, and the results were difficult to predict. The PAEA replaced this process with a less adversarial and more expeditious process that takes less than two months. Now, when the USPS wants to raise postage rates, it files a notice with the PRC, which takes public comments and verifies the proposed rates' compliance with the law. Reform of i nternational m ail r egulation. Section 407 of the law clarifies the authority of the Secretary of State to set international postal policy and enter agreements, and requires him/her to apply customs laws equally to private shipments and "shipments of international mail that are competitive products." New q ualifications and l engths of t erms in o ffice for the USPS's g overnors. Section 501 of the PAEA requires that members of the Board of Governors of the USPS "be chosen solely on the basis of their experience in the field of public service, law or accounting or on their demonstrated ability in managing organizations or corporations (in either the public or private sector) of substantial size." Of the nine governors, at least four would have to "be chosen solely on the basis of their demonstrated ability in managing organizations or corporations (in either the public or private sector) that employ at least 50,000 employees." Governors' terms are reduced from nine to seven years. Increased USPS t ransparency. Section 204 requires the USPS to release more details on its finances and operations. In its financial reporting, the USPS must provide the same information that private firms provide under Section 4 of the Sarbanes-Oxley Act. GAO study on the USPS's b usiness m odel. Section 710 of the PAEA requires the GAO to assess the options for a future business model for the USPS. The GAO was required to deliver its report by January 20, 2011, and did so. The inherent complexity of lawmaking and the execution thereof invites disagreement and confusion over what a law means. Should agencies interpret a statute based upon the text of the statute alone? Should they consider Congress's intent or try to ascertain the "original understanding" of the statute? Newly enacted statutes can be particularly susceptible to differing interpretations as political actors attempt to implement the statute. As described earlier, the PAEA made numerous significant changes to U.S. postal law. Because of its length--more than 20,000 words--and complexity, it is not surprising that disagreements concerning implementation of the PAEA have arisen. As the words of the PAEA develop into governmental actions, Congress may mitigate some of the possible negative effects through active oversight of the USPS and the PRC. To date, it is unclear if the Administration of President Barack Obama has any concerns regarding the implementation of the PAEA. However, his predecessor, President George W. Bush, did issue a signing statement that addressed a number of sections of PAEA, often in the context of the separation of powers. These include the following: Section 205 permits "any interested person (including an officer of the Postal Regulatory Commission representing the interests of the general public)" to "lodge a complaint" with the PRC. The statement said the executive branch shall construe this portion of the statute "not to authorize an officer or agency within the executive branch to institute proceedings in Federal court against the Postal Regulatory Commission." Section 404 establishes 39 U.S.C. 409(h), which limits the circumstances under which the Department of Justice may represent the Postal Service in legal cases. The signing statement declared that the executive branch "shall construe subsection 409(h) of title 39 ... which relates to legal representation for an element of the executive branch, in a manner consistent with the constitutional authority of the President to supervise the unitary executive branch and to take care that the laws be faithfully executed." Section 405 of the statute amends 39 U.S.C. 407 so that the "Secretary of State shall be responsible for formulation, coordination, and oversight of foreign policy related to international postal services and other international delivery services," and Section 405 places certain limitations on the Secretary's powers to conclude treaties. Section 405 also places requirements upon the Secretary (e.g., the Secretary must "coordinate with other agencies as appropriate" in carrying out his or her responsibilities). The signing statement said that the executive branch shall construe this portion of the statute "in a manner consistent with the President's constitutional authority to conduct the Nation's foreign affairs, including the authority to determine which officers shall negotiate for the United States and toward what objectives, to make treaties by and with the advice and consent of the Senate, and to supervise the unitary executive branch." Subsections 501(a) and 601(a) established 39 U.S.C. 202(a) and 502(a), which set the qualification requirements for members of the Board of Governors. The signing statement declared that this "purport[s] to limit the qualifications of the pool of persons from whom the President may select appointees." The executive branch, it continued, shall interpret this portion of the statute "in a manner consistent with the Appointments Clause of the Constitution." Subsection 605(c) requires the appointment of an inspector general within 180 days of the enactment of the statute. The signing statement said that the "executive branch shall also construe as advisory the purported deadline in subsection 605(c) ... as is consistent with the Appointments Clause." As enacted by Subsection 1010(e) of the act, 39 U.S.C. 404(c) requires the USPS to "maintain one or more classes of mail for the transmission of letters sealed against inspection." It prohibits the opening of such mail "except under authority of a search warrant authorized by law, or by an officer or employee of the Postal Service for the sole purpose of determining an address at which the letter can be delivered, or pursuant to the authorization of the addressee." The signing statement declared that the executive branch will interpret this prohibition "in a manner consistent ... with the need to conduct searches in exigent circumstances ... and the need for physical searches specifically authorized by law for foreign intelligence collection." Subsection 504(d) and Section 2009 of Title 39, as amended by Section 603 of the act, and Sections 701(a)(2), 702(b), 703(b), 708(b), and 709(b)(2) of the statute, require the PRC to provide budget requests and assorted reports to Congress. The signing statement said that the executive branch shall construe the "provisions ... that call for executive branch officials to submit legislative recommendations to the Congress in a manner consistent with the constitutional authority of the President to supervise the unitary executive branch and to recommend for congressional consideration such measures as the President shall judge necessary and expedient." Taken as a whole, then, the signing statement's individual contentions amount to a defense of executive branch authorities against perceived or possible legislative encroachments. Congress may wish to consider the merits of these executive branch claims and query the current Administration to see if it shares these views. PAEA replaced the Postal Rate Commission with the Postal Regulatory Commission. This new regulatory agency has both greater powers and greater duties than its predecessor. To date, the PRC has completed numerous tasks that were integral to executing PAEA's objectives, such as establishing "a modern system for regulating rates and classes for market-dominant products"; "further defining" the term "workshare discount," which refers to postage discounts provided to mailers for the presorting, pre-barcoding, handling, or transportation of mail; promulgating "regulations to ... prohibit the subsidization of competitive products by market-dominant products"; and prescribing "the content and form" of the annual reports USPS must issue. The PRC also has conducted annual determinations of the USPS's compliance with PAEA, and issued numerous opinions on USPS proposals to alter rates, products, and services. Congress has held many hearings on the USPS since enactment of the PAEA during which it has examined the implementation of PAEA and the role of the PRC. However, in order to assess the PRC's development as an agency and to further understand the directions in which the PRC is developing, Congress may wish to examine the PRC's actions since the enactment of the PAEA, review its annual expenditures, and confer with its commissioners and employees. After running modest profits from FY2004 through FY2006, the USPS lost $25.4 billion between FY2007 and FY2011. The USPS's financial difficulties have made it difficult for the USPS to make its RHBF payments as scheduled by the PAEA. Congress reduced the FY2009 payment amount from $5.4 billion to $1.4 billion ( P.L. 111-68 ), and the USPS made the payment. Congress also delayed the FY2011 payment to August 1, 2012 ( H.Rept. 112-331 ). However, the USPS was unable to make the FY2011 payment, and the agency has said it cannot make the FY2012 $5.6 billion payment which is due on September 30, 2012. As Table 1 indicates, the USPS must make payments of $5.6 billion to $5.8 billion in PAEA-mandated RHBF payments through FY2016. Both the PRC and the USPS Office of Inspector General have issued reports that suggest that the PAEA payment schedule for future retiree health benefits is too aggressive. The PRC estimated that the USPS should pay $3.4 billion per year, while the USPSOIG has said that the USPS should pay $1.6 billion per year through 2016 to fund its obligations. In light of this, Congress may wish to reassess the PAEA's payment schedule and the differing calculations of the USPS's obligation. Additionally, confusion has arisen as to what might occur should the USPS fail to make its annual payment to the Retiree Health Benefits Fund. The PAEA does not address what should occur in such an instance. Congress may wish to address this matter by considering building in consequences or a mechanism for missed or less-than-full payments, such as the automatic rollover of a shortfall into a subsequent fiscal year's scheduled payment. The PAEA's Section 302 addresses the surfeit of USPS non-retail facilities. The law states: Congress finds that-- (A) the Postal Service has more than 400 logistics facilities, separate from its post office network; (B) ... the Postal Service has more facilities than it needs and the streamlining of this distribution network can pave the way for the potential consolidation of sorting facilities and the elimination of excess costs; (C) the Postal Service has always revised its distribution network to meet changing conditions and is best suited to address its operational needs; and (D) Congress strongly encourages the Postal Service to-- (i) expeditiously move forward in its streamlining efforts; and (ii) keep unions, management associations, and local elected officials informed as an essential part of this effort and abide by any procedural requirements contained in the national bargaining agreements. In the move to reduce the number of these facilities, Section 302(c)(1) of the PAEA requires the USPS to produce a facilities plan that includes the procedures that the Postal Service will use to-- (i) provide adequate public notice to communities potentially affected by a proposed rationalization decision; (ii) make available information regarding any service changes in the affected communities, any other effects on customers, any effects on postal employees, and any cost savings; (iii) afford affected persons ample opportunity to provide input on the decision; and (iv) take such comments into account in making a final decision. Section 302(c)(5) forbids the USPS from closing or consolidating "any processing or logistics facilities without using procedures for public notice and input consistent with those described [above]." The USPS published its facilities plan in June 2008. The plan neither lists all the types of processing and logistics facilities that exist nor provides public notice and input for closing them. The USPS's plan only provides public input processes in its section on area mail processing closures. As noted above, the PAEA's Section 302 states that the USPS must devise and employ public notification and input processes prior to the closure of all "processing and logistics facilities." Yet the USPS has been criticized for closing some types of non-retail facilities without following the PAEA-required processes. Congress may wish to examine whether there is a discrepancy between Section 302 of PAEA and current USPS practices, and whether the PRC has the jurisdiction and authority to enforce Section 302. As noted above, Section 101 of the PAEA defined "postal service" to mean "the delivery of letters, printed matter, or mailable packages, including acceptance, collection, sorting, transportation, or other functions ancillary thereto." Section 102(c)(2) of the law did permit the USPS to continue providing the types of nonpostal services (e.g., photocopy and notary services) it had been providing prior to January 1, 2006. However, Section 102(c)(3) required the PRC to review each nonpostal service offered by the Postal Service ... [to] determine whether that nonpostal service shall continue, taking into account-- (A) the public need for the service; and (B) the ability of the private sector to meet the public need for the service. Section 102(c)(4) mandated that "[a]ny nonpostal service not determined to be continued by the Postal Regulatory Commission [under Section 102(c)(3)] shall terminate." Additionally, PAEA's Section 102(c)(5) required that when the PRC authorized the USPS to sell a nonpostal service, the PRC had to designate whether the service would be priced and regulated as a market-dominant product, a competitive product, or an experimental product. Taken as a whole, then, the PAEA's Section 102 aimed to direct the USPS to provide postal services and to refrain from offering new nonpostal services. Since the enactment of the PAEA, this latter objective has come into question. As mail volumes and revenues have dropped, the USPS has sought ways to increase its postal product and services revenues. In May 2009, the USPS proposed holding a "summer sale" that would give reduced postage prices to mailers who had sent over 1 million mail pieces in a six-month period. (The PRC promptly approved this proposal, and the USPS held the sale.) Five months later, the USPS announced it would begin selling Hallmark greeting cards at some of its retail postal facilities. (The PRC previously had approved greeting card sales.) However, the USPS has said that these steps are not sufficient, and that it would like to be given greater authority to sell new nonpostal services. For example, then Postmaster General John Potter testified before the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security that we are simply unable to generate the revenue necessary to support our retail and delivery network at their current size.... Other national [postal services] complement their traditional offerings with banking, cell phone, logistics, and other services to generate the income necessary to offset the costs of their universal service obligation--costs that cannot be met solely by the price of postage. [W]e believe the time has come to allow the Postal Service to introduce new lines of business at its retail facilities.... This change is only possible with the concurrence of Congress through new legislation, and we ask for your consideration in this regard. Whether the USPS would benefit from additional authority to sell nonpostal products is unclear. Additionally, the USPS argument for the need for greater authority to sell nonpostal services rests on a broader argument--that the USPS's business model is "broken." Just four months after the enactment of the PAEA, then Postmaster General Potter testified before Congress that, [u]nfortunately, significant changes in the communications and delivery markets have made continued success under the original law problematic. That is why our Nation is fortunate that so many have recognized this and acted to preserve affordable, universal Postal services. I appreciate the efforts of this committee, both houses of Congress, Comptroller General David Walker, the administration, and the President's Commission on the U.S. Postal Service. It is my hope that 30 years from today a future Postmaster General will sit at this table and report on the progress made possible by the Postal Accountability and Enhancement Act of 2006. Unfortunately, our business model remains broken, even with the positive pricing and product changes in the new law. With the diversion of messages and transactions to the Internet from the mail, we can no longer depend on printed volume growing at a rate sufficient to produce the revenue needed to cover the costs of an ever-expanding delivery network. This argument has been reiterated by the USPS's chief financial officer, Joseph Corbett, who said the USPS's "business model, quite frankly, is broken. It doesn't work for a declining-volume scenario." The argument that the USPS's business model is "broken" and cannot cover its operating costs without being allowed to enter nonpostal lines of business appears to rest on a fundamental assumption: that over the long run the USPS's operating costs will continue to outstrip its operating revenues in perpetuity; and that this lag of revenue growth behind cost growth is the result of declining mail volumes (and the resultant revenues). Hence, the need for the USPS to reap additional revenues by offering new nonpostal services. In its PAEA Section 710 report, GAO states, "USPS's business model is not viable due to USPS's inability to reduce costs sufficiently in response to continuing mail volume and revenue declines." As Congress further considers the USPS's request for broader authorities to provide nonpostal services, it may wish to investigate these fundamental assumptions regarding postal economics and the possible ramifications for the USPS's operations.

President George W. Bush signed the Postal Accountability and Enhancement Act (PAEA; P.L. 109-435; 120 Stat. 3198) on December 20, 2006. The PAEA was the first broad revision of the 1970 statute that replaced the U.S. Post Office with the U.S. Postal Service (USPS), a self-supporting, independent agency of the executive branch. This report describes Congress's pursuit of postal reform and summarizes the major provisions of the new postal reform law. The report also suggests possible PAEA-related oversight issues for Congress. Legislatively, the pursuit of reform of the U.S. Postal Service (USPS) began during the 104th Congress, in 1996. A number of factors encouraged the movement for postal reform. Perhaps foremost were the financial challenges of the USPS. A decade later, Congress enacted the PAEA, which made over 150 changes to postal law. Some of the more significant alterations are defining the term "postal service"; restricting the USPS's authority to provide nonpostal services; altering the USPS's budget submission process; requiring the USPS to prefund its future retiree health benefits by establishing the Postal Service Retiree Health Benefits Fund; and replacing the USPS's regulator, the Postal Rate Commission, with the more powerful Postal Regulatory Commission. The inherent complexity of lawmaking and the execution thereof invites disagreement and confusion over what a law means and how it should be implemented. In the six years since the enactment of the PAEA, some issues and questions concerning the law's provisions have arisen. These include, but are not limited to, possible executive branch concerns about the PAEA and the separation of powers; the cost of prefunding USPS future retiree health benefits; the role of the public in the closure of nonretail postal facilities; the USPS's authority to provide nonpostal products and services, and the viability of the USPS's business model. This report will be updated should events warrant.

With the signing of the Omnibus Appropriations Act for FY2009 ( H.R. 1105 , P.L. 111-5 ) on March 11, 2009, the National Aeronautics and Space Administration (NASA) was funded at $17.78 billion for the fiscal year. Of that total, $5.76 billion was allocated to Space Operations, which include the Space Shuttle and the International Space Station. For FY2008, NASA had received $5.53 billion for Space Operations. As NASA continued to fly Space Shuttle missions to the International Space Station, the agency awaited the announcement of a new administrator to replace Michael Griffin, who resigned in January. On March 11 President Obama said he would appoint a new NASA director soon, and that one of biggest tasks of the new director would be "shaping a mission for NASA that is appropriate for the 21 st Century." NASA launched its first space station, Skylab, in 1973. Three crews were sent to live and work there in 1973-1974. It remained in orbit, unoccupied, until it reentered Earth's atmosphere in July 1979, disintegrating over Australia and the Indian Ocean. Skylab was never intended to be permanently occupied, but the goal of a permanently occupied space station with crews rotating on a regular basis, employing a reusable space transportation system (the space shuttle) was high on NASA's list for the post-Apollo years following the moon landings. Budget constraints forced NASA to choose to build the space shuttle first. The first launch of the shuttle was in April 1981. When NASA declared the shuttle "operational" in 1982, it was ready to initiate the space station program. In his January 25, 1984 State of the Union address, President Reagan directed NASA to develop a permanently occupied space station within a decade, and to invite other countries to join. On July 20, 1989, the 20 th anniversary of the first Apollo landing on the Moon, President George H. W. Bush voiced his support for the space station as the cornerstone of a long-range civilian space program eventually leading to bases on the Moon and Mars. That "Moon/Mars" program, the Space Exploration Initiative, was not greeted with enthusiasm in Congress, primarily due to budget concerns, and ended in FY1993, although the space station program continued. President Clinton dramatically changed the character of the space station program in 1993 by adding Russia as a partner to this already international endeavor. That decision made the space station part of the U.S. foreign policy agenda to encourage Russia to abide by agreements to stop the proliferation of ballistic missile technology, and to support Russia economically and politically as it transitioned from the Soviet era. The Clinton Administration strongly supported the space station within certain budget limits. The International Space Station program thus began in 1993, with Russia joining the United States, Europe, Japan, and Canada. An Intergovernmental Agreement (IGA) established three phases of space station cooperation. The IGA is a treaty in all the countries except the United States, where it is an Executive Agreement. It is implemented through Memoranda of Understanding (MOUs) between NASA and its counterpart agencies. During Phase I (1995-1998), seven U.S. astronauts remained on Russia's space station Mir for long duration (several month) missions with Russian cosmonauts, Russian cosmonauts flew on the U.S. space shuttle seven times, and nine space shuttle missions docked with Mir to exchange crews and deliver supplies. Repeated system failures and two life-threatening emergencies on Mir in 1997 raised questions about whether NASA should leave more astronauts on Mir , but NASA decided Mir was sufficiently safe to continue the program. ( Mir was deorbited in 2001.) Phases II and III involve construction of the International Space Station itself, and blend into each other. Phase II began in 1998 and was completed in July 2001; Phase III is underway. President George W. Bush, prompted in part by the February 2003 space shuttle Columbia tragedy, made a major space policy address on January 14, 2004, directing NASA to focus its activities on returning humans to the Moon and eventually sending them to Mars. Included in this "Vision for Space Exploration" was a decision to retire the space shuttle in 2010. The President said the United States would fulfill its commitments to its space station partners. Under the original ISS schedule, assembly of the station would have been completed in 2002, with operations at least through 2012. President Bush restructured the space station program in 2001, and left it unclear when assembly would be completed. NASA briefing charts in March 2003 showed space station operations possibly continuing until 2022. Under President Bush's January 2004 "Vision for Space Exploration," however, NASA plans to complete its utilization of ISS in 2016 (though the other partners may continue to use it after that time). ISS segments have been and continue to be launched into space on U.S. or Russian launch vehicles and assembled in orbit. The space station is composed of a multitude of modules, solar arrays to generate electricity, remote manipulator systems, and other elements. (Details can be found at http://spaceflight.nasa.gov/home/index.html .) The U.S. space shuttle has been the major vehicle taking crews and cargo back and forth to ISS, but the shuttle system encountered difficulties after the Columbia disaster and did not resume flights until 2006. Russian Soyuz spacecraft are also used to take crews to and from ISS, and Russian Progress spacecraft deliver cargo, but cannot return anything to Earth, since it is not designed to survive reentry into the Earth's atmosphere. A Soyuz is always attached to the station as a lifeboat in case of an emergency. "Expedition" crews have occupied ISS on a 4-6 month rotating basis since November 2000. Originally the crews had three members (two Russians and one American, or two Americans and one Russian). Crew size was temporarily reduced to two (one American, one Russian) while the U.S. shuttle was grounded in order to reduce resupply requirements. The number of astronauts who can live on the space station is limited in part by how many can be returned to Earth in an emergency by lifeboats docked to the station. Only Russian Soyuz spacecraft are available as lifeboats. Each Soyuz can hold three people, limiting crew size to three if only one Soyuz is attached. The plan is that crew size will grow to six once assembly is completed. Each Soyuz must be replaced every six months. The replacement missions are called "taxi" flights since the crews bring a new Soyuz up to ISS and bring the old one back to Earth. Therefore, under normal conditions, the long duration Expedition crews are regularly visited by taxi crews, and by the space shuttle bringing up additional ISS segments or exchanging Expedition crews. When the shuttle is unavailable, Expedition crews are taken back and forth on the "taxi" flights. In order to contract for Soyuz service to the ISS, NASA has needed an exemption from the Iran Nonproliferation Act (INA) ( P.L. 106 - 178 ), which banned U.S. payments to Russia in connection with the International Space Station (ISS) unless the U.S. President determined that Russia was taking steps to halt proliferation of nuclear weapons and missile technology to Iran. In 2005 Congress amended INA to exempt Soyuz flights to the ISS from the ban through 2011. It also extended the provisions of the INA to Syria and North Korea, and renamed it the Iran, North Korea, and Syria Nonproliferation Act (INKSNA). NASA asked for a legislated extension of this exemption, and waiver authority was extended until July 1, 2016, in the Continuing Appropriations Act of 2009 ( P.L. 110 - 329 ). (For details see CRS Report RL34477, Extending NASA's Exemption from the Iran, North Korea, and Syria Nonproliferation Act , by [author name scrubbed] and Mary Beth Nikitin.) From FY1994 to FY2001, the cost estimate for building ISS grew from $17.4 billion to about $25 billion. The $17.4 billion estimate did not include launch costs, operational costs after completion of assembly, civil service costs, or other costs. NASA estimated the program's life-cycle cost (all costs, including funding spent prior to 1993) from FY1985 toFY2012 at $72.3 billion. In 1998, GAO estimated the life-cycle cost at $95.6 billion (GAO/NSIAD-98-147). More recent, comparable, life-cycle estimates are not available from NASA or GAO. As costs continued to rise, Congress voted to legislate a $25 billion cap on development of the ISS program, plus $17.7 billion for associated shuttle launches, in the FY2000-FY2002 NASA authorization act ( P.L. 106 - 391 ). In January 2001, however, NASA announced that the cost would be over $30 billion, 72% above the 1993 estimate, and $5 billion above the legislated cap. NASA explained that program managers had underestimated the complexity of building and operating the station. The Bush Administration signaled it supported the legislated cap, would not provide additional funds, and NASA would have to find what it needed from within its Human Space Flight account. In February 2001, the Bush Administration announced it would cancel or defer some ISS hardware to stay within the cap and control space station costs. The decision truncated construction of the space station at a stage the Administration called "core complete." In 2001, the space station program office at Johnson Space Center (JSC) estimated that it would cost $8.3 billion from FY2002 toFY2006 to build the core complete configuration, described at that time as all the U.S. hardware planned for launch through "Node 2," plus the launch of laboratories being built by Europe and Japan. NASA subsequently began distinguishing between "U.S. Core Complete" (the launches through Node 2, which, prior to the Columbia tragedy, was scheduled for February 2004) and "International Partner (IP) Core Complete" which included the addition of European and Japanese laboratory modules (then anticipated in 2008). The new policy was followed by President Bush's January 2004 "Vision for Space Exploration," which directs that U.S. research on ISS be restricted only to that which supports the Vision. A new research plan, incorporating the President's Vision, was issued by NASA in June 2006, as mandated by the 2005 NASA authorization act ( P.L. 109 - 155 ). At a January 2005 Heads of Agency meeting, the partners endorsed a final configuration of ISS, but NASA subsequently announced changes to it. The agency now plans to conduct only 16 (instead of 28) shuttle launches to the ISS, all before the end of FY2010 (September 30, 2010), and has dropped plans to launch the centrifuge and its accommodation module, and Russia's Science Power Platform. The agency plans to meet with the other ISS partners to discuss these changes. The changes to the ISS are largely due to the new direction NASA is taking in response to the Vision for Space Exploration. The Vision calls for development of a Crew Exploration Vehicle, now named Orion, to take astronauts to and from the Moon, and a Crew Launch Vehicle, now named Ares I. Orion also can take them to and from the ISS, and NASA Administrator Griffin stated at a September 19, 2005 press conference that Orion would be used to take crews to and from the ISS, and to serve as a lifeboat for them. If Orion is built as announced, it would fulfill the U.S. commitment to build a crew return capability, and allow the ISS crew size to increase to its originally planned complement of seven. An Earth-orbit capability is planned by 2014 (although NASA now considers early 2015 more likely) with the ability to take astronauts to and from the Moon following no later than 2020. The Space Transportation System (STS)--the Space Shuttle--is a partially reusable launch vehicle and is the sole U.S. means for launching humans into orbit. It consists of an airplane-like Orbiter, with two Solid Rocket Boosters (SRBs) on each side, and a large, cylindrical External Tank (ET) that carries fuel for the Orbiter's main engines. The Orbiters and SRBs are reused; the ET is not. NASA has three remaining spaceflight-worthy Orbiters: Discovery , Atlantis , and Endeavour . More than 100 shuttle launches have taken place since April 1981. Two ended in tragedy, each killing seven astronauts. In 1986, the space shuttle Challenger exploded 73 seconds after launch because of the failure of a seal (an O-ring) between two segments of an SRB. In 2003, the space shuttle Columbia disintegrated as it returned to Earth after 16 days in orbit (see CRS Report RS21408, NASA ' s Space Shuttle Program: The Columbia Tragedy, the Discovery Mission, and the Future of the Shuttle , by [author name scrubbed]). A hole in Columbia ' s left wing, caused during launch by a piece of foam insulation that detached from the ET, allowed hot gases to enter the wing during reentry, deforming it and causing the shuttle to break up. The Columbia Accident Investigation Board (CAIB) found that the tragedy was caused by technical and organizational failures, and made 29 recommendations, 15 of which it said should be completed before the shuttle returned to flight. Sean O'Keefe, NASA's Administrator from December 2001-February 2005, said NASA would comply with the CAIB recommendations. NASA launched the space shuttle Discovery on the first of two "Return to Flight" (RTF) missions--STS-114--on July 26, 2005, and it successfully landed on August 9. On July 27, however, NASA announced that a piece of foam had detached from STS-114's ET during launch, similar to what happened to Columbia . Cameras and other sensors on Discovery and on the International Space Station--to which Discovery was docked for much of its mission--imaged the Orbiter and determined that it was not damaged, but further shuttle launches were suspended. Meanwhile, the images revealed that two "gapfillers"--ceramic coated fabric placed between thermal protection tiles--were protruding on the belly of the Orbiter that could have affected aerodynamic heating during reentry. One of the Discovery astronauts removed them during a space walk. The second RTF mission--STS-121--was scheduled for September 2005, but deferred. STS-121 launched on July 4, 2006, and returned safely to Earth on July 17. The shuttle Atlantis launched September 9 on STS 115, during which construction of the International Space Station was resumed. Current plans for the shuttle include nine more flights to complete the ISS before the shuttle is permanently grounded in 2010. Also planned is another flight to service the Hubble Space Telescope. Following the Columbia disaster, then-Administrator Sean O'Keefe had cancelled the Hubble servicing mission, partly on the grounds that shuttle astronauts would not be able to reach the ISS as a haven in case the shuttle was unable to return to earth. The decision was put under review by the new Administrator, Michael Griffin, and on October 31, 2006, he announced that the Hubble mission would be undertaken in 2008. The servicing would extend the life of the telescope through 2013. To deal with emergencies, NASA planned to prepare a "launch on need" mission with a second shuttle ready to launch on a rescue mission if the first was found defective during the servicing mission. The launch was in final stages of preparation when a major data handling unit already in place in the Hubble telescope failed in late September 2008. A backup unit in the telescope was activated, but the service mission was revised to include carrying a second data handling unit, which had been stored on earth, to replace the failed one. NASA determined that assessing and preparing the second unit for installation and service would delay the mission until May or June of 2009. NASA attempted unsuccessfully for many years to develop a "second generation" reusable launch vehicle (RLV) to replace the shuttle. In 2002 NASA indicated the shuttle would continue flying until at least 2015, and perhaps 2020 or beyond. The Columbia tragedy, and President Bush's 2004 Vision for Space Exploration--to return astronauts to the Moon by 2020 and someday send them to Mars--forced NASA to revise that plan. The President's Vision calls for the shuttle program, which absorbs approximately 25% of NASA's annual budget, to be terminated in 2010. A primary motivation is to make that funding available to implement other aspects of the Vision, although there also is concern about shuttle safety. Congress has been debating the Vision, including its impact on the shuttle and on U.S. human access to space. Some Members wanted to terminate the shuttle earlier than 2010 because they feel it is too risky and/or that the funds should be spent on accelerating the Vision. Others want to retain the shuttle at least until a new spacecraft, the Crew Exploration Vehicle (CEV), is available to take astronauts to and from the ISS. The CEV is now planned for 2015 at the earliest, leaving a multi-year gap during which U.S. astronauts would have to rely on Russia for access to the ISS. The 2008 NASA Authorization Act ( P.L. 110 - 422 ) included a provision requiring NASA to "terminate or suspend any activity of the Agency that, if continued between the date of enactment of this Act and April 30, 2009, would preclude the continued safe and effective flight of the Space Shuttle after fiscal year 2010 if the President inaugurated on January 20, 2009, were to make a determination to delay the Space Shuttle's scheduled retirement." (Sec. 611d.) Funding for the shuttle for FY2008 was $3.981 billion. For FY2009, NASA requested $2.982 billion for the shuttle, but that amount reflects NASA's new system for funding program overhead costs, which created a new Cross-Agency Support account. By the new accounting system, the comparable shuttle funding for FY2008 was $3.267 billion. The omnibus appropriations bill ( P.L. 111-8 ) appropriated the requested $2.982 billion. (For details on the NASA budget, see CRS Report RS22818, National Aeronautics and Space Administration: Overview, FY2009 Budget, and Issues for Congress , by [author name scrubbed] and [author name scrubbed].) In passing the 2005 NASA authorization act ( P.L. 109 - 105 ), Congress basically agreed with the President's plan for directing NASA's attention to a return to the Moon and manned missions to Mars. Included in the Moon-Mars "Vision" is the plan to end flights of the Space Shuttle in 2010, and restriction of U.S. experiments on the ISS mostly to those that forward the goal Moon-Mars goal. A number of critical questions remain, however. Adequacy of funding is the chief question raised about NASA's activities. In presenting the Moon-Mars vision, the President did not request significantly increased money for NASA, despite chronic indications that the missions it was already charged with were underfunded. NASA has responded to the new mission by cutting back funding for its other activities, primarily in scientific research and aeronautics. Although Discovery ' s "Return to Flight" mission of July 2006 was a success, the ability of the shuttle fleet to carry out enough flights to complete construction of the ISS by 2010 is still in question. With a history of more than a hundred successful missions, it might be assumed that another 15 or so would be considered more or less routine, but instead, each launch is still a major and risky event. The great complexity of the vehicle and the extreme environment in which it operates require constant attention to possible accidents and malfunctions, many of which must be addressed on an ad hoc basis. The future role of the ISS is also unclear. Assuming that enough shuttle flights are made to carry out "core completion" of the station by 2010, it is not clear what will be done with the ISS after that. In particular, there will be a gap of several years between retirement of the shuttle in 2010 and beginning of flight of the Crew Exploration Vehicle, to be designed for the return to the moon but able to serve as a vehicle to reach the ISS.

The International Space Station (ISS) program began in 1993, with Russia joining the United States, Europe, Japan, and Canada. Crews have occupied ISS on a 4-6 month rotating basis since November 2000. The U.S. Space Shuttle, which first flew in April 1981, has been the major vehicle taking crews and cargo back and forth to ISS, but the shuttle system has encountered difficulties since the Columbia disaster in 2003. Russian Soyuz spacecraft are also used to take crews to and from ISS, and Russian Progress spacecraft deliver cargo, but cannot return anything to Earth, since they are not designed to survive reentry into the Earth's atmosphere. A Soyuz is always attached to the station as a lifeboat in case of an emergency. President Bush, prompted in part by the Columbia tragedy, made a major space policy address on January 14, 2004, directing NASA to focus its activities on returning humans to the Moon and someday sending them to Mars. Included in this "Vision for Space Exploration" is a plan to retire the space shuttle in 2010. The President said the United States would fulfill its commitments to its space station partners, and the shuttle Discovery made the first post-Columbia flight to the ISS in July 2006. Shuttle flights have continued and completion of the space station is scheduled before the shuttle is retired in 2010. Meanwhile NASA has begun development of a new crew launch vehicle, named Ares, and a crew exploration vehicle, named Orion. NASA programs were funded for FY2008 in Division B of the Consolidated Appropriations Act (P.L. 110-161). The Space Operations program, which includes the space shuttle and the ISS, was funded at $6.734 billion. For FY2009 NASA requested $5.775 billion for these programs, but in the process revised its budgeting to move its overhead costs to a new account called Cross-Agency Support. Under the new system, the FY2008 Space Operations program would have received $5.526 billion, about $250 million less than the FY2009 request. NASA is currently operating under a continuing resolution (Division A of P.L. 110-329), which funded most civilian activities through March 6, 2009. Under the continuing resolution, Space Operations are funded at the $5.526 billion rate appropriated for FY2008. An FY2009 NASA authorization bill (H.R. 6063) was introduced May 15, 2008. Among the provisions in the one-year authorization bill was a "Sense of the Congress" urging cooperation in the Moon/Mars activities with other nations pursuing human space flight. It also requires that NASA "terminate or suspend any activity of the Agency that, if continued between the date of enactment of this Act and April 30, 2009, would preclude the continued safe and effective flight of the Space Shuttle after fiscal year 2010 if the President inaugurated on January 20, 2009, were to make a determination to delay the Space Shuttle's scheduled retirement." Congress passed the bill September 27, and it was signed by the President October 15 (P.L. 110-422).

Growing recognition of the crucial role that technological innovation plays in the U.S economy has led to increased congressional activity with respect to the intellectual property laws. As evidenced by provisions within several patent reform bills pending before the 111 th Congress, the operation of the U.S. Patent and Trademark Office (USPTO) is among the subjects of legislative interest. Many knowledgeable observers have expressed concern that the USPTO does not possess the capability to process the large number of patent applications that it receives. The growing backlog of filed, but unexamined applications could potentially lead to long delays in the time the USPTO requires to grant patents. Some experts believe that the concept of "deferred examination" may assist in alleviating the growing USPTO inventory of applications that have yet to be reviewed. Under current law, a USPTO examiner reviews each patent application that is filed. In contrast, the patent offices of many foreign nations, including Canada, Germany, Japan, and the United Kingdom, do not automatically examine every application. In these offices, an examiner will not consider the application unless the applicant submits a request for examination, including an additional fee. Failure to file such a request within a specified time period--usually from three to five years--results in the abandonment of the application. Deferred examination may hold potential benefits. Some inventors who file patent applications may subsequently decide not to expend the additional resources needed to obtain patents. If, for example, an invention proves less promising than it initially appeared due to technical or marketplace developments, or government approval to market the technology cannot be obtained, a patent applicant may rationally decide not to pursue the matter further. The USPTO then does not need to review those applications, allowing others to move through the agency more quickly. On the other hand, some experts believe that deferred examination holds negative consequences, such as marketplace uncertainty. Firms may not know for many years whether their new products will infringe a patent that resulted from deferred examination. This report provides an overview of deferred patent examination. It begins by offering a brief review of patent acquisition proceedings as well as challenges faced by the USPTO. The report then introduces the concept of deferred examination. The potential positive and negative consequences of deferred examination upon the environment for innovation within the United States are then explored. The report closes by identifying salient design parameters for deferred examination systems and reviewing congressional options. The U.S. Constitution provides Congress with the power "To promote the Progress of Science and useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their ... Discoveries." In accordance with the Patent Act of 1952 (the "Patent Act"), an inventor may seek the grant of a patent by preparing and submitting an application to the USPTO. Under current law, each application is then placed into queue for eventual review by officials known as examiners. The USPTO publishes most, but not all, pending patent applications "promptly after the expiration of a period of 18 months" from the filing date. Among the applications that are not published prior to grant are those that the applicant represents will not be the subject of patent protection abroad. In particular, if an applicant certifies that the invention disclosed in the U.S. application will not be the subject of a patent application in another country that requires publication of applications 18 months after filing, then the USPTO will not publish the application. USPTO officials known as examiners then determine whether the invention disclosed in the application merits the award of a patent. The USPTO examiner will consider a number of legal requirements, including whether the submitted application fully explains and distinctly claims the invention. In particular, the application must enable persons skilled in the art to make and use the invention without undue experimentation. In addition, the application must provide the "best mode," or preferred way, that the applicant knows to practice the invention. The examiner will also determine whether the invention itself fulfills certain substantive standards set by the patent statute. To be patentable, an invention must meet four primary requirements. First, the invention must fall within at least one category of patentable subject matter. According to the Patent Act, an invention which is a "process, machine, manufacture, or composition of matter" is eligible for patenting. Second, the invention must be useful, a requirement that is satisfied if the invention is operable and provides a tangible benefit. Third, the invention must be novel, or different, from subject matter disclosed by an earlier patent, publication, or other state-of-the-art knowledge. Finally, an invention is not patentable if "the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." This requirement of "nonobviousness" prevents the issuance of patents claiming subject matter that a skilled artisan would have been able to implement in view of the knowledge of the state of the art. If the USPTO allows the patent to issue, its owner obtains the right to exclude others from making, using, selling, offering to sell, or importing into the United States the patented invention. Those who engage in those acts without the permission of the patentee during the term of the patent can be held liable for infringement. Adjudicated infringers may be enjoined from further infringing acts. The patent statute also provides for an award of damages "adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." The maximum term of patent protection is ordinarily set at 20 years from the date the application is filed. At the end of that period, others may employ that invention without regard to the expired patent. Although patent term is based upon the filing date, the patentee gains no enforceable legal rights until the USPTO allows the application to issue as a granted patent. A number of Patent Act provisions may modify the basic 20-year term, including examination delays at the USPTO and delays in obtaining marketing approval for the patented invention from other federal agencies. Like most rights, those provided by a patent are not self-enforcing. Patent owners who wish to compel others to respect their proprietary interests must commence enforcement proceedings, which most commonly consist of litigation in the federal courts. Although issued patents enjoy a presumption of validity, accused infringers may assert that a patent is invalid or unenforceable on a number of grounds. The Court of Appeals for the Federal Circuit (Federal Circuit) possesses nationwide jurisdiction over most patent appeals from the district courts. The Supreme Court enjoys discretionary authority to review cases decided by the Federal Circuit. The growing popularity of the patent system has placed strains upon the resources of the USPTO. During 2009, the USPTO received 485,500 applications--a decrease of 2.3% from the 496,886 applications it received during the 2008 fiscal year. The number of applications filed in 2009 was still greater than the 468,330 filed in 2007, however. In turn, this figure was substantially larger than the annual filings achieved just a few years ago. In 2000, for example, 293,244 applications were filed at the USPTO. The USPTO has candidly admitted that "the volume of patent applications continues to outpace our capacity to examine them." As a consequence, the USPTO reportedly holds an inventory in excess of 1.2 million patent applications that have yet to be reviewed by an examiner. In addition, a USPTO examiner in 2009 would not review a patent application until, on average, 25.8 months after it was filed. The "first action pendency" during 2000 was 13.6 months. Many observers believe that if current conditions continue, the backlog and delay are likely to grow at the USPTO in coming years. Long delays for patent approvals may negatively impact high technology industries by increasing uncertainty about the availability and scope of patent rights. For market segments that feature a rapid pace of innovation and short product cycles, such as consumer electronics, lengthy USPTO delays may also significantly devalue the patent right. Put simply, by the time a patent issues, the entire industry might have moved on to more advanced technologies. Commerce Secretary Gary Locke reportedly described the length of time the USPTO requires to issue patents as "unacceptable," explaining that "[t]his delay causes uncertainty for inventors and entrepreneurs and impedes our economic recovery." USPTO Director David Kappos recently opined that "[e]very quality patent application that sits on the shelf represents jobs not created." In addition, under current law, USPTO delays may qualify certain patents for an extension of term. For example, if the USPTO does not respond to an application within 14 months of the day it is filed, the term of a patent that results from that application is extended by one day for each day of delay. Given that the average first action pendency is now almost 26 months, this rule of "Patent Term Adjustment" may cause many U.S. patents to have a term that exceeds 20 years. A patent with a longer term may be of greater value to its proprietor, but also may impact the ability of others to develop competing products. The USPTO has developed a number of initiatives in order to address its backlog of unexamined patent applications. The agency has hired many new examiners, including 1,193 in 2006; 1,215 in 2007; and 1,211 in 2008. The significance of this hiring rate should be assessed in view of the fact that in 2009, the total size of the patent examining corps was 6,242. The recent economic downturn has caused the USPTO to limit new hiring, however. As the title of recent congressional testimony by the Government Accountability Office--"Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog" --indicates, many observers are of the view that "[d]ue to both monetary and infrastructure constraints, the USPTO cannot simply hire examiners to stem the tide of applications." In 2007, the USPTO also proposed rules with respect to claims and so-called continued applications that were designed to reduce its examination burdens. These rules would have limited the number of claims that could be filed in a particular patent application, unless the applicant supplied the USPTO with an "Examination Support Document" in furtherance of that application. They would have also limited the number of continued applications that could be filed, absent a petition and showing by the patent applicant of the need for such applications. These rules never came into effect due to a temporary court ruling enjoining their implementation. In the face of considerable opposition to these rules by many members of the patent bar and innovative firms, the USPTO announced on October 8, 2009, that it was rescinding the rules package entirely. More recently, the USPTO announced a "Patent Application Backlog Reduction Stimulus Plan." Under that program, an individual, small firm, or other enterprise that qualifies as a "small entity" may choose to abandon a previously filed application. If the applicant does so, he may select another application to be examined on an expedited basis. According to the USPTO, "[t]his procedure allows a small entity applicant who has multiple applications currently pending before the USPTO to have one of the applications accorded special status for examination if the applicant is willing to expressly abandon an application that has not been examined." The Patent Application Backlog Reduction Stimulus Plan has reportedly been the subject of only limited participation. As record-setting patent filing rates continue to strain agency resources, the USPTO has actively considered new concepts for administering the patent examination system. Explaining that it "frequently receives suggestions that the USPTO adopt a deferral of examination procedure," the USPTO held a roundtable on February 12, 2009, in order to obtain input on the possibility of adopting this system. The remainder of this report reviews the concept of deferred examination. The Patent Act currently requires the USPTO to review each patent application to determine whether it should issue into a patent or not. Inventors pay for this service upon filing their applications. The USPTO has established an optional deferral procedure through regulation. In order to defer, the applicant must pay an additional $130 processing fee and, at the outset, choose the number of months of deferral. The maximum period of deferral is 36 months. However, applicants have reportedly used this procedure infrequently. An alternative regime employed by certain other patent-granting nations is termed "deferred examination," or, more rarely, "examination on request." Under this procedure, patent applications are not automatically placed into queue to be examined. Rather, the applicant must make an additional, affirmative request for examination, and pay an additional fee. This request must be made within a stipulated period of time--for example, three, five, or seven years--or the application is deemed to have been abandoned. Deferred examination is reportedly employed by many patent-granting nations, including each of the top 10 U.S. trading partners with the exception of Mexico. Jurisdictions that have adopted deferred examination report that many applicants never request a substantive examination. Further, the number of applications that are never examined appears to increase as the period of deferral is lengthened. For example, the European Patent Office (EPO) requires that a request for examination be made within six months of the EPO's publication of the so-called European Search Report. Because the EPO typically takes about one year to publish its search report, examination must be requested within approximately 18 months. In 2008, the EPO reported that requests for examination were received with respect to 93.5% of all applications. In contrast, the Japan Patent Office (JPO) currently operates under a longer, three-year period of deferral. In 2008, the JPO reported that only 65.6% of all applications proceeded to examination. Prior to 2001, when the JPO allowed an even lengthier seven-year period of deferral, the dropout rate was correspondingly greater. According to one estimate, as many as 65% of JPO applications were never examined. The experience of the Canadian Intellectual Property Office (CIPO) is similar. Canadian law allows for a five-year period of deferral that reportedly results in a "dropout rate" of about 35% of filed applications. Other patent offices have also reported substantial dropout rates as well. Applicants may choose not to pursue their filed applications further for a number of reasons. They may determine that marketplace, regulatory, or technical developments have made further prosecution of that application not worthwhile. Some inventors may also determine that the inventions disclosed in their filed applications do not meet the legal standards of patentability. In particular, the EPO and certain other patent offices provide all applicants with a "Search Report" that lists other patents, journal articles, and other references that document the state of the art. Upon reviewing this information, some applicants may determine that it is unlikely their inventions would be considered patentable, and therefore decline to request examination. Other applicants may no longer be in business or lack funding to continue to advance their applications. The possibility of U.S. adoption of deferred examination has proven to be a controversial topic. While some patent professionals believe that the possibility of "examination upon request" would advantage both patent applicants and the USPTO, others believe that this system has too many negative aspects to be worthy of adoption. This report next considers some of the possible benefits and drawbacks of deferred examination. Supporters of deferred examination assert that U.S. adoption would result in a reduction of workload for the USPTO. Under this view, many inventors who file applications at the USPTO might subsequently choose not to pursue them further. This set of applications need not receive any review whatsoever by agency examiners. This application dropout would in turn provide more resources for the USPTO to examine undeferred applications. Although the potential application dropout rate in the United States may be difficult to predict, some observers believe that the experience of foreign patent offices suggests that the reduction of USPTO workload could potentially be significant. Others note that even a small decrease in applications that require examination would nonetheless assist the USPTO. Proponents of a deferred examination system also contend that with increasing application pendency rates at the USPTO, the United States effectively operates under a de facto deferral regime today. As a result, any potential negative consequences of deferred examination have to some extent already been realized, while the advantages of a formal "examination upon request" system have yet to be obtained. Some firms within the life sciences industry also explain that deferred examination provides a good match for products that are subject to lengthy regulatory approval delays. For example, drugs and certain medical devices require the approval of the Food and Drug Administration (FDA) prior to being sold to the public. Innovators of those products may need to file a patent application earlier in their development cycle in order to attract venture capital. However, the final design of the product is not certain until later in the development cycle. A delay during examination may allow the applicant to more closely tailor the claims of the patent to the final design of the product. In addition, some products submitted for regulatory review do not obtain FDA approval. The FDA may determine that some drugs and medical devices are not safe and effective within the meaning of the Federal Food Drug & Cosmetic Act. In such cases, as journalist Steve Seidenberg describes the matter, sponsors of rejected products "wind up with patents they can't use." Deferred patent examination may also make better use of government resources with respect to products that may never receive regulatory approval. Other advocates of deferred examination observe that this system has been used by leading patent offices for many years. As explained by Robert J. Yarbrough, chairman of the Pennsylvania Intellectual Property Forum, the "benefits and pitfalls of deferred examination should be well known." Mr. Yarbrough asserts that the United States could potentially draw upon this experience in designing its own system. Although some experts believe that adoption of a deferred examination would work to the advantage of the patent community, others believe that this approach might fail to realize its purported benefits and also involves additional detriments. Many observers have suggested the possibility that deferred examination might increase uncertainty in the marketplace. As explained by David M. Simon, chief patent counsel of Intel Corporation [D]eferred examination that results in patents not issuing until perhaps ten years after filing could result in substantial claw back from the public domain when those deferred applications issue. Businesses will be surprised with patents suddenly issuing to preclude successful products. Other observers go further, suggesting that some patent applicants may attempt to manipulate the deferral system strategically. Some applicants may elect not to pursue allowance of their patents while monitoring the activities of their competitors. They might then attempt to amend their patent applications in an effort to obtain patent coverage of a competitor's product. Although this possibility exists under current law, deferred examination may provide another mechanism for creating so-called "submarine patents"--patents that remain submerged within the USPTO for many years, only to surface and surprise the marketplace. Skeptics of deferred examination recognize that the USPTO currently houses a significant inventory of unexamined applications and experiences long examination pendencies, trends that may lead both to marketplace uncertainty and strategic behavior by applicants. But they are concerned that adoption of deferred examination may exaggerate these unwelcome trends. Writing for the American Intellectual Property Law Association (AIPLA), Executive Director Q. Todd Dickinson asserts that "although inventories tend to rise and fall over time, the creation of a deferred examination system would institutionalize a delay option in examination and may create further uncertainty in the system." Others believe that the relatively high dropout rates associated with foreign deferred examination systems will not be realized in the United States. According to these accounts, elements that contribute to the abandonment of applications abroad may not exist to the same extent domestically. In particular, the United States is a large market that has a long tradition of enforcing patents. Under this view, a U.S. patent might be more valuable to firms than patents granted by other nations. In turn, applicants may be less willing to abandon a U.S. application than an application filed elsewhere. Seemingly supporting this argument is the fact that the current USPTO rule allowing for deferred examination is little used. The USPTO reported on January 28, 2009, that since the deferral alternative commenced on November 29, 2000, fewer than 200 applications have been deferred. The reason for this low usage rate may be due to a variety of factors, potentially including lack of widespread knowledge of the provision and long application pendency rates even absent an express deferral. Given the potential complexity of each individual decision to abandon an application, a precise estimate of dropout rates within a proposed U.S. deferred examination system is likely unachievable. Other commentators have expressed concern that a deferred examination system may have a negative impact upon the revenue that the USPTO receives through the fees it charges. AIPLA Executive Director Q. Todd Dickinson observes that the potential risk to USPTO income "will largely depend on the fees established for participating in deferred examination, on the assumed drop-out rate and loss of income from other fees." On the other hand, to the extent deferred examination leads to a decrease in initial filing fees, this system could potentially increase patent filing rates. This step could cause inventors to decrease the care with which they prepare applications, however, out of the recognition that they may not request examination for all of them. As Tom DiLenge, general counsel and vice president of the Biotechnology Industry Organization (BIO) writes, "some BIO members are concerned that a deferred examination system with a low threshold for initial application filings would lead to an increase in poor-quality filings, thereby triggering more public criticism of the patent system." This brief discussion suggests that a deferred patent examination system potentially holds both positive and negative aspects. It also indicates a number of system parameters that the designers of a deferred examination system for the United States could potentially manipulate in an attempt to maximize its perceived advantages while minimizing its perceived disadvantages. Perhaps the most obvious of these parameters is the period of possible deferral. Leading foreign patent offices offer maximum periods of deferral ranging from approximately two years (at the European Patent Office) to seven years (at the German Patent and Trademark Office), with other patent offices providing intermediate periods of deferral. Experience suggests that the longer the period of maximum deferral, the greater the number of applications for which examination will never be requested. However, longer periods of deferral may also increase marketplace uncertainty about the availability and scope of patent rights. In deferral systems, the party who requests examination is usually the applicant. However, some deferral systems allow third parties to request examination as well. Upon receiving notice that a third party has exercised its "activation right," the applicant must either enter examination or abandon the application. The activation right is intended to allow competitors of the patent applicant and other interested members of the public to obtain earlier certainty regarding the existence and extent of patent rights. Some commentators have expressed concern that liberal use of activation rights may burden patent applicants, however, and propose that the USPTO impose a fee in order to prevent abuses. Designers of a deferred examination system must also decide whether it applies to all patent applications, or instead to a more limited number based upon a particular field of technology or other factor. In addition, the system could require deferral to be affirmatively elected, or alternatively apply deferral as a default. The current USPTO regulation allowing for deferral of application operates on an "opt-in" basis. As typically framed abroad, however, deferral is an "opt-out" system that obliges applicants to request examination. Whether deferred applications should be subject to different rules with respect to the pre-grant publication of applications has also been discussed. Under current law, not all applications are published "promptly after the expiration of a period of 18 months" from the filing date. Notably, if an applicant certifies that the invention disclosed in the U.S. application will not be the subject of a patent application in another country that requires publication of applications 18 months after filing, then the USPTO will not publish the application. Many commentators have suggested that all deferred applications should be published, regardless of whether the applicant will pursue foreign patents or not. Under this position, the policy goal of alerting the public about pending patent applications is of particular significance when a deferred application may not issue for many years after it is filed. As a result, the exception for domestic-only applications would be eliminated if the application is deferred. The fee structure with respect to deferred applications may also be adjusted in view of the policy goals and fiscal needs of the USPTO. As one possibility, patent attorney Robert J. Yarbrough, who generally supports a deferred examination system, writes that the deferred "applicant should pay no higher fees than any other applicant and, preferably, should be given a discount." For example, the USPTO currently assesses a $220 examination fee that could be waived until the applicant requests that the USPTO perform this service. Another issue for consideration is the impact of deferred examination upon the term of a patent. Under current law, the maximum term of a patent is 20 years from the date the application was filed. Because the applicant obtains no enforceable rights until the USPTO allows the patent to issue, each day the application spends at the USPTO effectively reduces the period during which the patent owner enjoys propriety rights. Deferred examination implies that the effective term of patent would be reduced by the period measured from the filing date until the date the patent owner requests examination. At least one commentator has proposed that deferred examination be "term neutral." Under this proposal, each day that an application is deferred would result in one day of term extension for any patent that results from that application. As an example, if a period of three years elapses between the date of filing and the date that examination is requested, then the maximum term of the patent would be 23 years from the date of filing. No current system of deferred examination is believed to provide for patent term extension in this manner. Some observers have also proposed that patents that result from deferred applications be subject to "intervening rights." Intervening rights allows a specific enterprise to engage in activities that would otherwise infringe an issued patent. The Patent Act currently allows third parties to enjoy intervening rights when a patent is amended by either reissue or reexamination, or where a patent is revived after failure to pay a maintenance fee. Some commentators have suggested that intervening rights should also apply to patents that issued from deferred applications, provided that an enterprise commercialized a product during the deferral period that subsequently became subject to a patent. A variety of options are available for Congress with respect to deferred examination. If the current situation is deemed appropriate, then no action need be taken. Alternatively, Congress could introduce a statutory deferred examination regime into the U.S. patent system via legislation. A third congressional option is to allow or encourage the USPTO to enact regulations that would encourage, or perhaps mandate, deferred examination of patent applications. Whether deferred examination may be achieved by the USPTO through rulemaking, or whether congressional intervention would be required, is not entirely certain. The Patent Act currently requires the USPTO to examine each filed application. However, Congress has also granted to the USPTO the power to "establish regulations, not inconsistent with law, which ... shall govern the conduct of proceedings in the Office." The USPTO apparently relied upon this procedural rulemaking authority in order to enact its current regulation regarding deferred examination. Assuming that the USPTO reasoned correctly, this regulation could potentially be expanded in order to develop a more full-fledged deferred examination system. As explained by Arti Rai, administrator for external affairs at the USPTO, "an improved system of deferred examination could in all likelihood be implemented through PTO regulation, so long as the PTO's procedural-rulemaking authority is not interpreted in an unduly cramped fashion." On the other hand, uncertainty over the precise extent of USPTO procedural rulemaking authority may prevent or limit further adaption of a deferred examination system absent congressional intervention. Because this proposal potentially requires many changes to existing law with respect to such matters as fees, pre-grant publication of applications, intervening rights, and patent term, a court could potentially consider expanded deferred examination regulations to be substantive in nature and therefore beyond the ability of the USPTO to promulgate. A legislative rather than regulatory response may therefore provide the most appropriate mechanism for adopting a deferred examination system. The growing value of intellectual property within the world economy has placed increased demands upon the USPTO to process accurately a quantity of patent applications that was nearly unimaginable a generation ago. The USPTO has in part responded by encouraging policy discussion regarding new procedures for managing its increasingly strained resources. The possibility of U.S. adoption of deferred examination--a patent office practice that is accepted globally but controversial domestically--has once more become part of the discussion regarding patent reform. Ultimately, whether or not a deferred patent examination system would benefit the environment for innovation in the United States remains an open question.

Recent congressional interest in the patent system has in part focused upon the capabilities of the U.S. Patent and Trademark Office (USPTO). Many experts have expressed concern that the USPTO lacks the capacity to process the large number of patent applications that it receives. The USPTO's growing inventory of filed, but unexamined applications could potentially lead to longer delays in the USPTO patent-granting process. Under current law, a USPTO examiner automatically reviews each patent application that is filed. Some observers have suggested that the USPTO instead adopt a system of "deferred examination" in order to alleviate its growing backlog. Under this system, the USPTO would not automatically review each application. Applicants would instead be required to submit a specific request for examination. Failure to file such a request within a specified time period--typically ranging from three to five years--would result in the abandonment of the application. Deferred examination may hold potential benefits. For example, some inventors who file a patent application may subsequently decide ultimately not to expend further resources in obtaining a patent on that technology due to marketplace developments or other reasons. The USPTO then does not need to review those applications, allowing others to move through the agency more quickly. Deferred examination may be particularly suitable for enterprises that sell products, including pharmaceuticals and medical devices, that may have a long development cycle and be subject to regulatory approval. Proponents of deferred examination observe that numerous foreign patent offices have used this system for many years. They further explain that given increasingly lengthy delays, the USPTO effectively operates under a de facto deferral regime today. On the other hand, some experts believe that deferred examination holds negative consequences. Deferred examination may cause many years to pass between the time an application was filed and the date a patent issues. Other firms may not know for some time whether their new products will infringe a patent that resulted from deferred examination. It is also possible that applicants could use the system strategically. They may choose to defer examination, monitor the industry, and then amend their applications in order to obtain patents that cover the successful products of their competitors. Opponents of deferred examination are also skeptical that a significant number of applications will "drop out" of the USPTO if this system were adopted. They also explain that the USPTO currently allows applicants to delay prosecution for up to three years, but that this procedure is rarely used. Designers of a deferred examination system may potentially manipulate a number of parameters in an attempt to maximize potential benefits while minimizing perceived disadvantages. Among these parameters are the maximum length of the deferral period, the ability of third parties to request examination of a deferred application, the framing of the system as an "opt-in" or "opt-out" procedure for applicants, pre-grant publication of deferred applications, the fee structure, the impact of deferred examination upon patent term, and the availability of third party "intervening rights" for patents that issue from deferred applications. Options for implementing deferred examination include both legislation and USPTO rulemaking.

The Budget and Accounting Act of 1921 (P.L. 67-13; 42 Stat. 20-27) established for the first time the requirement that the President annually submit a budget proposal to Congress. The President's budget proposal, or the Budget of the United States Government as it is referred to in Section 1105(a) of the U.S. Code , consists of estimates of spending, revenues, borrowing, and debt; policy and legislative recommendations; detailed estimates of the financial operations of federal agencies and programs; and other information supporting the President's recommendations. Initially, the 1921 act required the President to include budget information for the upcoming fiscal year, as well as for the most recently completed and current fiscal years. Under the 1921 act, the deadline for submission was set as "the first day of each regular session" of Congress. Budgets during the Administrations of Presidents Harding, Coolidge, and Hoover were submitted in December; during the Administrations of President Franklin D. Roosevelt and subsequent Presidents, budgets were submitted in January or February. The deadline was changed in 1950, 1985, and 1990, but always required that the budget be submitted either in January or February. Under current law (31 U.S.C. SS1105(a)), the President is required to submit the annual budget on or after the first Monday in January, but no later than the first Monday in February. For nearly half a century after the 1921 act took effect, Presidents submitted their annual budgets to Congress toward the beginning of the session but were not required to update the budget submissions later in the session. As the federal budget became larger, more complex, and more dynamic, Congress felt a greater need for more extensive and updated budgetary information from the President. This view was expressed by the House Rules Committee in its report on the Legislative Reorganization Act of 1970 (P.L. 91-510; 84 Stat. 1140): Very often, as the appropriations process moves forward, conditions relating to the President's budget change. Frequently, Members are not fully informed about such changes and what effect they will have on the total Budget. No official Executive pronouncements are made subsequent to the Budget submission; no supplementary budgetary information is presented; no firm foundation except the January Budget is available in the Congress. This inexact, imprecise, and haphazard system must be substantially improved if the Congress is to analyze effectively the President's program and, with any degree of accuracy, forecast the expenditure and revenue levels of the National Government. The Legislative Reorganization Act of 1970 made several changes in the federal budget process in response to Congress's request for more budgetary information from the President, chiefly by requiring that the President's budget cover not just the upcoming fiscal year but also the four ensuing fiscal years. In addition, Section 221(b) of the act requires the President to submit to Congress an update of the budget in the middle of the legislative session. The requirement, which was first effective in 1972, is codified at 31 U.S.C. SS1106 (see this report's Appendix for the current text of the statutory requirement). The update is commonly referred to as the mid-session r eview (or MSR), but sometimes is referred to as the supplemental summary of the b udget . The most current mid-session review (FY2017) is available at https://www.whitehouse.gov/omb/budget/MSR . Congress and the President have made two changes since 1972 pertinent to the requirement for a mid-session review. First, in conjunction with a change in the start of the fiscal year from July 1 to October 1, made by the Congressional Budget Act of 1974 (CBA, P.L. 93-344 ; 88 Stat. 299-300), the deadline for submission of the mid-session review was changed from June 1 to July 15. The CBA also provided for a transition quarter "commencing July 1, 1976, and ending on September 30, 1976" for which the President was required to prepare, as soon as practicable, budget estimates "in such formal detail as he may determine." The second change pertained to the budget enforcement procedures established on a temporary basis by the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA). Under Section 241 of BBEDCA, the President was required, in the preparation of the annual budget, to adhere to statutory deficit targets that w ere enforced by sequestration. Section 242 of BBEDCA extended the same constraint to the preparation of the mid-session review. The restriction expired at the end of FY1995, along with the deficit targets themselves. Under 31 U.S.C. SS1106, the mid-session review must include, in part (A) substantial changes in or reappraisals of estimates of expenditures and receipts; (B) substantial obligations imposed on the budget after its submission; (C) current information on matters referred to in section 1105(a)(8) and (9)(B) and (C) of this title; and (D) additional information the President decides is advisable to provide Congress with complete and current information about the budget and current estimates of the functions, obligations, requirements, and financial condition of the United States Government. The content and structure of the mid-session review has varied by President. Generally, Presidents have included both required and optional elements such as (1) technical re-estimates of expenditures and receipts, (2) updates to economic assumptions and forecasts, (3) changes to the estimated condition of the Treasury, (4) revised versions of select the summary tables from the original budget request, and (5) discussion of the potential effects of enacted and proposed appropriations. It is not uncommon for legislative or economic changes to occur close to the deadline for submission of the mid-session review. In such cases, the President may be unable to provide a detailed review of the effects they may have on the estimates included in the President's original budget submission. The President's mid-session review may include changes to the amount of budget authority requested in the original budget submission. Any such changes must be accompanied by a statement of the potential effects of those changes and "supporting information as practicable." The mid-session review may also include discussion of the potential effects of pending budgetary reforms or other legislative proposals that have not been enacted. Finally, the mid-session review may include other legislative proposals or administration initiatives. For example, President George W. Bush's FY2003 mid-session review included a chapter discussing the President's management agenda and other government-wide management initiatives, including several E-Government reforms. President Barack Obama's FY2013 mid-session review included a section discussing the effects of several enacted and proposed initiatives intended to create jobs and economic growth, such as the Hiring Incentives to Restore Employment Act ( P.L. 111-147 ; 124 Stat. 71). Since the first year the mid-session review was required (FY1973), each President has submitted at least one mid-session review on time and at least one late. Controversy has occasionally surfaced regarding the timing of its submission to Congress. On more than one occasion, some Members of Congress have suggested that the President has timed submission of the mid-session review in order to gain a political or legislative advantage over Congress. Table 1 provides information on the timing of submission of the mid-session review for FY1973-FY2017. The 45-year period identified in Table 1 covers all or part of the Administrations of eight Presidents, including the last three years of the Nixon Administration; the full terms of the Ford, Carter, Reagan, George H. W. Bush, Clinton, and George W. Bush Administrations; and the eight years of the Obama Administration. During this period, the mid-session review was submitted, on average, 7.80 calendar days late. For FY1973, FY1974, and FY1975, the deadline for submission of the mid-session review was June 1. The Congressional Budget Act of 1974 (CBA), enacted on July 12, 1974, changed the deadline for submission of the mid-session review from June 1 to July 15. In addition, Section 502 of CBA established a transition period "commencing July 1, 1976, and ending on September 30, 1976" for which the President was required to prepare, as soon as practicable, budget estimates "in such form and detail as he may determine." Since the first year the mid-session review was required it was submitted, on average, 8 calendar days late. In 23 of the 45 years, the mid-session review was submitted after the deadline, with delays ranging from 1 to 52 calendar days. When the mid-session review was late, it was delayed, on average, three weeks (20.96 calendar days). In 22 of the 45 years, the mid-session review was submitted on or before the deadline. Seven of the 22 timely submissions were made on the deadline. In 11 instances, the mid-session review was submitted fewer than 10 days before the deadline. In the remaining four instances, the mid-session review was submitted at least two weeks before the deadline. For FY1978, FY2000, and FY2001, the mid-session review was submitted in late June--16, 17, and 19 calendar days ahead of the deadline, respectively. For FY1999, it was submitted on May 26, 1998--50 calendar days before the deadline. Figure 1 shows the number of days the mid-session review was submitted before or after the deadline for each year from FY1973-FY2017. The submission of the mid-session review was delayed for more than three weeks on nine occasions: FY1985, FY1986, FY1987, and FY1988 under the Reagan Administration; FY1994 and FY1998 under the Clinton Administration; FY2002 under the George W. Bush Administration; and FY2010 and FY2012 under the Obama Administration. The delays for FY1994, FY2002, and FY2010 occurred in presidential transition years. The circumstances surrounding the instances where submission was delayed longer than three weeks are discussed in further detail below. During the first three years of his Administration, President Reagan submitted the mid-session review either on time or no more than 15 days late. During the next four years of his Administration, however, growing and persistent deficits made his relationship with Congress on budgetary matters especially turbulent, marked by delay and gridlock in all phases of legislative action on the budget. The mid-session reviews for four consecutive years, FY1985-FY1988, were submitted between 22 and 46 days late. On September 29, 1987, the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 (Title I of P.L. 100-119 ) was enacted, which in part amended the Balanced Budget and Emergency Deficit Control Act of 1985 (Title II of P.L. 99-177 ) to modify the sequestration process. A requirement was added that the President include in the mid-session review preliminary sequestration estimates as well as the economic and technical assumptions that would be used in the initial sequestration report for the fiscal year due in August. The joint explanatory statement accompanying the conference report on the 1987 act noted: For FY 1989 and beyond, the President's July 15 mid-session budget report must provide an estimate of the deficit excess and net deficit reduction computed using the economic and technical assumptions that he will use in the initial sequestration report for that fiscal year. It is imperative that the Director of OMB actually deliver this mid-session report by July 15. When he issues the initial sequestration report, he is required to use those same economic and technical assumptions. The increased significance given to the mid-session review by virtue of this change in the sequestration process may account, in part, for the improved record of submission beginning with FY1989. President Reagan's mid-session review for that year was 13 days late. The improved record of submission continued for all four years of the George H. W. Bush Administration, covering FY1990-FY1993. The requirement under the 1985 Balanced Budget Act was effective for three years (FY1989-FY1991), but was terminated under revisions made by the Budget Enforcement Act (BEA) of 1990. On July 15, 1993, the Clinton Administration notified Congress that it would delay the submission of the mid-session review for FY1994 so that it would reflect the impact of the Omnibus Budget Reconciliation Act (OBRA) of 1993, which was then pending before the House and Senate. On that date, the Administration provided preliminary mid-session estimates of the deficit. President Clinton signed OBRA of 1993 into law on August 10 (as P.L. 103-66 ) and transmitted the mid-session review for FY1994 to Congress on September 1, 48 days late. President Clinton's action stirred controversy in Congress, in part, because some Members wanted an updated assessment of the budgetary situation before voting on the conference report on OBRA of 1993. On July 20, 1993, the Senate tabled an amendment (by a vote of 56 to 43) offered by Senator Pete Domenici to H.R. 20 , the Hatch Act Reform Amendments. Senator Domenici's amendment stated: It is the sense of the Senate that the President should submit the supplementary budget as required by law no later than July 16 and the requisite information therein required, but in no event later than July 26, 1993. Senator Larry Craig discussed various patterns in the timing of submission of the mid-session review during years in which the House and Senate considered reconciliation legislation. President Clinton used the mid-session review for FY1994 in part to recount the actions that led to the enactment of OBRA of 1993 and to discuss the features of that act. As had been the case for FY1994, the submission of the mid-session review for FY1998 was delayed until after Congress completed action on reconciliation legislation. The delay in this case, until September 5, 1997, was the longest incurred in the more than 25-year history of the mid-session review--52 days. Unlike the experience for FY1994, however, the delay was not accompanied by controversy. In May 1997, the Clinton Administration and congressional leaders reached agreement on a plan to balance the budget by FY2002. On August 5, President Clinton signed into law the two reconciliation acts that implemented most of the balanced-budget policies. The delayed issuance of the mid-session review for FY1998 allowed President Clinton to render a final accounting with respect to the budgetary impact of the two measures, which amounted to $247 billion in savings over five years (yielding an estimated surplus of $63 billion for FY2002). The issuance of the mid-session review again was associated with controversy in 2001, although possibly more for its contents than the timing of its release. President George W. Bush submitted his transition budget for FY2002 to Congress on April 9 (reflecting the delay that typically occurs in a presidential transition year). His budget recommended, among other things, that Congress enact a 10-year tax cut of approximately $1.6 trillion while at the same time preserving the entire surplus in the Social Security trust funds. In May, Congress adopted the budget resolution for FY2002 ( H.Con.Res. 83 ), affirming its commitment to a somewhat smaller tax cut (about $1.35 billion) and to preserving the Social Security surplus. The on-budget surplus, which excludes the transactions of the Social Security trust funds, was estimated at that time to be about $30 billion for FY2001 and $48 billion for FY2002. These amounts represented the resources that could be allocated during the remainder of the session for additional defense spending and other budget priorities (principally under "reserve fund" procedures) without violating the pledge to preserve the Social Security surplus. Following the adoption of the budget resolution, the House and Senate agreed to a revenue reconciliation measure providing the recommended level of tax cuts; President Bush signed it into law on June 7. During the remainder of June and into July, the House and Senate focused on the consideration of the regular appropriations bills. The FY2002 mid-session review was issued on August 22 (38 days late), while the House and Senate were in recess. It indicated that, owing largely to unexpected weakness in the economy, the estimates of the on-budget surpluses for FY2001 and FY2002 had dropped to $1 billion for each year. Accordingly, the amount available for allocation to defense spending and other priorities had been reduced significantly. The returning House and Senate faced the prospect of completing action on the regular appropriations measures for FY2002 with less than a month before the beginning of the fiscal year (on October 1) and under much tighter budgetary constraints than had previously been assumed. The FY2010 mid-session review was issued on August 25 (41 days late), while the House and Senate were in recess. It showed a reduction in the FY2009 deficit estimate in the May budget submission of $262 billion (from $1.841 trillion to $1.580 trillion), owing largely to a $250 billion reduction in the placeholder for a financial stabilization reserve, but an increase of $243 billion in the FY2010 deficit estimate (to $1.502 trillion, an amount equal to 10.4% of the Gross Domestic Product). The timing of budget submissions by President Obama in 2009 for FY2010 was affected by several factors. First, 2009 was a presidential transition year, which led to the President submitting his budget proposal on May 7. OMB also claimed that rapidly changing economic conditions made it difficult to develop stable economic assumptions or reliable budgetary estimates. Some Members, however, expressed the view that the announced delay in the submission of the mid-session review until the August recess reflected an effort to withhold unfavorable news about economic and budgetary developments that could impede the consideration of priority legislation. Many of the economic and fiscal conditions that existed during President Obama's first year in office had persisted, to varying degrees, until the submission of the FY2012 mid-session review. In addition, the submission deadline for the FY2012 mid-session review coincided with the negotiations between the President and Congress over the debt ceiling, which culminated in the enactment of the Budget Control Act of 2011 (BCA, P.L. 112-25 ) on August 2, 2011. The FY2012 mid-session review was submitted on September 1, 2011, one month after the enactment of the BCA, and reflected, in part, the changes resulting from that legislation. The FY2012 mid-session review projected a lower deficit for FY2012 and each of the following 9 years covered by the 10-year budget window than the President's budget had estimated in February. According to the mid-session review, the reductions in projected deficits were due primarily to the terms of the BCA. The mid-session review was submitted more than three weeks before the deadline on one occasion: FY1999 under the Clinton Administration. In 1998, President Clinton submitted the mid-session review for FY1999 nearly two months (50 days) early--on May 26. In February 1998, the President's budget for FY1999 estimated a $10 billion deficit for the current year, FY1998. The mid-session review revised this estimate to a surplus of $39 billion, which the Administration referred to as "an historic achievement" in a press statement announcing the release of the FY1999 mid-session review. The prospect of the first surplus in nearly three decades, and growing surpluses in the following years, sparked congressional interest in acting on sizeable tax-cut legislation during the session. President Clinton argued instead that the budget surpluses should be "reserved" until changes could be made in the Social Security program to strengthen its long-term financial soundness, and some have suggested that, by releasing the mid-session review early, President Clinton was able to use the favorable budgetary news to improve his position during policy negotiations with Congress. Section 1106. Supplemental budget estimates and changes.-- (a) Before July 16 of each year, the President shall submit to Congress a supplemental summary of the budget for the fiscal year for which the budget is submitted under section 1105(a) of this title. The summary shall include-- (1) for that fiscal year-- (A) substantial changes in or reappraisals of estimates of expenditures and receipts; (B) substantial obligations imposed on the budget after its submission; (C) current information on matters referred to in section 1105(a)(8) and (9)(B) and (C) of this title; and (D) additional information the President decides is advisable to provide Congress with complete and current information about the budget and current estimates of the functions, obligations, requirements, and financial condition of the United States Government; (2) for the 4 fiscal years following the fiscal year for which the budget is submitted, information on estimated expenditures for programs authorized to continue in future years, or that are considered mandatory, under law; and (3) for future fiscal years, information on estimated expenditures of balances carried over from the fiscal year for which the budget is submitted. (b) Before July 16 of each year, the President shall submit to Congress a statement of changes in budget authority requested, estimated budget outlays, and estimated receipts for the fiscal year for which the budget is submitted (including prior changes proposed for the executive branch of the Government) that the President decides are necessary and appropriate based on current information. The statement shall include the effect of those changes on the information submitted under section 1105(a)(1)-(14) and (b) of this title and shall include supporting information as practicable. The statement submitted before July 16 may be included in the information submitted under subsection (a)(1) of this section. (c) Subsection (f) of section 1105 shall apply to revisions and supplemental summaries submitted under this section to the same extent that such subsection applies to the budget submitted under section 1105(a) to which such revisions and summaries relate.

The Budget and Accounting Act of 1921 established for the first time the requirement that the President annually submit a budget proposal to Congress. Under current law (31 U.S.C. SS1105(a)), the President is required to submit the budget proposal to Congress on or after the first Monday in January, but no later than the first Monday in February. For further information, see CRS Report R43163, The President's Budget: Overview of Structure and Timing of Submission to Congress, by [author name scrubbed]. For nearly half a century after the 1921 act took effect, Presidents submitted their annual budgets to Congress toward the beginning of the session but were not required to update their budget submissions later in the session. As the federal budget became larger and more complex, Congress felt a need for more extensive and updated budgetary information from the President. Section 221(b) of the Legislative Reorganization Act of 1970 requires the President to submit to Congress an update of the budget proposal in the middle of the legislative session. This update, commonly referred to as the mid-session review (or MSR), was first required for FY1973. The mid-session review for FY2017 is available at http://www.whitehouse.gov/omb/budget/MSR. Pursuant to 31 U.S.C. SS1106, the mid-session review must include, in part, (1) any substantial changes to estimated receipts or expenditures, (2) changes resulting from enacted or pending appropriations, and (3) estimated end-of-year Treasury figures. Presidents also have some discretion regarding additional content and overall structure of the mid-session review. For example, in addition to the required elements, some Presidents have included updates to their original budget request or discussion of the potential effects that pending legislative proposals may have on their budgetary estimates. Since the first year the mid-session review was required, each President has submitted at least one mid-session review on time and at least one late. Controversy has occasionally surfaced regarding the timing of its submission to Congress. At times, some Members of Congress have suggested that the President has timed submission of the mid-session review in order to gain a political or legislative advantage over Congress. Delayed Submission of the Mid-Session Review. During the 45 years that the President has been required to submit a mid-session review, it has been submitted, on average, 8 calendar days late. In 23 of the 45 years, the mid-session review was submitted after the deadline, with delays ranging from 1 to 52 days. When the mid-session review was submitted late, it was delayed, on average, 21 calendar days. Timely and Accelerated Submission of the Mid-Session Review. In 22 of the 45 years, the mid-session review was submitted on time. Seven of the 22 timely submissions were made on the deadline, including FY2017. In 11 instances, the mid-session review was submitted fewer than 10 days before the deadline. In the remaining four instances, the mid-session review was submitted at least two weeks before the deadline. For FY1978, FY2000, and FY2001, the mid-session review was submitted in late June--16, 17, and 19 calendar days ahead of the deadline, respectively. For FY1999, it was submitted on May 26, 1998--50 calendar days ahead of the deadline. This report, which provides an overview of the mid-session review and analysis of the timing of the mid-session review, will be updated annually or as developments warrant.

The District of Columbia Tuition Assistance Grant (DCTAG) program was created in 1999 to address concerns about the public postsecondary education offerings available to District of Columbia residents. In the 1990s, the University of the District of Columbia (UDC), which, at the time, was the only public institution of higher education (IHE) in Washington, DC, faced a series of obstacles that threatened its existence. In the midst of financial shortfalls across the District's government, the school's budget was severely reduced, from $76 million in FY1992 to $43 million in FY1995. In 1996, when UDC's budget was reduced by an additional $16.2 million, fall enrollment dropped from 10,000 students the previous year to 7,600 students. The next fall, acting UDC President Julius E. Nimmons, Jr. laid off 125 faculty members, nearly one-third of the institution's full-time faculty, as well as 200 of the university's 437 non-faculty employees. The school's accreditation, though thrown into doubt, was renewed in 1997. Despite reforms put into place after the reaccreditation, UDC remained under public scrutiny for several years. As a possible indicator that the public higher education available in Washington, DC, did not meet their needs, District residents enrolled in postsecondary institutions outside of their home jurisdiction at a rate far higher than their peers elsewhere in the United States. In the fall of 1998, 3,116 District residents were enrolled as undergraduate freshmen in IHEs, of whom 1,163 (37%) attended public or private institutions in DC. The national average for postsecondary attendance within an individual's jurisdiction of residence that year was 82%, with Vermont's 54% in-state attendance ranking as the second lowest in the nation. This disparity in college-attendance trends across states raised concerns about the cost for District students attending IHEs. In each of the 50 states, some form of public higher education is made available to in-state students at a lower cost than the price of tuition and fees offered to students from outside the state, thereby reducing the average total postsecondary education cost for residents of that jurisdiction. In academic year (AY) 1999-2000, "dependent undergraduates from the District of Columbia paid [an average of] $7,890 per year in tuition minus all grant aid ... more than twice the national average" of $3,215 per student annually. Although similar issues arising elsewhere in the United States might be rectified through the reallocation of resources among public IHEs and the development of policies at the state level, supporters of the program argued that both the District of Columbia's unique role and status as the nation's capital and the state of local governance required remedies of this sort to be achieved through federal action. In general, budgetary authority for Washington, DC, rests in the hands of Congress, as: The Constitution gives Congress the power to "exercise exclusive Legislation in all Cases whatsoever" pertaining to the District of Columbia. In 1973, Congress granted the city limited home rule authority and empowered citizens of the District to elect a mayor and city council. However, Congress retained the authority to review and approve all District laws, including the District's annual budget. While Congress retains the power to determine the appropriation and allocation of funds, it typically cedes much of the daily governance to local government. However, in the 1990s, troubled city services, a poor credit rating that hindered the District's ability to borrow funds, and an FY1995 budget deficit of $722 million led to federal intervention. Two pieces of legislation, the District of Columbia Financial Responsibility and Management Assistance Act of 1995 ( P.L. 104-8 ) and the National Capital Revitalization Act of 1997 ( P.L. 105-33 ), increased the federal role in the governance of the District of Columbia. New oversight committees were formed and many of the "state functions" normally carried out by the District of Columbia's government were temporarily transferred to Congress. As Congress attempted to rejuvenate the District of Columbia's local government and improve the standard of living for the average citizen, an increasing number of concerns were raised about the postsecondary education opportunities available to District residents. In March 1999, Washington, DC's Delegate to Congress Eleanor Holmes Norton and Representatives Tom Davis and Constance Morella introduced a bill that would create a program to provide support for higher education to DC residents. On November 12, 1999, the District of Columbia College Access Act ( P.L. 106-98 ) was signed into law, authorizing the DCTAG program for FY2000 to FY2005. Congress defined the program's purpose as "enabl[ing] college-bound residents of the District of Columbia to have greater choices among institutions of higher education." The DCTAG program provides grants to District residents, regardless of need or merit, to attend eligible public and private not-for-profit IHEs in the United States. When the program was first enacted, $10,000 annual scholarships (with a cumulative cap of $50,000) were available exclusively for use at public IHEs in Maryland and Virginia, and annual grants of $2,500 (with a cumulative cap of $12,500) were available exclusively for tuition and fees at a limited number of private colleges and private historically black colleges and universities (HBCUs) in Maryland and Virginia. Both the $10,000 scholarship for attendance at a public not-for-profit school and the $2,500 grant for attendance at certain private schools were intended to assist DC high school graduates in pursuing a postsecondary education and to provide them with a "greater range of options" for their postsecondary education. The act also included a provision (Section 3(c)(1)(a)(ii)) that permitted the mayor of the District of Columbia to broaden the list of public institutions eligible to receive program funds, which could include IHEs outside Maryland and Virginia. In May 2000, Mayor Anthony Williams exercised this administrative authority and expanded the program to provide up to $10,000 per student per year (with a cumulative cap of $50,000) toward the difference between in-state and out-of-state undergraduate tuition and fees at all public colleges and universities nationwide. The District of Columbia College Access Improvement Act of 2002 ( P.L. 107-157 ) further amended the program to provide awards of up to $2,500 per student per year (with a cumulative cap of $12,500) to assist students with paying the tuition and fees for any private HBCU nationwide. The addition of these eligible institutions was intended to help expand DC residents' access to HBCUs nationwide. Since its original authorization in 1999, the DCTAG program has been reauthorized twice, once in 2004 ( P.L. 108-457 ) and again in 2007 ( P.L. 110-97 ). The 2007 reauthorization extended the appropriation of funds for the DCTAG program through FY2012 and introduced a means-testing provision prohibiting Washington, DC, residents from families with taxable annual incomes of $1,000,000 or greater from receiving awards. The DCTAG program is currently operating under a Continuing Resolution ( P.L. 113-46 ). The DCTAG program is administered by the mayor of the District of Columbia, through the Office of the State Superintendent of Education's (OSSE's) Higher Education Financial Services. As mandated by statute, the District of Columbia government established a dedicated account for program funds, with separate line items for federal appropriations, District government contributions, unobligated balances from prior appropriations, and interest earned on the balance. OSSE has taken the further step of creating two separate accounts, one for short-term expenditures (within 90 days) and one for longer-term needs, both of which can receive direct deposits from federal appropriations. If the funds made available for the program are not sufficient to fully support all applicants at the maximum allowable grant amount, the mayor is required to ratably reduce awards--first reducing those granted to first-time recipients and then those granted to renewing recipients. Should this be required, the mayor is authorized to apply ratable reductions based on student financial need and administrative burden. The size of the DCTAG award that a District of Columbia resident can receive is based on the type of institution attended (see Table 1 ). District of Columbia residents are eligible to receive DCTAG funds in amounts not to exceed $10,000 per student per year (with a total per student cap of $50,000) to attend any public Title IV eligible four-year IHE in the United States. Because the UDC provides an in-state tuition rate for DC students, District of Columbia residents are specifically prohibited from using DCTAG funds to reduce the cost of attending UDC. Likewise, students may not use DCTAG funds to attend the Community College of the District of Columbia--the open-admission, two-year IHE that was split off from UDC in August 2009 as a separate institution--because it offers reduced tuition to residents of Washington, DC. Private, nonprofit Title IV eligible HBCUs nationwide and private Title IV-eligible nonprofit IHEs in the Washington, DC, metropolitan area (defined as the District of Columbia; the cities of Alexandria, Falls Church, and Fairfax in Virginia; Arlington and Fairfax counties in Virginia; and Montgomery and Prince George's counties in Maryland) are eligible to accept DCTAG funds in amounts not to exceed $2,500 per student per year (with a total per student cap of $12,500). Nationwide, public Title IV-eligible two-year IHEs are eligible to accept DCTAG funds in amounts not to exceed $2,500 per student per year (with a total per student cap of $10,000). To receive funds under the DCTAG program, any of the aforementioned institutions, except HBCUs, are required to enter into an agreement with the mayor of the District of Columbia regarding reporting requirements and the institution's use of funds to supplement, not supplant assistance that it would otherwise provide eligible students. To become and remain eligible for a grant under the DCTAG program, a student must be a resident of the District of Columbia; be a citizen, national, or permanent resident of the United States; be able to provide evidence from the Immigration and Naturalization Service that he or she is in the United States for other than a temporary purpose with the intention of becoming a citizen or permanent resident; or be a citizen of any one of the Freely Associated States; be enrolled or accepted for enrollment, on at least a half-time basis, in a degree, certificate, or other program (including a study-abroad program approved for credit by the student's home institution) leading to a recognized educational credential at an eligible institution; maintain satisfactory progress in his or her course of study, as defined by Section 484(c) of the Higher Education Act of 1965, as amended; not be in default on a federal student loan; be 24 years of age or younger at the time of initial application, unless enrolled in the program prior to the 2006-2007 academic year; have either graduated from a secondary school or received the equivalent of a secondary school diploma or have been accepted for enrollment as a freshman at an eligible institution; and be domiciled in the District of Columbia for not less than the 12 consecutive months preceding enrollment at an eligible IHE, if undergraduate study is started within three calendar years (excepting periods of National Service or service in the Armed Forces or the Peace Corps) of high school graduation or its equivalent or be domiciled in the District of Columbia for not less than five consecutive years preceding enrollment at an eligible IHE, if undergraduate study is started more than three calendar years after high school graduation or its equivalent. Post-baccalaureate students who have already earned a bachelor's degree or students whose family's federal taxable income equals or exceeds $1,000,000 annually are ineligible to participate in the DCTAG program. To receive funds through the DCTAG program, an eligible student must first submit a DC OneApp, the District of Columbia's online application that District residents use to apply for the District of Columbia's state-level higher education grant programs; then fill out the Free Application for Federal Student Aid (FAFSA); and finally, submit required supporting DC OneApp documents, including income or benefits verification or a document no older than 45 days from the date of the DC OneApp submission that reflects the name and address of either the applicant or their parent or legal guardian, proof of high school or equivalent completion (first-time applicants only), and a student aid report. After a student submits a successful application and the grant size is determined, awards are paid directly to the eligible IHE at which the student is enrolled. In the case of public institutions, the grant may be no larger than the difference between the in-state and out-of-state tuition and fees, and in no case may the grant be larger than $10,000 per year, as previously indicated in Table 1 . Grants awarded to students attending school on a less than full-time basis are prorated. To participate in the DCTAG program, institutions must complete (or have completed) a Program Participation Agreement; fill out a Minimum Requirements Invoice for a Public or a Private Institution, including the W-9 form; and email an invoice for eligible students. Because DCTAG funds are not intended to cover the full cost of college attendance, students may seek additional sources of financial assistance. Title IV federal student aid programs, administered by the Department of Education, constitute a large share of such support. The maximum loan or grant amount for each of these programs is determined by a different need analysis calculation involving, but not limited to, the cost of attendance and the total estimated financial assistance from other sources. For the purpose of these calculations, funds received through the DCTAG program would most likely be considered either scholarships or state assistance, both of which are considered estimated financial aid. As a result, receiving a DCTAG award may reduce the federal student aid available to a student. For a list of additional student support available to District of Columbia residents, see the Appendix . The DCTAG program is funded through annual appropriations, which are available until expended and do not expire at the end of each fiscal year. From the program's inception through FY2007, these funds were included in annual District of Columbia Appropriations Acts; beginning in 2008, program funds were appropriated through annual Federal Services and General Government Appropriations Acts. Between FY2010 and FY2013 appropriated funds for the DCTAG program either remained level or decreased through various acts and Continuing Resolutions. Table 2 details the funding levels for each year of the program's existence. Because of the program's carryover authority, any funds remaining at the end of a fiscal year may be used to award grants in future years. Table 3 details the available and expended funds for FY2012 and FY2013. Aside from general administrative duties that the District of Columbia must fulfill under the DCTAG program, the mayor must submit to Congress an annual report detailing the number of eligible students served and the amount of grant awards disbursed, any reduction in grant size, and the credentials earned by eligible student cohorts. The Government Accountability Office (GAO) also is required to monitor the program, particularly with respect to barriers to enrollment for program participants and overall program efficacy. In 2005, GAO released a report that recommended actions be taken to improve the way in which student data are verified, the reconciliation of cash balances against financial management system totals, and the models used to predict yearly awards. The District of Columbia's Office of the State Superintendent of Education reports that it has addressed all of GAO's concerns. As of April 2013, a total of 19,664 students have received approximately $317.5 million in DCTAG awards and have attended over 600 IHEs in 49 states. In AY2011-2012 alone, approximately $33.4 million in DCTAG funds supported 5,253 students enrolled in postsecondary institutions. In AY2011-2012, DCTAG recipients primarily choose to attend public IHEs and public HBCUs, as Figure 1 shows. In the fall of 2010, 2,503 District of Columbia residents who had graduated from high school within the previous 12 months enrolled in Title IV-eligible two- or four-year degree-granting IHEs as freshmen. That same year, 1,448 recent graduates from Washington, DC, high schools received first-time DCTAG awards (see Table 4 ), meaning that approximately 58% of the recent high school graduates from Washington, DC, who enrolled as freshmen at eligible IHEs in 2010 received DCTAG funds. This figure does not include those students who enrolled at ineligible institutions or otherwise did not meet eligibility requirements. Therefore, the DCTAG program does appear to assist a relatively large number of those students choosing to pursue a postsecondary education at eligible IHEs shortly after graduating high school in financing their postsecondary education. According to data collected in the American Community Survey, during the period from 2010 to 2012, an average of approximately 85% of District of Columbia residents who were enrolled in grades 9-12 attended public schools and 15% attended private schools. According to DCTAG program data, from AY2006-2007 through AY2011-2012, approximately 68% of DCTAG recipients had attended a DC public or charter high school, whereas approximately 27% had attended private schools. Since its inception, DCTAG participation has increased, and the number of recent high school graduate participants also has increased significantly; however, participation rates have leveled off somewhat in recent years, as shown in Table 4 . The District of Columbia is divided into eight subdivisions, or wards, each of which is home to approximately 75,000 residents. Every ward is represented in the DC Council by an elected councilmember, making wards discrete political units. Because household income, educational attainment, and other social factors vary greatly among the wards, measures of social equity are often calculated by ward. OSSE data demonstrate how awards have been distributed across wards in the past several years. Table 5 compares the average median family income and the percentage of DCTAG recipients within each ward. The data seem to indicate that those wards with the lowest average median family income (i.e., wards 4, 5, 7, and 8) have a higher percentage of DCTAG recipients than those wards with the highest median family income (i.e., wards 1, 2, 3, and 6). The most recent OSSE data available show that the six-year undergraduate graduation rate for DCTAG recipients is slightly below the national average. For instance, for the 2005 cohort, nationwide, 58.3% of students completed their bachelor's degree within six years of enrollment, whereas 48.5% of DCTAG recipients completed their bachelor's degree within six years of enrollment. While there has been a substantial increase in the amount appropriated for the DCTAG program from its inception (see Table 2 ), there has been no change to the maximum award size in response to the trend of rising postsecondary education costs, which may be leaving many program participants paying more per year for their education than in previous years or possibly limiting their choices of which institution to attend. The extent to which DCTAG awards may be covering a declining amount of the differential between in-state and out-of-state tuition is a commonly raised concern about the DCTAG program. This section of the report examines the extent to which the maximum award may be bridging the gap between in-state and out-of-state tuition. It also examines growth in maximum awards as a share of all awards. Most DCTAG recipients choose to attend a public IHE, for which they can receive up to $10,000 per year towards the difference between in- and out-of-state tuition. Even though the number of DCTAG recipients on the whole has remained relatively stable, there has been a noticeable increase in the number of $10,000 awards disbursed each year since 2004, as shown in Table 6 . The nationwide increase in tuition and fees may be contributing to this upturn in maximum awards received, although there may be other factors that impact this, such as students' choices to attend four-year IHEs rather than two-year IHEs. In AY2011-2012, 66% of those DCTAG recipients who received the maximum annual DCTAG award of $10,000 enrolled at public four-year IHEs in Delaware, Maryland, North Carolina, Pennsylvania, and Virginia (regional IHEs). Moreover, most of those students enrolled in a small number of those regional IHEs. For instance, Figure 2 shows that of the 978 students who received the maximum $10,000 DCTAG award and attended a regional IHE in AY2011-2012, 528 (54%) attended one of six schools: Pennsylvania State University, University Park; Bowie State University; George Mason University; Norfolk State University; the University of Maryland, College Park; and Virginia Commonwealth University; the other 450 (46%) students who received the maximum award attended 53 other regional IHEs. The average in- and out-of-state tuition differential for these six most-attended regional IHEs was $14,092; therefore, on average, a DCTAG recipient who attended one of these schools and who received the maximum annual award would still face a gap of an average of $4,092 in out-of-state tuition. To meet the program's stated purpose of providing access to a greater range of postsecondary educational options, Congress could consider increasing the maximum annual DCTAG award to account for the in- and out-of-state tuition differential at popular regional public IHEs at which many DCTAG recipients are receiving the maximum annual award, currently, a differential of approximately $14,100 per year. Such a decision would likely be weighed in relation to competing demands for resources. Alternatively, Congress could consider better matching individual students' financial need to DCTAG funds awarded through means testing or by lowering the current $1 million income cap for participation. Tuition and fees at private not-for-profit four-year IHEs also have grown considerably since DCTAG was created, but the maximum annual award--$2,500--has not increased. Table 7 shows that, since AY2004-2005, the median tuition and fees for such institutions in the District of Columbia has increased by 42.5%, while the percentage of DCTAG recipients enrolled in DC area private not-for-profit four-year IHEs in each year has decreased slightly. Table 8 shows a similar but slightly more pronounced result for DCTAG participants choosing to attend private not-for-profit four-year HBCUs. Since AY2004-2005, the median tuition and fees at such institutions has increased by 34.6%, while the percentage of DCTAG recipients attending has decreased by 2.6%. Although the increase in tuition and fees at DC private nonprofit IHEs and private HBCUs nationwide may not have deterred DCTAG recipients from attending such schools, the unchanged $2,500 award does not go as far as it did 10 years ago, thereby causing recipients to pay more out-of-pocket costs than in years past. In addition to federal student aid, there are several other programs that are available to residents of Washington, DC: The District of Columbia College Access Program (DC CAP) is a nonprofit organization that was founded in 1999 to encourage and enable DC high school students to enroll in postsecondary schools and provides them with educational counseling and financial assistance to help them succeed. In partnership with the District of Columbia Public School system (DCPS), District of Columbia charter schools, and OSSE, DC CAP serves DC high school students, primarily from low-income, minority, and single-parent households, during both high school and college, through counseling, seminars, and preparatory programs. In addition, the organization offers high school graduates need-based Last Dollar Awards of up to $2,070 per student per year for up to five years to cover unmet college expenses. DC Adoption provides scholarships to students who were adopted from the DC Child & Family Services Agency after October 1, 2001, and students who lost one or both parents as a result of the events of September 11, 2001. Students may receive up to $10,000 toward the cost of postsecondary education per year for up to six years. The Mayor's Scholars Undergraduate Fund provides need-based grants to eligible DC residents, which they can apply towards the cost of pursuing their first undergraduate degree at a public or private institution located within DC. Grants can equal up to $3,000 at the University of the District of Columbia (UDC) Community College, up to $7,000 at UDC, and up to $10,000 at private institutions. Individuals who receive DCTAG assistance are also eligible to receive Mayor's Scholars Undergraduate Fund grants. The program was first announced in October 2012 and began operating in FY2013.

To address concerns about the public postsecondary education offerings available to District of Columbia residents, the District of Columbia College Access Act of 1999 (P.L. 106-98) established the District of Columbia Tuition Assistance Grant (DCTAG) program. The program is meant to provide college-bound DC residents with a greater array of choices among institutions of higher education by providing grants for undergraduate education. Grants for study at public institutions of higher education (IHEs) nationwide offset the difference between in-state and out-of-state tuition and fees, up to $10,000 per year and a cumulative maximum of $50,000. Students may also receive grants of up to $2,500 per year and a cumulative maximum of $12,500 for undergraduate study at Historically Black Colleges and Universities (HBCUs) nationwide and private IHEs in the Washington, DC, metropolitan area. DCTAG program grants are provided regardless of need or merit. However, to be eligible to receive a program grant, individuals must, among other criteria, be District of Columbia residents; be enrolled or accepted for enrollment on at least a half-time basis in a degree, certificate, or credential granting program; maintain satisfactory progress in their course of study; be 24 years of age or younger; and have received a secondary school diploma or its equivalent. Post-baccalaureate students who have already earned a bachelor's degree or students whose family's federal taxable income equals or exceeds $1 million annually are ineligible to participate. As of February 2012, a total of 18,663 students have received a total of $307 million in DCTAG awards and have attended over 600 institutions of higher education (IHEs) in 49 states. There has been a substantial increase in the amount appropriated for the DCTAG program since its inception (from $17 million in FY2000 to $28.4 million in FY2013), but there has been no change to the maximum award size in response to rising postsecondary education costs, which may be leaving many program participants paying more per year for their education than in previous years or possibly limiting their choices of which institution to attend. This report first discusses the history of the DCTAG program and the events and legislation leading up to its passage. It then describes the program's administration, including recipient eligibility and the amount of award available based on the type of institution attended, award interaction with federal student aid, and funding. Next, the report presents DCTAG performance data, such as the types of institutions DCTAG recipients primarily attend and the types of students served by the program (e.g., the number of grants received, by DC ward). Finally, the report provides an analysis of grant benefits and discusses the extent to which DCTAG awards may be bridging the gap between in-state and out-of-state tuition.

Retiring Justice John Paul Stevens has not authored many opinions relating to intellectual property law, but those he has written reflect his interest in striking an appropriate balance between the protection of intellectual property rights and public access to the products of creative and inventive minds. His intellectual property opinions seek to serve the central purposes of the Copyright and Patent Clause of the Constitution--(1) encourage and reward the creativity of authors and inventors by offering them exclusive legal rights to their respective writings and discoveries, and (2) promote the progress of science and useful arts by requiring that the monopoly privileges last only for a limited period, after which the public gains free access to such work. This report examines Justice Stevens' opinions involving copyright law, patent law, and state sovereign immunity and patent infringement lawsuits. A brief summary of the basic principles and provisions of copyright and patent law precedes each section describing these opinions. Copyright is a federal grant of legal protection for certain original works of creative expression, including books, movies, photography, art, and music. The Copyright Act refers to the creator of such works as an "author;" ownership of a copyright initially vests in the author, but the author may transfer ownership of the copyright to another person or company. A copyright holder possesses several exclusive legal entitlements under the Copyright Act, which together provide the holder with the right to determine whether and under what circumstances the protected work may be used by third parties. The grant of copyright permits the copyright holder to exercise, or authorize others to exercise, the following exclusive rights: the reproduction of the copyrighted work; the preparation of derivative works based on the copyrighted work; the distribution of copies of the copyrighted work; the public performance of the copyrighted work; and the public display of the copyrighted work, including the individual images of a motion picture. Therefore, a party desiring to reproduce, adapt, distribute, publicly display, or publicly perform a copyrighted work must ordinarily obtain the permission of the copyright holder, which is usually granted in the form of a voluntarily negotiated license agreement that establishes conditions of use and an amount of monetary compensation known as a royalty fee. There are, however, other ways a third party may legally use a copyrighted work in the absence of affirmative permission from the copyright holder, including the use of statutory licenses or reliance upon the "fair use" doctrine. The doctrine of "fair use" recognizes the right of the public to make reasonable use of copyrighted material, under particular circumstances, without the copyright holder's consent. For example, a teacher may be able to use reasonable excerpts of copyrighted works in preparing a scholarly lecture or commentary, without obtaining permission to do so. The Copyright Act mentions fair use "for purposes such as criticism, comment, news reporting, teaching, scholarship, or research." However, a determination of fair use by a court considers four factors: the purpose and character of the use including whether such use is of a commercial nature or is for nonprofit educational purposes, the nature of the copyrighted work, the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and the effect of the use upon the potential market for or value of the copyrighted work. Because the language of the fair use statute is illustrative, determining what constitutes a fair use of a copyrighted work is often difficult to make in advance--according to the U.S. Supreme Court, such a determination requires a federal court to engage in "case-by-case" analysis. Violation of one of the exclusive rights of the copyright holder constitutes infringement, and the copyright holder may bring a civil lawsuit against the alleged infringer to collect monetary damages and/or to obtain an injunction to prevent further infringement. The direct infringer is not the only party potentially liable for infringement; the federal courts have recognized two forms of secondary copyright infringement liability: contributory and vicarious. The concept of contributory infringement has its roots in tort law and the notion that one should be held accountable for directly contributing to another's infringement. For contributory infringement liability to exist, a court must find that the secondary infringer "with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another." Vicarious infringement liability is possible where a defendant "has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities." For manufacturers of consumer electronics and personal computers, the Supreme Court's 1984 decision in Sony Corporation of America v. Universal City Studios is considered the "Magna Carta" of product innovation and the technology age. The Sony decision held that the sale of the home video cassette recorder (VCR) did not constitute contributory infringement of the copyrights on television programs, because such a "staple article of commerce" is capable of "substantial noninfringing uses" that include "time-shifting"--recording a television program to view it once at a later time, and thereafter erasing it. Sony's embrace of time-shifting as a "fair use" of copyrighted works has created a safe harbor from copyright infringement liability for developers and sellers of electronic devices that facilitate the recording, storage, and playback of copyrighted media, such as the digital video recorder (DVR and TiVo), portable music and video players (iPod), and personal computers. Some commentators consider the Sony decision to be the "legal foundation of the Digital Age." The outcome of Sony "meant that companies could invest in the development of new digital technologies without incurring the risk of enormous liability for the potential misuses of those technologies by some of their consumers." The Sony case concerned a lawsuit in which owners of copyrights on broadcast television programs sought to hold Sony Corporation liable for contributory copyright infringement due to its manufacture and sale of the Betamax VCR that Betamax customers used to record some of the broadcasts. The district court ruled in favor of Sony because the court concluded that noncommercial home recording of material broadcast over public airwaves was a fair use of copyrighted works. The U.S. Court of Appeals for the Ninth Circuit disagreed, believing that the home use of a video tape recorder was not a fair use because it allowed for mass copying of copyrighted television programming. The appellate court held that the copyright owners were entitled to appropriate relief, including an injunction against the manufacture and marketing of the Betamax video recorder or royalties on the sale of the equipment. The Supreme Court reversed the Ninth Circuit. Justice Stevens authored the majority opinion that garnered the support of four other justices. He was concerned that the Ninth Circuit's ruling, "if affirmed, would enlarge the scope of respondents' statutory monopolies to encompass control over an article of commerce that is not the subject of copyright protection. Such an expansion of the copyright privilege is beyond the limits of the grants authorized by Congress." He explained that defining the scope of the copyright monopoly grant "involves a difficult balance between the interests of authors ... in the control and exploitation of their writings ... on the one hand, and society's competing interest in the free flow of ideas, information, and commerce on the other hand." Justice Stevens also noted that historically, Congress has been primarily responsible for amending copyright law in response to changes in technology. He elaborated: The judiciary's reluctance to expand the protections afforded by the copyright without explicit legislative guidance is a recurring theme. Sound policy, as well as history, supports our consistent deference to Congress when major technological innovations alter the market for copyrighted materials. Congress has the constitutional authority and the institutional ability to accommodate fully the varied permutations of competing interests that are inevitably implicated by such new technology. While Justice Stevens observed that the "Copyright Act does not expressly render anyone liable for infringement committed by another," he nevertheless acknowledged that the lack of such statutory authorization does not preclude the imposition of vicarious liability on parties who have not themselves engaged in infringing activity. He observed that the only contact between Sony and its customers occurs at the moment of sale of the Betamax video recorder. The video equipment may be used for both infringing and noninfringing purposes, as it is "generally capable of copying the entire range of programs that may be televised: those that are uncopyrighted, those that are copyrighted but may be copied without objection from the copyright holder, and those that the copyright holder would prefer not to have copied." As there was no precedent in copyright law for imposing vicarious liability on Sony because it sold the video recording equipment with constructive knowledge that its customers might use it to make unauthorized copies of copyrighted programming, Justice Stevens sought guidance from patent law, defending the appropriateness of such reference "because of the historic kinship between patent law and copyright law." He first found that the Patent Act contained an express provision that prohibits contributory infringement liability in the case of the sale of a "staple article or commodity of commerce suitable for substantial noninfringing use." He then quoted from an earlier Supreme Court case involving contributory patent infringement that had said "a sale of an article which though adapted to an infringing use is also adapted to other and lawful uses, is not enough to make the seller a contributory infringer. Such a rule would block the wheels of commerce." While recognizing that there are differences between copyright and patent laws, Justice Stevens believed that the contributory infringement doctrine as it is used in patent law should also be applied to copyright law. Therefore, he "imported" the "staple article of commerce doctrine" from patent law into copyright law, in the passage below: The staple article of commerce doctrine must strike a balance between a copyright holder's legitimate demand for effective - not merely symbolic - protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce. Accordingly, the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses. With this test articulated, Justice Stevens analyzed whether the Betamax was capable of commercially significant noninfringing uses. He identified one potential use that met this standard: "private, noncommercial time-shifting in the home." Such time-shifting could be "authorized" time-shifting (recording noncopyrighted programs or material whose owners did not object to the copying) as well as unauthorized time-shifting (where the copyright holders did not consent to the practice). However, in his view, even unauthorized time-shifting is not infringing because such activity falls within the scope of the Copyright Act's "fair use" doctrine. Because the Betamax is capable of substantial noninfringing uses, Sony's manufacture and sale of such equipment to the public did not constitute contributory copyright infringement. Justice Stevens concluded the Court's majority opinion as follows: One may search the Copyright Act in vain for any sign that the elected representatives of the millions of people who watch television every day have made it unlawful to copy a program for later viewing at home, or have enacted a flat prohibition against the sale of machines that make such copying possible. It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other innovations in the past. But it is not our job to apply laws that have not yet been written. Applying the copyright statute, as it now reads, to the facts as they have been developed in this case, the judgment of the Court of Appeals must be reversed. The Copyright Clause of the Constitution authorizes Congress: "To promote the Progress of Science ... by securing for limited Times to Authors ... the exclusive Right to their respective Writings...." Therefore, this constitutional provision indicates that the rights conferred by a copyright cannot last forever; rather, a copyright holder may exercise his/her exclusive rights only for "limited Times." At the expiration of that period of time, the copyrighted work becomes part of the public domain, available for anyone to use without payment of royalties or permission. In 1790, the First Congress created a copyright term of 14 years for existing and future works, subject to renewal for a total of 28 years. By 1909, both the original and the renewal term had been extended to 28 years, for a combined term of 56 years. Additional extensions were enacted between 1962 and 1974. When the current Copyright Act was enacted in 1976, Congress revised the format of copyright terms to conform with the Berne Convention and international practice. Instead of a fixed-year term, the duration of copyright was established as the life of the author plus 50 years. In 1998, Congress passed the Copyright Term Extension Act (CTEA) that added 20 years to the term of copyright for both subsisting and future copyrights to bring U.S. copyright terms more closely into conformance with those governed by the European Union. Hence, the law currently provides that an author of a creative work may enjoy copyright protection for the work for a term lasting the entirety of his/her life plus 70 additional years. Plaintiffs representing individuals and businesses that rely upon and utilize materials in the public domain filed a lawsuit against the U.S. Attorney General to obtain a declaration that the CTEA is unconstitutional. Among other things, plaintiffs argued that in extending the term of subsisting copyrights, the CTEA violated the "limited Times" requirement of the Copyright Clause. The lower court held in favor of the Attorney General, finding no constitutional problems. The U.S. Court of Appeals for the District of Columbia Circuit affirmed the district court. Justice Ginsburg wrote the majority opinion in Eldred v. Ashcroft , in which the Court upheld the CTEA by a vote of 7-2. She stated that "[h]istory reveals an unbroken congressional practice of granting to authors the benefit of term extensions so that all under copyright protection will be governed evenhandedly under the same regime." She rejected the plaintiffs' argument that the "limited Times" requirement requires a forever "fixed" or "inalterable" copyright term. Ultimately, the Court found that the unbroken congressional practice for more than two centuries of applying adjustments to copyright term to both existing and future works "is almost conclusive." Justice Stevens wrote a vigorous dissent in Eldred ; Justice Breyer filed a separate dissenting opinion. Justice Stevens concluded that any extension of the life of an existing copyright beyond its expiration date exceeds Congress's authority under the Copyright Clause. He noted that the Copyright Clause was "both a grant of power and a limitation," and that the "limited Times" requirement serves the purpose of promoting the progress of science by ensuring that authors' creative works will enter the public domain once the period of exclusivity expires. He criticized the majority opinion's reliance on the history of Congress's "unbroken pattern" of applying copyright extensions retroactively, arguing that "the fact that Congress has repeatedly acted on a mistaken interpretation of the Constitution does not qualify our duty to invalidate an unconstitutional practice when it is finally challenged in an appropriate case." Justice Stevens opined that "[e]x post facto extensions of copyrights result in a gratuitous transfer of wealth from the public to authors, publishers, and their successors in interest. Such retroactive extensions do not even arguably serve ... the purpose[] of the Copyright ... Clause." He concluded his dissent by making this observation: By failing to protect the public interest in free access to the products of inventive and artistic genius - indeed, by virtually ignoring the central purpose of the Copyright... Clause - the Court has quitclaimed to Congress its principal responsibility in this area of the law. Fairly read, the Court has stated that Congress' actions under the Copyright ... Clause are, for all intents and purposes, judicially unreviewable. That result cannot be squared with the basic tenets of our constitutional structure. According to section 101 of the Patent Act, one who "invents or discovers any new and useful process, machine, manufacture, or any composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title." Thus, the subject matter that is eligible for patent protection may be divided into four categories: processes, machines, manufactures, and compositions of matter. The statutory scope of patentable subject matter under SS 101 of the Patent Act is quite expansive--the U.S. Supreme Court once observed that the legislative history describing the intent of SS 101 was to make patent protection available to "anything under the sun that is made by man." Notwithstanding the breadth of patentable subject matter, the Supreme Court has articulated certain limits to SS 101, stating that "laws of nature, natural phenomena, and abstract ideas" may not be patented. The Court has elaborated on this restriction in several cases, including the following explanation: [A] new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E=mc 2 ; nor could Newton have patented the law of gravity. Such discoveries are "manifestations of ... nature, free to all men and reserved exclusively to none." Process patents (also called method patents) involve an act, or series of steps, that may be performed to achieve a given result. The Patent Act defines a "process" to mean a "process, art, or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material." However, this statutory definition is not particularly illuminating "given that the definition itself uses the term 'process.'" It has thus been up to the courts to interpret the scope of patentable processes under SS 101 of the Patent Act. Software-related inventions may be patented if they meet the statutory requirements of the Patent Act. Today more than 20,000 software patents are granted each year. While software patents comprised approximately 2% of all patents awarded in the early 1980s, they now account for approximately 15% of the total number of U.S. patent issued each year. At the dawn of the computer age in the 1970s, however, inventions relating to computer software were ineligible for patent protection due to a 1972 Supreme Court case, Gottschalk v. Benson . The Benson Court held that mathematical algorithms, though they may be novel and useful, may not be patented. The Court rejected patent claims for an algorithm used to convert binary code decimal numbers to equivalent pure binary numbers (in order to program a computer), because such claims "were not limited to any particular art or technology, to any particular apparatus or machinery, or to any particular end use." A patent on such claims, according to the Court, "would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself." The Benson Court then pronounced that "[p]henomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work." After Benson , patent applicants tried to obtain patents on mechanical devices and processes that included the use of a computer program to run the machine or implement the process. In a 1978 case, Parker v. Flook , Justice Stevens wrote the majority opinion, joined by five other justices, in which the Court rejected this attempt to runaround Benson . In Flook, the patent application described a method for computing an "alarm limit," which is a number that may signal the presence of an abnormal condition in temperature, pressure, and flow rates during catalytic conversion processes. Justice Stevens criticized the patent claims, as follows: The patent application does not purport to explain how to select the appropriate margin of safety, the weighting factor, or any of the other variables. Nor does it purport to contain any disclosure relating to the chemical processes at work, the monitoring of process variables, or the means of setting off an alarm or adjusting an alarm system. All that it provides is a formula for computing an updated alarm limit. Although the computations can be made by pencil and paper calculations, ... the formula is primarily useful for computerized calculations producing automatic adjustments in alarm settings. Although the patent applicant attempted to distinguish the case from Benson by pointing out that his application called for "post-solution" activity--the adjustment of the alarm limit to the figure computed according to the formula--Justice Stevens rejected this argument: The notion that post-solution activity, no matter how conventional or obvious in itself, can transform an unpatentable principle into a patentable process exalts form over substance. A competent draftsman could attach some form of post-solution activity to almost any mathematical formula; the Pythagorean theorem would not have been patentable, or partially patentable, because a patent application contained a final step indicating that the formula, when solved, could be usefully applied to existing surveying techniques. While he allowed that an "inventive application" of a mathematical formula may be patented, he determined that the Flook's application contained no claim of patentable invention. Rather, the application "simply provides a new and presumably better method for calculating alarm limit values." He then concluded that "a claim for an improved method of calculation, even when tied to a specific end use, is unpatentable subject matter under SS 101." However, Justice Stevens commented at the end of his opinion: To a large extent our conclusion is based on reasoning derived from opinions written before the modern business of developing programs for computers was conceived. The youth of the industry may explain the complete absence of precedent supporting patentability. Neither the dearth of precedent, nor this decision, should therefore be interpreted as reflecting a judgment that patent protection of certain novel and useful computer programs will not promote the progress of science and the useful arts, or that such protection is undesirable as a matter of policy. Difficult questions of policy concerning the kinds of programs that may be appropriate for patent protection and the form and duration of such protection can be answered by Congress on the basis of current empirical data not equally available to this tribunal. It is our duty to construe the patent statutes as they now read, in light of our prior precedents, and we must proceed cautiously when we are asked to extend patent rights into areas wholly unforeseen by Congress. Only three years after Flook, the Supreme Court issued a 5-4 decision that appears to conflict with Flook. The opinion of the Court in Diamond v. Diehr was written by Justice Rehnquist, who had dissented in Flook . The Diehr Court upheld the patentability of a computer program-controlled process for producing cured synthetic rubber products, stating: [A] physical and chemical process for molding precision synthetic rubber products falls within the SS 101 categories of possibly patentable subject matter. That respondents' claims involve the transformation of an article, in this case raw, uncured synthetic rubber, into a different state or thing cannot be disputed. The respondents' claims describe in detail a step-by-step method for accomplishing such, beginning with the loading of a mold with raw, uncured rubber and ending with the eventual opening of the press at the conclusion of the cure. Industrial processes such as this are the types which have historically been eligible to receive the protection of our patent laws. The fact that several of the process's steps involved the use of a mathematical formula and a programmed digital computer did not pose a barrier to patent eligibility, according to the Diehr Court: [T]he respondents here do not seek to patent a mathematical formula. Instead, they seek patent protection for a process of curing synthetic rubber. Their process admittedly employs a well-known mathematical equation, but they do not seek to pre-empt the use of that equation. Rather, they seek only to foreclose from others the use of that equation in conjunction with all of the other steps in their claimed process. Finally, the Court concluded that "a claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula, computer program, or digital computer." Justice Stevens wrote a lengthy dissent in Diehr , joined by three other justices who were in the Flook majority. He noted that the Benson decision in 1972 had "clearly held that new mathematical procedures that can be conducted in old computers, like mental processes and abstract intellectual concepts ... are not patentable processes within the meaning of SS 101." In Justice Stevens' view, Diehr's patent claim concerning a method of using a computer to determine the amount of time a rubber molding press should remain closed during the synthetic rubber-curing process "is strikingly reminiscent" of the method of updating alarm limits that the Court had held unpatentable in Flook . He argued that "[t]he broad question whether computer programs should be given patent protection involves policy considerations that this Court is not authorized to address." Justice Stevens would have preferred that the Court's opinion contained the following: (1) an unequivocal holding that no program-related invention is a patentable process under SS101 unless it makes a contribution to the art that is not dependent entirely on the utilization of a computer, and (2) an unequivocal explanation that the term "algorithm" as used in this case, as in Benson and Flook , is synonymous with the term "computer program." The Diehr decision and its appellate progeny encouraged software patent applicants to follow "the doctrine of the magic words," whereby the applicant could obtain a patent on software inventions "only if the applicant recited the magic words and pretended that she was patenting something else entirely," such as hardware devices, some sort of apparatus, or other machines. However, in 1994 the U.S. Court of Appeals for the Federal Circuit, which has exclusive appellate jurisdiction in patent cases, did away with this charade. The Federal Circuit issued an en banc decision, In re Alappat , in which it concluded that "a computer operating pursuant to software may represent patentable subject matter." The Patent Act grants patent holders the right to exclude others from making, using, offering for sale, or selling their patented invention throughout the United States, or importing the invention into the United States. Whoever performs any one of these five acts during the term of the invention's patent, without the patent holder's authorization, is liable for infringement. Defendants who may be sued for patent infringement include private individuals, companies, and also the federal government. Yet when state governments and state institutions (such as state-owned universities) infringe patents, the patent holder currently has very limited legal recourse because of the U.S. Supreme Court's jurisprudence concerning the Eleventh Amendment to the U.S. Constitution. The Eleventh Amendment, with limited exceptions, bars an individual from suing a state under federal law without the state's consent. While states may consent to suit by waiving the privilege of sovereign immunity, in limited circumstances Congress may also abrogate, or overrule, that immunity by passing a statute pursuant to the enforcement power under SS 5 of the Fourteenth Amendment. Congress passed the Patent and Plant Variety Protection Remedy Clarification Act (Patent Remedy Act) in 1992. The language of the statute specifically and unequivocally abrogated state sovereign immunity and subjected the states to suits for monetary damages brought by individuals for violation of federal patent law. The validity of this statute was challenged in Florida Prepaid v. College Savings Bank . College Savings Bank held a patent for its financing methodology, based on certificates of deposit and annuity contracts, designed to guarantee investors funds for future college expenses. The state of Florida soon adopted College Savings Bank's methodology and created the Florida Prepaid Postsecondary Education Expense Board (the Board) to issue similar financing options to its own residents. Consequently, College Savings Bank filed a claim for patent infringement against the Board under the Patent Remedy Act. The principal issue in Florida Prepaid was whether the Patent Remedy Act had legitimately abrogated state sovereign immunity from suit for patent infringement. College Savings Bank argued that Congress had lawfully done so pursuant to the due process clause by ensuring an individual an adequate remedy in the case of a deprivation of property perpetrated by the state in the form of patent infringement. The district court agreed with College Savings Bank, and the Federal Circuit Court affirmed. However, the Supreme Court, in a 5-4 decision, overturned the Federal Circuit decision, holding that the PRCA was not a valid use of the SS 5 enforcement power of the Fourteenth Amendment and therefore not a legitimate abrogation of state sovereign immunity. Justice Stevens filed a dissenting opinion, joined by three other justices. He first observed that the Constitution vested Congress with plenary authority over patents, and that Congress had passed laws providing federal courts with exclusive jurisdiction of patent infringement litigation. He noted that there is "a strong federal interest in an interpretation of the patent statutes that is ... uniform," and that such federal interest is "threatened ... by inadequate protection for patentees." In Justice Stevens' view, it was "appropriate for Congress to abrogate state sovereign immunity in patent infringement cases in order to close a potential loophole in the uniform federal scheme, which, if undermined, would necessarily decrease the efficacy of the process afforded to patent holders." He believed that the Patent Remedy Act was a proper exercise of Congress's power under SS5 of the Fourteenth Amendment to prevent state deprivations of property without due process of law. Supporting the concern for potential due process violations, he referred to the legislative history of the Patent Remedy Act that included congressional findings that state remedies would be insufficient to compensate inventors whose patents had been infringed, and also that state infringement of patents was likely to increase. Justice Stevens argued that the Patent Remedy Act "merely puts" states in the same position as the federal government and private users of the patent system when it comes to the possibility of being held accountable for patent infringement. At the conclusion of his dissent, Justice Stevens criticized the majority opinion's "aggressive sovereign immunity jurisprudence" that "demonstrates itself to be the champion of States' rights."

This report briefly surveys decisions of retiring Justice John Paul Stevens in intellectual property cases. An examination of Justice Stevens' written opinions relating to intellectual property law reveals a strong desire to ensure that the rights of intellectual property creators are balanced with the rights of the public to access creative and innovative works. No decision embodies this interest more than Justice Stevens' majority opinion in Sony Corporation of America v. Universal City Studios, Inc., a landmark copyright case issued in 1984 that paved the way for the development and sale of popular consumer electronics, such as the video recorder (VCR, DVR, TiVo), portable music and video players (iPod), personal computers, and other devices that permit the recording and playback of copyrighted content. In addition, Justice Stevens issued a lengthy dissent in the 2003 case Eldred v. Ashcroft, in which he asserted that Congress lacked the power to pass a law that extended the term of existing copyrights by 20 years. Such a retroactive extension delays the entrance of copyrighted works into the public domain and, in Justice Stevens' opinion, is a violation of the Constitution's Copyright Clause that authorizes Congress to grant exclusive intellectual property rights to authors and artists for "limited Times." In the area of patent law, Justice Stevens authored the majority opinion in the 1978 case Parker v. Flook that sought to severely restrict the availability of patent protection on inventions relating to computer software programs. Yet just three years later, the Supreme Court's decision in Diamond v. Diehr effectively opened the door to the allowance of patents on some computer programs. Justice Stevens wrote a strongly worded dissent in Diehr in which he suggested that Congress would be better suited than the Court to address the policy considerations of allowing patent protection for computer programs. His written opinions in both of these cases reveal an interest in judicial restraint, not wanting to extend patent rights into areas that Congress had not contemplated. Justice Stevens dissented from the 1999 opinion, Florida Prepaid v. College Savings Bank, in which a majority of the Court invalidated Congress's attempt to abrogate state sovereign immunity and authorize patent holders to file suits for monetary damages against states and state instrumentalities that infringe their patent rights. Justice Stevens believed that the 1992 Patent and Plant Variety Protection Remedy Clarification Act was a proper exercise of Congress's authority under SS5 of the Fourteenth Amendment to prevent state deprivations of property without due process of law, and he expressed his disagreement with the majority opinion's expansive protection of states' rights.

This report provides background data on U.S. arms sales agreements with and deliveries to its major purchasers during calendar years 2001-2008. It provides the total dollar values of U.S. arms agreements with its top five purchasers in five specific regions of the world for the periods 2001-2004, 2005-2008, and for 2008, and the total dollar values of U.S. arms deliveries to its top five purchasers in five specific regions for those same years. In addition, the report provides a listing of the total dollar values of U.S. arms agreements with and deliveries to its top 10 purchasers for the periods 2001-2004, 2005-2008, and for 2008. The data are official, unclassified, United States Defense Department figures compiled by the Defense Security Cooperation Agency (DSCA), unless otherwise indicated. The data have been restructured for this report by DSCA from a fiscal year format to a calendar year format. Thus a year in this report covers the period from January 1-December 31, and not the fiscal year period from October 1-September 30. The following regional tables ( Tables 1-5 ) provide the total dollar values of all U.S. defense articles and defense services sold to the top five purchasers in each region indicated for the calendar year(s) noted. These values represent the total value of all government-to-government agreements actually concluded between the United States and the foreign purchaser under the Foreign Military Sales (FMS) program during the calendar year(s) indicated. In Table 6 , the total dollar values of all U.S. defense articles and defense services sold to the top 10 purchasers worldwide are provided for calendar year period noted. All totals are expressed as current U.S. dollars. The following regional tables ( Tables 7-11 ) provide the total dollar values of all U.S. defense articles and defense services delivered to the top five purchasers in each region indicated for the calendar year(s) noted for all deliveries under the U.S. Foreign Military Sales (FMS) program. These values represent the total value of all government-to-government deliveries actually concluded between the United States and the foreign purchaser under the FMS program during the calendar year(s) indicated. Commercial licensed deliveries totals are excluded, due to concerns regarding the accuracy of existing data. In Table 12 , the total dollar values of all U.S. defense articles and defense services actually delivered to the top 10 purchasers worldwide is provided. The delivery totals are for FMS deliveries concluded for the calendar year(s) noted.

This report provides background data on United States arms sales agreements with and deliveries to its major purchasers during calendar years 2001-2008, made through the U.S. Foreign Military Sales (FMS) program. In a series of data tables, it lists the total dollar values of U.S. government-to-government arms sales agreements with its top five purchasers, and the total dollar values of U.S. arms deliveries to those purchasers, in five specific regions of the world for three specific periods: 2001-2004, 2005-2008, and 2008 alone. In addition, the report provides data tables listing the total dollar values of U.S. government-to-government arms agreements with and deliveries to its top 10 purchasers worldwide for the periods 2001-2004, 2005-2008, and for 2008 alone. This report is prepared in conjunction with CRS Report R40796, Conventional Arms Transfers to Developing Nations, 2001-2008, by [author name scrubbed]. That annual report details both U.S. and foreign arms transfer activities globally and provides analysis of arms trade trends. The intent here is to complement that elaborate worldwide treatment of the international arms trade by providing only the dollar values of U.S. arms sales agreements with and delivery values to its leading customers, by geographic region, for the calendar years 2001-2004, 2005-2008, and 2008. Unlike CRS Report R40796, this annual report focuses exclusively on U.S. arms sales and provides the specific names of the major U.S. arms customers, by region, together with the total dollar values of their arms purchases or deliveries. This report will not be updated.

With a campaign to significantly reduce the budget deficit, some in the 112 th Congress see foreign affairs funds, particularly for foreign aid programs, as expenditures that can be cut in order to reduce the deficit. Foreign affairs spending typically amounts to about 1% of the total budget. Others, including some Members of Congress in both political parties and former Secretary of Defense Robert Gates, view a robust foreign affairs budget as essential to promoting U.S. national security and foreign policy interests, perhaps even saving long-term spending by preventing the much costlier use of troops overseas. The 112 th Congress began formal consideration of the annual State Department, Foreign Operations and Related Agencies appropriations (State-Foreign Ops) legislation with a House subcommittee markup of draft legislation on July 27. The Senate full committee reported out its State-Foreign Ops bill on September 22. The Consolidated Appropriations Act, FY2012, was approved by Congress in December 2011 and signed into law on December 23, 2011. State-Foreign Operations appropriations for FY2012 were included as Division I of the act. The State-Foreign Ops appropriation funds most programs and activities within the international affairs budget account, known as Function 150, including foreign economic and security assistance, contributions to international organizations and multilateral financial institutions, State Department and U.S. Agency for International Development (USAID) operations, public diplomacy, and international broadcasting programs. The bill does not align perfectly with the international affairs budget, however. Food aid, which is appropriated through the Agriculture appropriations bill, and the International Trade Commission and Foreign Claims Settlement Commission, both funded through the Commerce-Science-Justice appropriation, are international affairs (Function 150) programs not funded through the State-Foreign Operations appropriations bill. Furthermore, a number of international commissions that are not part of Function 150, such as the International Boundary and Water Commission, are funded through the State-Foreign Operations bill. A chart illustrating the organizational structure of the State-Foreign Operations appropriations bill is provided in Appendix A . This report focuses on only the accounts funded through the State-Foreign Operations appropriations bill, but provides appropriations figures for the entire international affairs (Function 150) budget in Appendix E . Recent events and congressional activity related to the State-Foreign Operations appropriations include the following: Congress passed the Consolidated Appropriations Act, 2012 ( H.R. 2055 ), in mid-December 2011, and the President signed it into law ( P.L. 112-74 ) on December 23. The law provides a 10% increase over FY2011 in State Department, Foreign Operations and Related Program funds--a 12% increase for State Operations, 1% increase for International Broadcasting, and 9% increase for Foreign Operations. The enacted funding is 10% below the Administration's request. (See Appendix C and Appendix D for account-by-account details.) On November 21, 2011, the Joint Select Committee on Deficit Reduction announced it had failed to meet the deadline to produce a plan for reducing the security and nonsecurity budgets required by the Budget Control Act (BCA, P.L. 112-25 ). The next step identified by the BCA is sequestration (a trigger of defense and nondefense automatic budget cuts). Sequestration is to take effect January 2013. Congress passed and the President signed two continuing resolutions: H.J.Res. 94 ( P.L. 112-67 , signed December 16, 2011) continued funding through December 17, and H.J.Res. 95 ( P.L. 112-68 , signed December 17, 2011) continued funding through December 23. H.R. 2017 ( P.L. 112-33 , signed September 30, 2011) continued FY2011 government funding, reduced by 1.503% through October 4, 2011; H.R. 2608 ( P.L. 112-36 , signed October 5, 2011) continued the reduced FY2011 funding through November 18, 2011; and H.R. 2112 ( P.L. 112-55 , signed November 18, 2011) continues the reduced FY2011 funding through December 16, 2011. This law provides full-year FY2012 foreign food aid funding at $1,630.0 million. On September 22, the Senate Appropriations Committee reported out its State-Foreign Operations bill ( S. 1601 ; S.Rept. 112-85 ) with a total discretionary funding level of $45.1 billion plus $8.7 billion in OCO funding for a total of $53.8 billion in FY2012. (In addition, the Foreign Service Retirement Fund is mandatory spending amounting to $158.9 million in FY2012.) This is 14% more than the House funding level. (See below.) On September 7, the Senate Appropriations Committee voted for a $1.043 trillion government spending plan as called for in the Budget Control Act of 2011. Within this action, the Senate provided $44.6 billion in 302(b) allocations (excluding OCO funds) to State-Foreign Operations. Congress approved and the President signed into law the Budget Control Act of 2011 ( S. 365 / P.L. 112-25 ) on August 2, 2011, legislation to raise the debt ceiling. The measure requires specific funding reductions in security and nonsecurity discretionary spending through FY2013. Section 102 of the act defines all 150 budget accounts, including the Department of State and foreign operations accounts, as security spending, putting them in direct funding competition with the Departments of Defense, Homeland Security, and Veterans Affairs; the National Nuclear Security Administration; and the intelligence community. The law contains additional annual discretionary fund reductions through FY2021, without differentiating between security and nonsecurity categories. On July 27, 2011, the House Appropriations Subcommittee on State, Foreign Operations, and Related Programs marked up its FY2012 State-Foreign Operations appropriation, proposing a total discretionary appropriation of $39.7 billion base and $7.6 billion in OCO funds for a total of $47.3 billion. (In addition, the Foreign Service Retirement Fund is mandatory spending amounting to $158.9 million in FY2012.) The subcommittee total is $1.6 billion (3.4%) below the enacted FY2011 total and more than $12.3 billion (20.7%) below the President's FY2012 request. This bill remains unnumbered. The House Appropriations Committee announced on May 11, 2011, the subcommittee allocations, or "302(b)s," which set the State-Foreign Operations funding ceiling at $39.6 billion, 22% below the President's request of $50.95 billion. These figures exclude funds for overseas contingency operations, which do not count toward the 302(b) allocation. Earlier, on April 15, 2011, the House Budget Committee passed a budget resolution ( H.Con.Res. 34 ) recommending $36.6 billion in new budget authority for the International Affairs account, and an additional $8.7 billion in overseas contingency funds for State Department and foreign operations programs accounted for under a separate "Global War on Terrorism" budget function. At $45.3 billion, total budget authority approved under the resolution for International Affairs accounts would be 26% less than the Administration requested. On February 14, 2011, the Obama Administration submitted its FY2012 budget request to Congress. Hearings on various aspects of the international affairs budget request were held throughout March and April. On February 14, 2011, the Obama Administration sent its FY2012 budget request to Congress, with a total of $59.65 billion requested for the Department of State, Foreign Operations, and Related Programs. The budget, which the Administration was compiling a year before the 112 th Congress began focusing on reducing the deficit, represents an 8.2% increase from enacted FY2010 funding, including the FY2010 supplemental, and a 21.8% increase over the FY2011 enacted level. Figure 1 provides a breakout of the request by assistance type. Figure 1 shows the major categories of foreign affairs funding requested for FY2012 and what percentage of the total foreign affairs request each comprises. The Administration's priorities on foreign affairs funding for FY2012 as compared with those in FY2011 would have State Department Administration of Foreign Affairs funding increase from 22% in the FY2011 request to 25%, Bilateral Economic Aid funding decrease from 46% in the FY2011 request to 39%, and Security Aid funding increase from 12% in the FY2011 request to 19%. These three categories make up more than 80% of the total foreign affairs funding requested. For a full listing of funds requested for State, Foreign Operations and Related Agency accounts, see Appendix C and Appendix D . (For a description of all the accounts, see CRS Report R40482, State, Foreign Operations Appropriations: A Guide to Component Accounts , by [author name scrubbed].) The Administration's FY2012 budget request for the Department of State, international broadcasting, and related agencies is $19.52 billion, a nearly 10.8% increase over the FY2010 enacted level of $17.62 billion (which includes $1.52 billion in supplemental funds) and 22.4% more than the FY2011 enacted level of $15.95 billion. Of the $19.52 billion requested for FY2012, $4.39 billion is designated as extraordinary Overseas Contingency Operations (OCO) funding, with the remaining $15.14 billion considered to be the core budget request. The two largest State Department accounts make up 70% of the State Department operations request. They are Diplomatic and Consular Programs (D&CP), which funds salaries and expenses, certain public diplomacy activities, and some worldwide security upgrades; and Embassy Security, Construction, and Maintenance (ESCM), which covers costs related to embassy building, maintenance, land leasing, and worldwide security upgrades. D&CP would receive $11.89 billion, a nearly 36% increase over the FY2011 enacted funding level. The request for ESCM is $1.80 billion, or 11% more than the FY2011 enacted level. The FY2012 request also includes $767.1 million for International Broadcasting, 2.7% above the FY2011 enacted level and 2.4% above the FY2010 total. FY2012 funds requested for other related agencies include $1.6 billion for Contributions to International Organizations (CIO) including the United Nations (U.N.), $1.9 billion for U.N. Peacekeeping (CIPA), $120.8 million for funding International Commissions, and $42.7 million for the U.S. Institute for Peace. Also included are funding for The Asia Foundation ($14.9 million), the National Endowment for Democracy ($104.0 million), and educational and cultural exchange activities ($637.1 million) that help advance U.S. interests. (See Appendix C for funding levels of State Department, International Broadcasting, and Related Agency accounts.) The State Department's FY2012 request reflects similar priorities as in previous years, including funding for "frontline states" of Iraq, Afghanistan, and Pakistan; building Foreign and Civil Service capacity; and reduced funding to certain international organizations. For FY2012 short-term State Department activities in Iraq, the Administration is requesting $3.2 billion in OCO funds to cover the extraordinary costs associated with the transition from military to civilian leadership in Iraq, in addition to a core budget request of nearly $496 million to support ongoing operations there. The planned withdrawal of U.S. military forces from Iraq by December 31, 2011, in accordance with U.S.-Iraq bilateral agreements, will bring a dramatic shift in the U.S. government's presence in Iraq, with the State Department planning to take over the helm of U.S. engagement with a diplomatic presence--including an embassy, two consulates, and two temporary branch offices--that is unmatched in terms of its security considerations, size, and complexity. Some Members of Congress remain skeptical of the State Department's capacity to take over more than 300 activities that the U.S. military had been performing, from environmental cleanup to medical support, while pursuing a wide-ranging policy agenda. The Administration is requesting $757.5 million in OCO funds in FY2012 for short-term needs related to State Department operations in Afghanistan to support an increased civilian presence, security, and other operations. In addition, the budget request includes a core budget request of $31.9 million for ongoing operations in Afghanistan. For State Department operations in Pakistan, the Administration's request for FY2012 includes $89.4 million in OCO funds to support an increased diplomatic presence, plus $19.6 million for ongoing operations. The State Department's Human Resources Initiative is a multi-year initiative started under the George W. Bush Administration and continued by the Obama Administration to build civilian capacity through increased staffing to alleviate a chronic shortage, reduce reliance on contractors, and increase training, including for critical languages. Original plans called for increasing Foreign Service capacity by 25% over FY2008 levels by FY2014, but the Obama Administration's FY2012 budget request shifted the goal beyond 2014 by requesting fewer positions than originally planned. In each of the past three years, the Administration had requested funds to support 500-600 new positions. For FY2012, while acknowledging the need for a "tight budget for tight times," the Administration nonetheless asked for increased funding for the Diplomatic & Consular Programs account to continuing rebuilding the workforce at the State Department. The Administration is requesting $687.2 million to continue to build civilian capacity, including adding 197 new State Department positions at a cost of $66.7 million, including 130 (86 overseas, 44 domestic) Foreign Service and 67 Civil Service positions. The Administration proposed reductions in FY2012 funding in several State Department and related agency accounts, relative to the FY2010 funding levels that were in effect when the request was submitted. In some of these accounts, Congress made deeper cuts in the enacted FY2011 continuing resolution appropriated after the Administration's FY2012 budget submission; in other accounts, however, the Administration had requested lower levels for FY2012 funding than levels enacted by Congress for FY2011. The Administration requested $92.2 million in FY2012 for Conflict Stabilization Operations, formerly the Civilian Stabilization Initiative, which is designed to build civilian capability to prevent and respond to crises and conflicts. This is 23.2% less than in FY2010, but more than 4 1/2 times greater than Congress appropriated in FY2011. The funds would support deployments of a Civilian Response Corps comprised of specialists from multiple federal agencies, as well as their training, oversight, and management. The FY2012 budget request also includes decreased funds, compared to FY2010 enacted levels for contributions to international organizations, including the United Nations, and for peacekeeping missions. The request, however, reflects some alternative sources of funding for some of these programs, including credits. Nevertheless, the Administration's FY2012 request still represents a 2.6% increase over the FY2011 enacted level for contributions to international organizations and 1.9% more than the FY2011 level for peacekeeping operations. These accounts primarily reflect the U.S. commitment to pay assessed contributions to most international organizations that have resulted from treaties and conventions the United States has signed and ratified. In addition, the Administration's FY2012 request proposed a cut of 13.2%, compared to FY2010 funding levels, for the U.S. Institute of Peace; however, the budget request of $42.7 million is 8.4% more than Congress appropriated for FY2011. Some of the deepest proposed cuts in FY2012 as compared with FY2011 enacted levels were for foundations and commissions, including The Asia Foundation, down 16.8%; the East-West Center, reduced by 48.6%; the National Endowment for Democracy, cut 13.3%; the Center for Middle East-West Dialogue, cut 11.1%; and the International Fisheries Commission, down 37.9%. The Foreign Operations budget comprises the majority of U.S. foreign assistance programs, both bilateral and multilateral. (See Appendix D for Foreign Operations accounts and funding levels.) The main exception is food assistance, which is appropriated through the Agriculture Appropriations bill. Foreign Operations accounts are managed primarily by USAID and the State Department, together with several smaller independent foreign assistance agencies such as the Millennium Challenge Corporation, the Peace Corps, and the Inter-American and African Development Foundations. The foreign operations budget also encompasses U.S. contributions to major multilateral financial institutions, such as the World Bank and U.N. entities, and includes funds for the Export-Import Bank and Overseas Private Investment Corporation, whose activities are regarded more as trade promotion than foreign aid. On occasion, the budget replenishes U.S. financial commitments to international financial institutions, such as the World Bank and the International Monetary Fund. The foreign operations budget request for FY2012 totals $40.13 billion, representing a 21.5% increase from the enacted FY2011 level of $33.02 billion. The request was released in February, before final FY2011 appropriations were enacted and before the current emphasis on budget reductions developed in Congress. At that time, foreign operations programs were being funded largely at the FY2010 funding level of $37.49 billion, compared to which the request was a 7% increase. In the FY2012 foreign operations request, the Administration focused on its key foreign assistance initiatives--the Global Health Initiative, Food Security Initiative, and the Global Climate Change Initiative--as well as the transition from military to civilian authority in front-line states and resources needed for reforming USAID operations. Since the request was released in February, events in the Middle East and widespread support for significant budget cuts have raised new questions about foreign assistance priorities. The following issues are likely to be among those at the center of congressional consideration of foreign operations appropriations for FY2012: With popular uprisings leading to the fall of governments in the Middle East when many in the 112 th Congress are pressing for drastic budget reductions, foreign assistance as a tool of democracy promotion is receiving significant scrutiny. Egypt, for example, has long been a top U.S. foreign aid recipient. The results of its political transition combined with congressional reaction to a more independent foreign policy course may shape future U.S. assistance. The form of assistance (which in recent years has been primarily military aid) is a key issue, with some lawmakers calling for debt cancellation, others for direct democracy promotion assistance, and still others suggesting that focusing aid on economic growth is the best way to foster a democratic future for Egypt. Similar considerations apply to Tunisia, for which the United States pledged $20 million in March through the Middle East Partnership Initiative for transition support, and legislation has been introduced in the Senate ( S. 618 ) to authorize Tunisia-United States and Egypt-United States enterprise funds. In Libya, the United States has suspended previously approved aid programs, approved $25 million in non-lethal assistance for Libyan opposition groups, and provided humanitarian assistance for refugees fleeing the country. As events evolve throughout the Middle East, U.S. efforts to respond with appropriate aid will likely be at the top of the foreign assistance agenda. The Department of Defense (DOD) greatly expanded its foreign aid activities in the wake of the Iraq and Afghanistan invasions, when high levels of security and economic aid flowed into those countries even while instability and relatively low personnel capacity limited the role of civilian aid agencies. As conditions on the ground have stabilized and both State and USAID have begun building their capacity in both countries, the Secretary of State and Secretary of Defense have expressed support for stronger civilian control of these activities. Congress, however, has not demonstrated support for Administration efforts to carry out such transitions. For example, the FY2011 foreign operations request called for funding in three foreign operations accounts--the Complex Crisis Fund (CCF), Pakistan Counterinsurgency Capability Fund (PCCF), and the International Narcotics Control and Law Enforcement (INCLE) account--to support activities such as police training that were previously funded through the Defense Appropriations bill. Congress, rather than providing additional funding for these activities, cut the CCF and INCLE account significantly in the FY2011 continuing resolution from FY2010 enacted levels and eliminated foreign operations funding for the PCCF, for which it instead provided $800 million through the Defense appropriation. While Secretary of State Clinton has claimed that a shift from military to civilian control will allow the Defense budget for Iraq to decrease by $16 billion, which may appeal to budget reduction advocates in Congress, the fate of the transition is in question, and FY2012 appropriations will be a strong indicator of Congress's position on this issue. For FY2012, the Administration has requested $75 million for the CCF, $1.1 billion for the PCCF, and $2.78 billion for INCLE programs. The Administration also requested, for the first time, $50 million for a Global Contingency Security Fund (with an additional $450 million requested through the DOD appropriation), to support a pilot program focused on joint civilian-military response to unforeseen events. As demonstrated in Table 5 , the Administration's FY2012 request would largely continue the flow of assistance to Afghanistan, Iraq, and Pakistan, countries of particular strategic interest in the fight against terrorism. However, Congress has expressed significant concerns over State and USAID accountability for the billions of U.S. assistance dollars that have flowed to these countries in recent years. The Commission on Wartime Contracting has reported that billions of dollars have been lost to waste, fraud, and abuse in Afghanistan and Iraq, often as a result of poor planning, limited competition in contracting, and insufficient oversight of contractors. Widely reported corruption at every level of the Afghanistan government and within Pakistan has bolstered concerns that U.S. funds are being channeled for the private use of elites, rather than for development purposes. In June 2010, then House State-Foreign Operations Appropriations Subcommittee Chairwoman Nita Lowey announced that her subcommittee would not consider the non-humanitarian part of the Administration's FY2011 aid request for Afghanistan until she was satisfied that the corruption issue had been resolved. The topic was also raised by several appropriators at hearings in early 2011 on the FY2012 request. The revelation that Osama Bin Laden was apparently living near a military academy in Pakistan for years before he was killed in May 2011 by U.S. military forces has led to doubts about the use of U.S. security assistance to Pakistan and calls by some for the suspension of all U.S. aid to Pakistan. In determining FY2012 aid funding, Congress will likely consider the risks associated with the continuation or reduction of assistance to these countries, or the additional funding that might be required in an effort to enhance oversight and lessen the risk of fraud and abuse. U.S. international family planning and abortion-related issues have generated contentious debate in Congress for over three decades, resulting in frequent clarification and modification of family planning laws and policies. Recent congressional debate centers around two key issues: (1) implementation of the "Mexico City policy" and (2) U.S. funding of the U.N. Population Fund (UNFPA). The Mexico City policy, issued by President Reagan in 1984, required foreign NGOs receiving USAID family planning assistance to certify that they would not perform or actively promote abortion as a method of family planning, even if such activities were undertaken with non-U.S. funds. The policy has been rescinded and reissued by past and current Administrations. It was most recently rescinded by President Obama in January 2009. Language reinstating the policy was included in the Foreign Relations Authorization Act for FY2012, approved by the House Foreign Affairs Committee on July 21, 2011, indicating that it may be a contentious issue during consideration of FY2012 foreign operations appropriations. Previous Administrations have also suspended grants to UNFPA due to evidence of coercive family planning practices in China, citing violations of the "Kemp-Kasten" amendment, which bans U.S. assistance to organizations that support or participate in the management of coercive family planning programs. Past and current Administrations have disagreed as to whether UNFPA engages in such activities. The George W. Bush Administration suspended U.S. contributions to UNFPA from FY2002 to FY2008 following a State Department investigation of family planning programs in China. President Obama resumed U.S. contributions to the organization in 2009. In recent years, Congress has enacted certain conditions for U.S. funding of UNFPA. For FY2012, the Administration requested a total of $769.105 million for bilateral and multilateral family planning and reproductive health assistance, including $47.5 million for UNFPA. The Administration has requested $8.72 billion through the Global Health and Child Survival Account to support State and USAID components of its Global Health Initiative (GHI) in FY2012. The request represents a 10% increase over FY2010 funding, including supplemental funds, and 11.3% over the FY2011 enacted level. GHI is intended to be a comprehensive approach to global health problems that builds on the previous Administration's focus on global HIV/AIDS, tuberculosis, and malaria, but prioritizes building strong and sustainable health systems through an emphasis on maternal and pediatric programs, as well as strategic coordination. The FY2012 request includes notable increases for nutrition programs and maternal and child health activities, while proposing a funding reduction only for pandemic influenza programs. The initiative was designed to last six years and invest $63 billion. However, with a total of about $18 billion appropriated for GHI in FY2009 and FY2010, Congress would need to provide $15 billion on average for FY2011 through FY2013 to meet that target, just as budget constraints make cuts more likely than increases. The 112 th Congress may face difficult questions in determining funding levels for GHI programs. The life-saving nature of many global health activities may give pause to some lawmakers looking for budget savings, while the significant resources needed just to maintain the health gains of the last decade, such as providing anti-retroviral drugs for HIV/AIDS patients, may appear to others to be unsustainable. Feed the Future (FtF), the Obama Administration's food security initiative announced in 2010, continues to be a priority for the Administration, which requested $1.56 billion through the State-Foreign Operations appropriation for related programs in the FY2012 budget, about 20% more than the enacted FY2010 level. FtF is the outgrowth of a pledge made by the President at a G-8 summit in 2009 to provide at least $3.5 billion over three years (FY2010-FY2012) to address root causes of global hunger, such as low agricultural productivity and poor nutrition. The initiative targets funding to countries with widespread hunger, an agriculture-based economy, and comprehensive strategies for food security already in place. The initiative also emphasizes the benefits of working multilaterally and in partnership with other stakeholders to leverage resources. The FY2012 request also includes $308 million for the multi-donor Global Agriculture and Food Security Program (GAFSP), managed by the World Bank. Congress has shown less support for this approach, appropriating just under $100 million for the GAFSP in FY2011 in response to a request for $408 million. In testimony before the Senate State-Foreign Operations Appropriations Subcommittee, USAID Administrator Rajiv Shah commented that newer initiatives, such as FtF, are particularly vulnerable to budget cuts in FY2012. The FY2012 request for programs supporting the Global Climate Change Initiative (GCCI) totals slightly over $1.3 billion, a 40% increase over the $946 million enacted in FY2010. (As with GHI and FtF, total GCCI funding for FY2011 is unclear because some relevant sub-account allocations have not been reported.) The funds would support activities relating to climate change, with an emphasis on adaptation, deployment of clean energy technologies, and reduction of greenhouse gas emissions through sustainable landscapes. A significant portion of this climate change funding would be channeled through international financial institutions. The emphasis on multilateral funding, both for climate change and food security, has been described by the Administration as a fiscally responsible approach intended to leverage commitments from other donors and increase the impact of U.S. funds. As with the multilateral approach to food security, however, Congress has not been fully supportive of the Administration's requests. The $400 million requested for the International Clean Technology Fund in FY2012 would be a 117% increase over the FY2011 funding, which was enacted after the FY2012 request was made. The request also includes $190 million for the International Strategic Climate Fund, a 281% increase over the FY2011 level. USAID Administrator Shah noted in congressional testimony earlier this year that his biggest frustrations in the job have related to the agency's complicated procurement process and a human resources management system that makes it difficult to reward leadership and risk-taking. He hopes to address these issues through USAID Forward, an initiative to change the way the agency does business through implementing reforms related to procurement, talent management, building policy capacity, monitoring and evaluation, budget management, use of science and technology, and innovation. While these reforms are intended to address aspects of USAID operations that Congress has often criticized, implementation will require additional funding at a time when Congress seeks to reduce spending. For FY2012, the Administration requests about $380 million for USAID Forward reforms through the USAID Operating Expenses account, primarily to hire 95 mid-career Foreign Service Officers, with an emphasis on Contract Officers and Controllers. The Administration has requested $358.4 million in funding through Treasury Department international programs for general capital increases (GCIs) at several multilateral financial institutions in FY2012--$117.4 million for the International Bank of Reconstruction and Development; $106.6 million for the Asian Development Bank; $102.0 million for the Inter-American Development Bank; and $32.4 million for the African Development Bank. Most of the funds requested represent just one of several annual installments toward a larger total GCI commitment. Multiple simultaneous GCIs are unusual but necessary, according to Treasury Secretary Timothy Geithner, because of high lending rates at the institutions, with U.S. encouragement, in response to the global financial crisis. Congressional appropriators, however, have suggested reluctance to appropriate such funds without prior consideration of authorization legislation stipulating reforms on which disbursement of the funds would be contingent. The Administration asserts that failure to provide the requested funding would diminish U.S. influence globally and potentially create an opportunity for other countries, such as China, to expand their global influence. U.S. national security, trade promotion, and humanitarian interests are rationales for most international affairs activities. During the Cold War, foreign aid and diplomatic programs had a primarily anti-communist focus, while concurrently pursuing other U.S. policy interests, such as promoting economic development, advancing U.S. trade, expanding access to basic education and health care, promoting human rights, and protecting the environment. After the early 1990s, with the Cold War ended, distinct policy objectives--including stopping nuclear weapons proliferation, curbing the production and trafficking of illegal drugs, expanding peace efforts in the Middle East, achieving regional stability, protecting religious freedom, and countering trafficking in persons--replaced the Cold War-influenced foreign policy objectives. A defining change in focus came following the 9/11 terrorist attacks in the United States. Since then, many U.S. foreign aid and diplomatic programs have emphasized national security objectives, frequently cast in terms of contributing to efforts to counter terrorism. In 2002, President Bush released a National Security Strategy that for the first time established global development as the third pillar of U.S. national security, along with defense and diplomacy. Development was again underscored in the Administration's 2006 and 2010 National Security Strategy. Also in 2002, foreign assistance budget justifications began to highlight the war on terrorism as the top foreign aid priority, emphasizing U.S. assistance to 28 "front-line" states--countries that cooperated with the United States in the war on terrorism or faced terrorist threats themselves. Large reconstruction programs in Afghanistan and Iraq exemplified the emphasis on using foreign aid to combat terrorism. State Department efforts focused extensively on diplomatic security and finding more effective ways of presenting American views and culture through public diplomacy, particularly in Muslim communities. The Obama Administration has carried forward many Bush foreign aid initiatives, including USAID's Development Leadership Initiative (DLI), the Millennium Challenge Corporation, and robust assistance to Iraq, Afghanistan, and Pakistan. The Obama Administration has also largely sustained Bush Administration investments in global health and HIV/AIDS treatment, though its Global Health Initiative shifts the emphasis away from a focus on discrete diseases and toward comprehensive health systems. In the FY2011 and FY2012 requests, the Administration further defined its international priorities, with an emphasis on building State Department and USAID capacity, supporting multilateral food security and global climate change initiatives, and shifting responsibility for assistance programs in Iraq and elsewhere from military to civilian authorities. Table 2 and Figure 2 show State-Foreign Operations appropriations for the past decade in both current and constant dollars. Table 3 and Figure 3 show appropriations for the State Department and related agencies over the past decade in both current and constant dollars. Table 4 and Figure 4 show appropriations for the State Department and related agencies over the past decade in both current and constant dollars. Prior to the wars in Afghanistan and Iraq, Israel and Egypt typically received the largest amounts of U.S. foreign aid every year since the Camp David Peace Accords in 1978. The reconstruction efforts in Iraq and Afghanistan moved those countries into the top five, though assistance to Iraq has declined significantly in the past couple of years, with the completion of many reconstruction activities. Meanwhile, a combination of security assistance and economic aid designed to limit the appeal of extremist organizations has moved Pakistan up the list in recent years. Funding for Iraq, Afghanistan, and Pakistan includes Overseas Contingency Operations (OCO) temporary appropriations. In the FY2012 request, Afghanistan tops the list at $3,213.4 million, including $1.2 billion in Economic Support Fund-OCO funds. Israel ranks second, with all of the $3,075 million requested for Foreign Military Financing (FMF). Pakistan ranks third at $2,965 million, 80% of which is for activities supported by the Economic Support Fund (ESF) and the Pakistan Counterinsurgency Capability Fund-OCO (PCCF). Iraq moves up from sixth in FY2010 to fourth in the FY2012 request. This is largely because of $1.0 billion for INCLE-OCO and $1.0 billion for FMF-OCO. Haiti, which was a top recipient in FY2010 as a result of supplemental funds for post-earthquake relief and reconstruction, would not be among the top 10 recipients in FY2012 under the Administration's proposal. As shown in Figure 5 , under the FY2012 budget request, Africa ($7.8 billion), Near East ($8.8 billion), and South Central Asia ($6.8 billion) would receive the most U.S. foreign assistance. Aid to Africa primarily supports HIV/AIDS and other health-related programs while 88% of the aid to South Central Asia is requested for Afghanistan and Pakistan. The Near East region continues to be dominated by assistance to Israel ($3.0 billion), Iraq ($2.4 billion), Egypt ($1.6 billion), and Jordan ($0.7 billion). The Western Hemisphere's projected relative decline in FY2012 is attributable mostly to the $1.4 billion in supplemental funds for Haiti's humanitarian crisis in 2010. Assistance to Europe and Eurasia would decline, according to the Administration, partly due to a reduction of funds in AEECA to reflect progress made by many countries in the region and other more pressing global priorities. Aid to East Asia and Pacific remains relatively low and consistent with past years' levels. Over the years, Congress has expressed interest in various discrete aid sectors, such as education, building trade capacity, maternal and child health, and biodiversity, that are funded across multiple accounts and/or agencies. Administrations have begun presenting their respective budget requests with a section showing what portion of the request would address some of these "key interest areas." Unlike the account funding tables in the budget request, however, the key interest area breakout does not show prior year allocations, limiting year-to-year comparison to requested funds rather than actual funding. This provides an indication of the Administration's interests and priorities, but not necessarily those of congressional appropriators. Table 6 compares the FY2011 and FY2012 budget requests for key interest areas identified by the Administration. The Administration requested less for most sectors than it did in FY2011. Perhaps surprisingly, two of the Administration's major initiatives--Food Security and Global Climate Change--show declines in the FY2012 request , as does the request for Microenterprise and Microfinance, Trade Capacity Building, Pandemic Influenza, and Other Public Health Threats. Sectors with increased funding include Family Planning, Maternal and Child Health, and Water. The Administration emphasized two new focus areas, adding Gender Funding and Science, Technology, and Innovation to the key interests list. Appendix A. Structure of State-Foreign Operations Appropriations Appendix B. Abbreviations Appendix C. State Department and Related Agencies Appropriations Appendix D. Foreign Operations Appropriations Appendix E. International Affairs (150) Budget Account

Some in the 112th Congress view the foreign affairs budget as a place to cut funds in order to reduce the budget deficit. Foreign affairs expenditures typically amount to about 1% of the annual budget. Others, including Members of Congress of both political parties, view a robust foreign affairs budget as essential for America's national security and foreign policy interests. The State Department, Foreign Operations, and Related Agencies appropriations bills, in addition to funding U.S. diplomatic and foreign aid activities, have been the primary legislative vehicle through which Congress reviews the U.S. international affairs budget and influences executive branch foreign policy making in recent years. (Congress has not amended foreign policy issues through a complete authorization process for State Department diplomatic activities since 2003 and for foreign aid programs since 1985.) After a period of general decline in the late 1980s and 1990s, funding for State Department operations, international broadcasting, and foreign aid rose steadily from FY2002 to FY2010, largely because of ongoing assistance to Iraq and Afghanistan, new global health programs, and increasing assistance to Pakistan. It declined again in FY2011 when Congress passed a continuing resolution (P.L. 112-10) significantly reducing U.S. government-wide expenditures, including foreign affairs. On February 14, 2011, the Obama Administration submitted its FY2012 budget proposal before enactment of the final FY2011 appropriations and the current congressional emphasis on budget reductions. The FY2012 request sought $61.5 billion for the international affairs budget, including a core State-Foreign Operations budget of $59.65 billion plus $8.70 billion for extraordinary Overseas Contingency Operations in frontline states. The total request represented an increase of 21.8% over the enacted FY2011 funding level for State Department and Foreign Operations accounts and sought significant increases for State Department's administration of foreign affairs accounts, security assistance, and various multilateral environmental accounts. Funding for international affairs programs was expected by many to decline in FY2012 as the 112th Congress focuses on budget reduction measures to meet objectives in the Budget Control Act of 2011 (P.L. 112-25). The House subcommittee mark of the FY2012 State-Foreign Operations appropriation recommended $47.58 billion in total funding, and the Senate committee-passed bill (S. 1601) recommended $53.97 billion. The enacted total funding level of $53.88 billion is nearly 10% less than the Administration's request, but is 10% more than the enacted total for FY2011. However, $11.20 billion of the FY2012 enacted total is designated for Overseas Contingency Operations (more than the $8.70 billion requested by the Administration) and does not count toward enacted discretionary spending caps. This report analyzes the FY2012 request and congressional action related to FY2012 State-Foreign Operations legislation. The Summary, "Introduction" and "Recent Developments" sections, and appendix tables in this version of the report have been updated to reflect enactment of P.L. 112-74, the Consolidated Appropriations Act, FY2012.

The Senate imposes some general procedural requirements and prohibitions on its committees, but, in general, the Senate's rules allow each of its standing committees to decide how to conduct business. Most of the chamber's requirements for committees are found in Senate Rule XXVI. Because the committees are agents of the Senate, they are obligated to comply with all Senate directives that apply to them. This report identifies and summarizes the provisions of the Senate's standing rules, standing orders, precedents, and other directives that relate to legislative activity in the Senate's standing committees. The report covers four main issues: committee organization, committee meetings, hearings, and reporting. The coverage of this report is limited to requirements and prohibitions that are of direct and general applicability to most or all Senate committees, as they consider most legislative matters. This report may not capture every nuance and detail of the rules themselves. For that purpose, the text of the appropriate rule or other document should be consulted. Adoption of committee rules ; Rule XXVI, paragraph 2 Each committee is required to adopt written rules to govern its proceedings. Committee rules must not be inconsistent with the rules of the Senate, but the Standing Rules do not elaborate on what this means in practice. Publication of committee rules ; Rule XXVI, paragraph 2 The rules adopted by each committee are to be published in the Congressional Record by March 1 of the first session of each two-year Congress. If the Senate should create a committee on or after February 1, the committee must adopt its rules and publish them in the Record within 60 days. If a committee later adopts an amendment to its rules, that amendment becomes effective only after it is published in the Record . Committee records ; Rule XXVI, paragraph 7(b) Each committee, except for the Appropriations Committee, is to keep a record of its actions, including rollcall votes taken. Authority to meet ; Rule XXVI, paragraph 1 A standing committee and its subcommittees are authorized to meet and to hold hearings when the Senate is in session as well as during its recesses or adjournments. Committees do not have unlimited authority to meet when the Senate is also meeting. Meetings during Senate sessions ; Rule XXVI, paragraph 5(a) A committee may not meet (or continue a meeting in progress) on any day (1) after the Senate has been in session for two hours, or (2) after 2:00 p.m. when the Senate is in session. This prohibition does not apply to the Appropriations and Budget Committees. The rule allows the majority and minority leaders (or their designees) to jointly waive the requirement for other committees, but in practice the Senate instead waives it by unanimous consent on the floor if no Senator objects. Regular meeting day ; Rule XXVI, paragraph 3 Each committee must designate a regular day on which to meet weekly, biweekly, or monthly. This requirement does not apply to the Appropriations Committee. In practice, committees do not always convene on the specified meeting date. Many committees meet at more frequent intervals than specified in their rules. Additional committee meetings ; Rule XXVI, paragraph 3 The chair of a committee may call additional meetings at his or her discretion. In addition, three members of a committee can make a written request to the chair to call a special meeting. The chair then has three calendar days within which to schedule the meeting, which is to take place within the next seven calendar days. If the chair fails to do so, a majority of the committee members can file a written motion to hold the meeting at a certain date and hour. This is a rarely used device. However, the expectation that Senators are prepared to invoke it may encourage committee chairs to schedule meetings sought by other committee members. Scheduling meetings ; Standing Orders of the Senate; Section 401 of S.Res. 4 , 95 th Congress When a committee or subcommittee schedules or cancels a meeting, it is to provide that information--including the time, place, and purpose of the meeting--for inclusion in the Senate's computerized schedule information system. (See Public Announcement , below.) Open meetings ; Rule XXVI, paragraph 5(b) In general, committee and subcommittee meetings, including hearings, are open to the public. For any committee or subcommittee meeting (or a series of meetings on the same subject that may extend up to 14 calendar days), the committee or subcommittee is authorized to vote to close a meeting if it (1) involves national security information, (2) concerns committee personnel or staff management or procedure, (3) could invade personal privacy or damage someone's reputation or professional standing, (4) could reveal identities or damage operations relating to law enforcement activities, (5) could disclose certain kinds of confidential financial or commercial information, or (6) could divulge information that some law or regulation requires to be kept confidential. By agreeing, in open session, to a motion made (and seconded) to close the meeting to the public, the committee can go into closed session only to determine whether the subject of the meeting or the testimony at the hearing falls into any of the six specified categories. If it determines that this is the case, the committee can then decide by a second rollcall vote in open session to close the remainder of the meeting. Presiding at committee meetings ; Rule XXVI, paragraph 3 In the absence of the committee chair at any committee meeting, the next ranking member of the majority party shall preside. Quorum at meeting ; Rule XXVI, paragraph 7(a)(1) A committee or subcommittee may set its own quorum requirement for transacting business at meetings so long as the quorum is not less than one-third of the membership. A committee can set a lesser quorum requirement for hearings, but a majority must be physically present to order a measure or matter reported; see Quorum at hearing and Quorum for reporting , below. Also, proxies cannot be used to constitute a quorum; see Proxy votin g , below. Maintaining order ; Rule XXVI, paragraph 5(d) The committee chair is responsible for maintaining order at committee meetings and may close a meeting for that purpose until order is restored. Proxy voting ; Rule XXVI, paragraphs 7(a)(3) and 7(c)(1) A committee may adopt rules permitting proxy voting (see Proxy votes on reporting , below). However, a committee may not permit a proxy vote to be cast unless the absent Senator has been notified about the question to be decided and has requested that his or her vote be cast by proxy. Proxies may not be counted for the purpose of constituting a quorum. Records of committee meetings ; Rule XXVI, paragraph 5(e) Each committee shall maintain a transcript or recording of each committee meeting, whether it is open or closed to the public. This requirement can be waived by majority vote. Unless the meeting is closed, a transcript or a video or audio recording must be posted on the Internet no later than 21 business days after the meeting and remain posted until the end of the Congress after the meeting; this requirement may be waived by the Rules and Administration Committee in cases of technical barriers to compliance. Authority to hold hearings ; see Authority to meet , above. Investigative authority ; Rule XXVI, paragraph 1 Each standing committee, including any of its subcommittees, is empowered to investigate matters within its jurisdiction. Subpoena power ; Rule XXVI, paragraph 1 Each standing committee, including any of its subcommittees, is empowered to issue subpoenas for persons and documents. Public announcement ; Rule XXVI, paragraph 4(a) A committee is to announce the date, place, and subject of each hearing at least one week in advance, though any committee may waive this requirement for "good cause." (See Scheduling m eetings , above.) This requirement does not apply to the Appropriations and Budget Committees. Quorum at a hearing ; Rule XXVI, paragraph 7(a)(2) A committee or subcommittee may set its own quorum requirement of less than one-third of the members "for the purpose of taking sworn testimony." The Senate standing rules do not set a minimum quorum for this purpose. Several committee rules allow sworn testimony to be taken with just one member in attendance. (See Quorum at a meeting and Quorum for r eporting , below.) Statements of witnesses ; Rule XXVI, paragraph 4(b) Each committee is to require each witness to file a written statement at least one day before his or her appearance, though the chair and ranking minority member may waive this requirement. This provision does not apply to the Appropriations Committee. Staff summaries of testimony ; Rule XXVI, paragraphs 4(b) and 4(c) The committee may direct its staff to prepare daily digests of the statements that witnesses propose to present and then to prepare daily summaries of the testimony that the committee actually received. With the approval of the chair and ranking minority member, the committee may include the latter summaries in any published hearings. Witnesses selected by the minority ; Rule XXVI, paragraph 4(d) During hearings on any measure or matter, the minority shall be allowed to select witnesses to testify on at least one day if the chair receives such a request from a majority of the minority party members prior to the end of the hearing. This provision does not apply to the Appropriations Committee. Open hearings ; see Open meetings , above. Broadcasting hearings ; Rule XXVI, paragraph 5(c) Any hearing that is open to the public also may be open to radio and television broadcasting. However, committees and subcommittees may adopt rules to govern how the media may broadcast the event. Printing and/or posting of hearings ; Rule XXVI, paragraph 10(a), Rule XXVI, paragraph 5(e) Each committee is authorized to print its hearing records as well as material submitted at hearings for the record. Records of the committee belong to the Senate and are open for review by any Member of the Senate. Such records should be kept separately from the records of the chair of the committee. Unless the meeting is closed, a transcript or a video or audio recording must be posted on the Internet no later than 21 business days after the meeting and remain posted until the end of the Congress after the meeting; this requirement may be waived by the Rules and Administration Committee in cases of technical barriers to compliance. Availability of printed hearings ; Rule XVII, paragraph 5 If a committee has held hearings on a measure or matter it has reported, the committee is to "make every reasonable effort" to have the printed hearings available to Senators before the Senate begins floor consideration of the measure or matter. Authority to originate measures ; Rule XXV, paragraph 1 A committee with legislative jurisdiction under Rule XXV has "leave to report by bill or otherwise" on matters within its jurisdiction. In other words, the committee is authorized to originate bills and resolutions in addition to reporting measures previously introduced and referred to it. Committee amendments ; Rule XV, paragraph 5 A Senator may raise a point of order on the floor against consideration of any reported committee amendment that contains "any significant matter" that is not within the committee's jurisdiction except for a "technical, clerical, or conforming amendment." This prohibition does not apply to provisions of an original bill that a committee reports. Quorum for reporting ; Rule XXVI, paragraph 7(a)(1) A majority of a committee must be physically present when the committee votes to order the reporting of any measure, matter, or recommendation. (See Quorum at hearing and Quorum at meeting , above.) Vote required to report ; Rule XXVI, paragraph 7(a)(3) The motion to order the reporting of a measure or matter requires the support of a majority of the members who are present, and in turn, the members who are physically present must constitute a majority of the committee. (See Quorum for reporting , above.) Proxy votes on reporting ; Rule XXVI, paragraph 7(a)(3) A committee may adopt a rule prohibiting the use of proxies on votes to order a measure or matter reported. If a committee permits the use of proxies on such votes, the preceding two requirements (in regard to a proper reporting quorum) continue to apply. Ratification of prior actions ; Rule XXVI, paragraph 7(a)(3) When a committee orders a measure or matter reported in accordance with the three immediately preceding rule provisions (that is, in regard to a proper reporting quorum and a proper vote to report), that action has the effect of ratifying previous committee actions on the measure or matter. In other words, if a measure or matter has been reported properly, a Senator may not make a point of order on the Senate floor against the measure's consideration on the basis of a committee action or inaction that occurred prior to the vote on reporting it. (This is sometimes called the "clean-up" provision of Rule XXVI.) The following requirements concern the content of committee reports on legislation. The Senate's rules do not require a committee to file a written report when it reports a bill or resolution to the Senate. However, if a written report is filed, Senate rules and statutes specify certain items that must be included: Other views ; Rule XXVI, paragraph 10(c) A committee member is entitled to have his or her supplemental, minority, or additional views included in the committee's report on a measure or matter if the committee member (1) gives notice, at the time the committee orders the measure or matter reported, of his or her intent to submit such views, and (2) files those views in writing within three calendar days of the committee vote. This provision does not apply to the Appropriations Committee. Rollcall votes taken ; Rule XXVI, paragraphs 7(b) and (c) A committee report on a measure shall contain the results of any rollcall votes taken on the measure and amendments to it and on the motion to order it reported, including the names of Senators voting in support or against. This requirement does not apply if the results have been "previously announced by the committee." Cost estimate ; Section 308(a) of the Congressional Budget Act ( P.L. 93-344 ). (Related requirements are found in Section 402 of the Congressional Budget Act and in Senate Rule XXVI, paragraph 11(a).) The report on a measure or committee amendment that would provide new budget, direct spending, or credit authority, or change revenues or tax expenditures, is to include (1) comparisons with appropriate committee allocations, (2) a cost estimate by the Congressional Budget Office (CBO) covering the first fiscal year affected and the following four fiscal years, and (3) an estimate, also prepared by CBO, of new budget authority provided for assistance to state and local governments. This requirement does not apply to continuing appropriations, and the second and third items need to be included only if they are "timely submitted" by CBO. Comparative print ; ("Cordon Rule," named after Senator Guy Cordon); Rule XXVI, paragraph 12 The committee report accompanying any measure that would repeal or amend existing law must show what the measure proposes to repeal and, using appropriate typographical devices, how the existing law would be amended by the bill if it were enacted as reported by the committee. A committee may dispense with this requirement if it states in its report that doing so is necessary "to expedite the business of the Senate." Regulatory and paperwork impact statement ; Rule XXVI, paragraphs 11(b) and (c) The report on a public bill or joint resolution must typically include an evaluation of the measure's anticipated impact in several respects: (1) its regulatory impact on individuals and businesses, (2) the economic effects of its regulatory impact, (3) its impact on personal privacy, and (4) the amount of paperwork and recordkeeping it would require. This requirement does not apply to the Appropriations Committee, nor does it apply to reports on Senate or concurrent resolutions or on private measures. Furthermore, any committee need not comply if it states in its report why compliance would be "impracticable." A Senator may make a point of order on the floor against considering a bill if the report accompanying it does not comply with this requirement. Applicability to Congress ; Section 102(b)(3) of P.L. 104-1 The report accompanying a bill or joint resolution "relating to terms and conditions of employment or access to public services or accommodations" must describe how the provisions of the measure apply to the legislative branch or why they do not. A point of order can be made on the floor against Senate consideration of a measure if the accompanying report does not comply with this requirement, but the requirement may be waived by majority vote of the Senate. Preemption information ; Section 423 of the Congressional Budget Act ( P.L. 93-344 ), as amended An authorizing committee's report accompanying a bill or joint resolution must contain a statement, if relevant, on the extent to which the measure would preempt any state, local, or tribal law and the effect of any such preemption, including identification of direct costs to state, local, and tribal governments and to the private sector; an assessment of anticipated costs and benefits; and a statement on effects on the private and public sectors. If the mandates are intergovernmental, the report is required to include additional detailed statements and explanations in regard to the funding allocations, sources, and costs of the mandates. Unfunded mandates ; Sections 423 and 424 of the Congressional Budget Act ( P.L. 93-344 ), as amended An authorizing committee's report accompanying a bill or joint resolution that contains a federal mandate must include a description of that mandate. Tax law complexity analysis ; Sections 4022(b) of the Internal Revenue Service Reform and Restructuring Act of 1998 ( P.L. 105-206 ) For measures reported by the Senate Finance Committee (or a conference committee) that include any provision that "would directly or indirectly amend the Internal Revenue Code of 1986 and which has widespread applicability to individuals or small businesses," the Joint Committee on Taxation (in consultation with the Internal Revenue Service and the Treasury Department) must provide in the committee report a tax complexity analysis (or instead provide such analysis to members of the reporting committee). Re port on jointly referred measure ; Rule XVII, paragraph 3(b) There may be only one report on a bill that was referred jointly to two or more committees. The report may be printed in several numbered parts prepared by different committees. Timely filing of reports ; Rule XXVI, paragraph 10(b) It is the chair's duty to ensure that a measure his or her committee has ordered reported is reported "promptly" to the Senate. The chair is also "to take or cause to be taken necessary steps to bring the matter to a vote." A majority of a committee may require that a measure the committee has approved be reported to the Senate within seven calendar days (excluding days on which the Senate is not in session) of the submission of a written request to do so. These provisions do not apply to the Appropriations Committee. Layover requirements ; Rule XVII, paragraphs 4(a) and 5 There are two distinct layover requirements in relation to committee-reported measures or matters. First, a measure or matter reported from committee is to lie over for one legislative day before the Senate may consider it. Second, the written report on the measure or matter (if there is a written report) is to be available to Senators for two calendar days (excluding Sundays and legal holidays) before the Senate begins considering the measure or matter. The two-calendar-day requirement may be waived jointly by the majority and minority leaders and does not apply to congressional declarations of war or national emergency or to joint resolutions of disapproval that are effective only if enacted within statutory deadlines.

The Senate imposes some general procedural requirements and prohibitions on its committees, but, in general, the Senate's rules allow each of its standing committees to decide how to conduct business. Most of the chamber's requirements for committees are found in Senate Rule XXVI. Because the committees are agents of the Senate, they are obligated to comply with all Senate directives that apply to them. This report identifies and summarizes the provisions of the Senate's standing rules, standing orders, precedents, and other directives that relate to legislative activity in the Senate's standing committees. The report covers four main issues: committee organization, committee meetings, hearings, and reporting. The coverage of this report is limited to requirements and prohibitions that are of direct and general applicability to most or all Senate committees as they consider most legislative matters. The report does not cover any special provisions contained in Senate resolutions concerning the Select Committee on Ethics, the Select Committee on Intelligence, or the Special Committee on Aging. Similarly, it does not encompass other provisions of law or the Senate's rules or standing orders that apply to (1) only one committee, such as the provisions of Rule XVI governing appropriations measures and the provisions of the Congressional Budget and Impoundment Control Act governing budget resolutions and reconciliation and rescission measures; or (2) only certain limited classes of measures, such as provisions of the Congressional Accountability Act and the Federal Advisory Committee Act.

In its most simple form, an annuity can be thought of as the opposite of life insurance. In a basic life insurance contract, a person pays an insurer a small sum for many years, and then upon the insured's death, a large payment is made to a beneficiary. In the simplest form of annuity, a large sum is paid to the insurer and then a smaller sum is paid out to the insured over his or her lifetime. More formally, an annuity can be defined as "a contract that provides an income for a specified period of time, such as a number of years, or for life." As with life insurance, annuities can be more complex, with insurers offering a wide variety of both insurance and investment features in the annuity contracts that they sell. Annuities can be classified as follows: Immediate versus Deferred --Under an immediate annuity, an individual pays an insurance company a sum of money and the insurance company begins making regular monthly payments to the individual immediately. Under a deferred annuity, an individual pays the insurance company a sum of money and the insurance company begins making regular monthly payments at some designated time after purchase. For example, an individual at age 45 might buy a 20-year deferred annuity that would start making monthly payments when the individual reaches age 65. Deferred annuities may also be funded over time, with a person making periodic payments into the annuity, as they might with a 401(k) account or other savings vehicle. After this "accumulation phase" is finished, the annuity would then make periodic payments based on the value of the final contributed amount. Fixed versus Variable --A fixed annuity pays a flat monthly amount for the life of the annuitant whereas a variable annuity pays a monthly payment amount tied to the performance of an investment portfolio containing assets such as corporate stocks or bonds. Under a variable annuity, the annuitant bears the risk that the monthly annuity payment could go down. Level Payment versus Graded Payment --In a level payment annuity, the monthly payments remain the same, whereas in a graded annuity the monthly payments increase each year. Depending on the terms of the annuity contract, the payments may increase at a specified rate, such as 2% per year, or may increase at the rate of inflation. Single-Life versus Joint-and-Survivor --A single-life annuity makes regular monthly payments for the life of one person. A joint-and-survivor annuity makes regular monthly payments for the lives of two people, the primary annuitant and a secondary annuitant, typically the spouse of the primary annuitant. Annuities as a class are a wide-ranging financial product: some annuities are relatively simple products designed to pay a set amount per month; some are complex products that may base payments on a variety of other investments combined with different forms of financial guarantees. Indexed annuities are a relatively recent invention combining elements of fixed annuities, which offer returns based on a fixed interest rate, and variable annuities, which offer returns through investment holdings chosen by the annuitant. Indexed annuities have tended to be complex products with features that sometimes may be difficult to value. Specifically, a common form of indexed annuity offers an investment return based on the level of a specific securities index combined with a guaranteed minimum return should the securities market fall, limiting the downside risk to the purchaser. Unlike variable annuities in which the actual securities investments are held in segregated accounts, indexed annuities credit the annuity holder with a return based on a securities index, but the actual securities may or may not be held by the insurance company. The indexed annuity investment return typically does not include dividends that would have accrued had this amount been actually invested in the particular securities index. In addition, there are often insurance options, such as some death benefit upon the death of the annuitant, or a survivor benefit to base payment on the death of the second person in a couple rather than on one person. The various options available in indexed annuities, or other annuities, are often paid for through charges based on a percentage of the account value. There are also typically significant surrender charges should a purchaser wish to cancel the annuity contract early. Annuities in general have been somewhat controversial, with opinions varying widely as to their suitability for many investors. Complaints about annuities include high fees on the investment funds, a lack of liquidity due to high surrender charges, and deceptive sales practices, particularly with regard to sales to senior citizens. These complaints, it should be noted, are not limited to indexed annuities, but include the variable annuity products that have been regarded as securities products under the Securities and Exchange Commission (SEC) regulation for decades. Defenders of annuity products point out that annuities can play an important role in retirement planning. They offer tax-deferred growth for investments and are the only product that can offer a lifetime guaranteed income. One of the primary advantages of annuities compared to other financial products, such as mutual funds or certificates of deposit, is the deferral of tax on the investment earnings of the annuity contract. These earnings are taxed only when the annuitant actually receives the annuity payments, according to formulas specified in the law and in IRS regulations. Internal Revenue Code Section 72 provides that the taxable income from an annuity contract in a given year is the total amount received under the contract that year less that year's prorated share of the cost of (or investment in) the contract. This allows the investment income to compound tax-free for potentially several years before any tax is due. On the other hand, the tax due on annuity investment income is calculated at ordinary income rates, as with interest from savings accounts and certificates of deposits, rather than at the reduced rates that currently apply to capital gains and dividends. Ordinary income tax rates are as high as 35%, while most long-term capital gains and dividends end up being taxed at 15%, although capital gains rates can be as low as 0%. This potentially higher tax rate for annuity investment income can have a significant impact on the economic rationale prompting a consumer to purchase an annuity, and thus makes the annuity market, and the insurers offering annuities, very sensitive to tax proposals that might change rates on investment income. As insurance products, all annuities are regulated by the individual states following the 1945 McCarran-Ferguson Act, which identifies the states as the primary regulators of insurance. This state oversight generally includes regulation of insurer solvency, regulation of the content of insurance products, and regulation of the market conduct of insurers and those selling insurance products. Annuities, particularly variable annuities, have attracted attention for allegedly abusive sales tactics. States coordinate regulation of insurance through the National Association of Insurance Commissioners (NAIC), which has promulgated model laws and regulations on insurance. In order to be effective, however, NAIC models must be adopted by the individual states, which are free to adopt them "as is" or with modifications. This has led to variation among the states in the precise regulations applied to annuities and other insurance products. Insurance products are primarily regulated at the state level, whereas securities products are generally regulated at the federal level, primarily by the SEC. SEC securities regulation related to annuities is typically less extensive than state insurance regulation. Companies that sell securities to the public are required to register with the SEC, as are brokers and others selling securities. In addition to SEC registration, securities brokers are required to be members of the Financial Industry Regulatory Authority (FINRA), a non-governmental self-regulatory organization for the securities industry. Much of the direct oversight of securities dealers occurs through FINRA rather than through the SEC, though the SEC retains authority over FINRA and may require it to adopt, or not adopt, certain policies or rules. There is little SEC oversight equivalent to state solvency requirements for insurers. Federal securities regulations only apply to those financial products that are considered securities under the federal securities laws. For a number of years after the introduction of the variable annuity, some controversy existed as to whether or not these products are securities. The Supreme Court decided in 1959, however, that variable annuities were to be considered securities under federal law. Following that decision, variable annuities have been generally subject to SEC and FINRA requirements, while other types of annuities are not. Both state and federal regulators have concluded that annuities in general present consumer protection issues and need particular regulatory attention. In proposing Rule 151A, the SEC cited the need to protect investors, particularly older investors, from fraudulent and abusive practices related to the sale of indexed annuities. Annuity sales practices have drawn complaints from consumers and various regulatory actions from state regulators and the SEC/FINRA over many years. The complexity of annuity products can allow unscrupulous sellers to take advantage of unsophisticated buyers, while high commissions on some annuities may give sellers a substantial financial incentive to sell these products. The alleged sales abuses seem to particularly affect older consumers. For example, a joint "Investor Alert" by the SEC, FINRA, and the North American Securities Administrators Association (NASAA) cites variable annuities as one of a number of products that are commonly used to defraud senior citizens. State regulators have also taken particular actions to protect consumers from abuses in annuity products. To help harmonize states' oversight efforts, the NAIC's model laws and regulations include an "Annuities Disclosure Model Regulation" and a "Suitability in Annuity Transactions Model Regulation." The NAIC Model Suitability language requires insurance companies to give objective financial information to potential purchasers, and it requires agents to use a standardized form to determine whether an annuity would be suitable for the potential purchaser. Some state laws ban the use of professional designations or titles--such as Senior Financial Advisor--that might mislead senior consumers into thinking that the advisor has special financial expertise related to the needs of older consumers. The NAIC Annuity Disclosure Model Regulation requires certain information to be disclosed, including information about premiums and how they are charged, a summary of the options and restrictions for accessing money, and an outline of fees. NAIC models, however, must be adopted by the individual states before they can take effect. According to the NAIC, 32 states have adopted the NAIC model on annuity suitability and 16 have adopted the model on annuity disclosure in "a uniform and substantially similar manner." In addition to the model laws and regulations, the NAIC addressed perceived abuses in annuity marketing with a "Buyer's Guide" for prospective purchasers of annuities. This guide includes a specific section on indexed annuities. As insurance products, all annuities are regulated at the state level. Some annuity products, however, are also considered securities products and are regulated by the SEC. On June 26, 2008, the SEC announced a proposed rule regarding indexed annuities. This rule was finalized on January 8, 2009. Specifically, Rule 151A removes an annuity contract from the insurance exemption in the Securities Act of 1933 if "the amounts payable by the insurer under the contract are more likely than not to exceed the amounts guaranteed under the contract." The same proposal also added Rule 12h-7, exempting state-regulated insurance companies from the requirements under the Securities Exchange Act of 1934 to file reports on such annuity contracts. The effective date of the rule is to be January 12, 2011. The primary impact of this rule change is that many, if not most, of the practices related to the sale of indexed annuities of those companies and individuals selling indexed annuities will be regulated by both the SEC and the states. This rule generated controversy, with several thousand comments to the SEC opposing it, including several written by Members of Congress. The SEC extended its comment period before promulgating its final Rule 151A. In its final rule, the SEC stated that the nature of the investment risk posed by indexed annuities means that they should be regulated as securities, rather than solely as insurance products, as long as more than half the time the expected return of the indexed annuities is more likely than not greater than the minimum guaranteed return. In this case, the SEC stated, it is the purchaser of the annuity, rather than the insurance company, who would bear most of the investment risk. As a result, such purchasers should be entitled to the disclosure requirements, selling restrictions, and antifraud provisions of the federal securities laws, the SEC reasoned. The rule also cited a need to protect investors from fraudulent and abusive practices related to the sale of equity-indexed annuities. The SEC received numerous public comments on the proposed rule, with most of them being either opposed to its adoption or requesting an extension of the time limit for filing comments. Two complaints frequently made by those opposed to the rule were (1) equity-indexed annuities are fundamentally not securities, and thus should not be regulated as such; and (2) state regulation of insurance products is superior to SEC regulation of securities products, so the proposal would add a layer of complexity and duplicative regulation for little benefit. Eighteen Members of Congress, led by Representative Gregory Meeks, sent a letter to the SEC calling for an extension of the comment period for an additional 90 days. The authors observed that the proposed rule would have a significant impact, imposing a layer of federal regulation on top of state regulation, and expressed concern that stakeholders, including state insurance regulators and the insurance industry, were not consulted in the development of the rule. Several other Members of Congress wrote similar individual letters. Such concerns, and the request for delay, were also echoed in letters from various state insurance regulators and state legislators, as well as by individual comments made to the SEC. In response to "numerous letters" requesting that the comment period be extended from its original September 10, 2008, closure, the SEC announced on October 10, 2008, that it was reopening the comment period for an additional 30 days. The official extension announcement was published in the Federal Register on October 17, 2008, and the comment period closed on November 17, 2008. According to the SEC, more than 4,800 letters were received by the end of the second comment period. On December 17, 2008, the SEC approved the previously proposed rule, with one commissioner dissenting. Prior to adoption, the language of the final rule was modified somewhat, particularly to address concerns that the types of annuities affected by it might be broader than intended by the SEC. It also extended the effective date from one year after adoption to approximately two years (January 12, 2011). The majority of the language in the final rule was, however, unchanged from that proposed in June 2008. Some congressional concern was expressed over the SEC action at the time. To meet the requirements of SEC Rule 151A, companies offering indexed annuities will have to file registration statements with the SEC, prepare and distribute prospectuses to prospective purchasers, and comply with the anti-fraud provisions of the federal securities laws, such as Section 10(b) of the Securities Exchange Act of 1934 ("the 1934 Act"). Becoming subject to the anti-fraud provisions of the federal securities laws means, among other things, that companies selling indexed annuities could be subject to liability--either via private lawsuits from purchasers of the annuities, or civil liability through the SEC's enforcement powers--under the Securities Act of 1933 ("the 1933 Act") for any material misstatements or omissions in the prospectuses they distribute to purchasers. The registration statements that insurance companies offering these products will have to file with the SEC must include a description of the securities to be offered for sale, information about the management of the issuer, information about the securities, and financial statements certified by independent accountants. In addition, under the new SEC rule, individual sellers of registered indexed annuities will be required to be registered broker-dealers and will become subject to oversight by FINRA. Alternatively, sellers of indexed annuities could become associated persons of an established broker-dealer through a networking arrangement. This provision will likely entail new compliance requirements for some firms selling indexed annuities, although it will offer some additional protection to buyers. Broker-dealers selling indexed annuities after Rule 151A's effective date of January 12, 2011, for instance, will fall under an obligation to make only suitable recommendations for the prospective buyer, and to comply with specific books and records, and supervisory and compliance requirements under the federal securities laws. This may arguably result in greater standardization of selling practices, which are currently subject to individual state oversight. Under the terms of Rule 151A's companion Rule 12h-7, companies would be exempt from the regular reporting requirements to the SEC mandated by the 1934 Act, which many other registered companies face, as long as the issuer of indexed annuities is already subject to state insurance regulation. The issuer must also file annual statements of its financial condition with its state regulator to qualify for this reporting exemption. Finally, to be exempt from reporting requirements, the insurance company selling the indexed annuities must also take steps to ensure that a secondary trading market for its indexed annuities does not emerge, since the provisions of the 1934 Act are aimed at issues surrounding the trading of securities. Thus, while bringing companies offering indexed annuities under federal regulation, the SEC has at the same time chosen not to require additional regulatory updates such as the quarterly 10-Q and annual 10-K filings that other registered companies must submit to the SEC. The reasoning for this, according to the SEC in its final rule, is that, though the indexed annuities will be considered securities under the new rule, they will not be traded in a secondary market, and activities of the insurance companies issuing them, including the seller's assets and income, are already monitored and regulated at the state level. The SEC argues that this exemption from reporting requirements will lessen the burden and costs on the industry of implementing Rule 151A. However, critics of the rule have responded that the SEC has underestimated the costs and burden of implementing Rule 151A, and that the SEC has overstepped its statutory authority in attempting to regulate this product. Only indexed annuities issued on or after the effective date of the rule--January 12, 2011--will need to register with the SEC and distribute prospectuses. Those issued and existing prior to January 12, 2011, would not be affected by the SEC's Rule 151A. One focus of critics' arguments has thus been on any potential future dampening effect on prospective competition or the offering of new indexed annuities products after that date. The SEC Rule 151A would not automatically apply to all indexed annuities. Instead, indexed annuities will only be considered securities and thus be forced to register with the SEC if the expected payout of the annuity is more likely than not to exceed the minimum guaranteed amount under the annuity contract. The SEC would consider the payout to be more likely than not in excess of the minimum if that were the expected outcome more than half the time. However, it is up to the seller of the indexed annuities to analyze the expected outcomes under various scenarios, and to make that determination. Arguably, a buyer of annuities might infer that an unregistered annuity would fail that outcomes test--although some believe this would depend upon the sophistication of the prospective buyer. There is no particular disclosure requirement for sellers of indexed annuities who determine that their products are not more likely than not to pay more than the minimum outcome more than half the time, because such annuities would not be considered securities under Rule 151A. In its proposed rulemaking, the SEC offered a cost estimate of complying with the rule. This drew a number of comments, particularly from industry groups, arguing that the costs of implementing the registration requirement would exceed the SEC estimate. The SEC estimated that the total cost savings to insurance companies that will be spared having to otherwise file regular quarterly and annual reports as a result of Rule 151A's companion Rule 12h-7--the voluntary exemption from 1934 Act reporting requirements--would be $15,414,600. This calculation was based on the SEC's analysis that approximately 24 insurance companies currently offer products with "market-value adjustment" features and other types of guaranteed benefits in connection with assets held in an investor's account, and those insurance companies currently file regular reports such as the annual Form 10-K, quarterly 10-Q, and Form 8-K. However, these companies would be entitled to the 12h-7 exemption, according to the SEC. The SEC calculated its $15,414,600 cost savings based on the number of filings it receives from the 24 insurance companies offering these products; a total of 49,994 burden hours for preparing the reports; and an hourly rate of $175 for the work of preparation by in-house staff, with 16,664 hours at $400 per hour for the work of preparation by outside professionals. The SEC then estimated the total cost of preparing the new registration statements that would be required under Rule 151A for insurance companies at $82,500,000, based on 60,000 burden hours estimated of in-house work at $175 per hour and an additional $72,000,000 cost estimate for outside professionals' work. Several commentators disagreed with the SEC's cost estimates. Some stated that consumers would face added costs, because the costs of preparing prospectuses and registering as broker-dealers would be passed along to the consumer; others stated the new rule would place a disproportionate burden on small insurance distributors. Others wrote that the hourly rates used by the SEC in its estimations were too low. On the day the SEC published its final Rule 151A, a coalition of insurance companies and insurance trade groups filed a Petition for Review in the U.S. Court of Appeals for the District of Columbia Circuit challenging the rule. The petitioners challenging the rule included American Equity Life Insurance Co. and the National Association of Insurance Commissioners. The Association of American Retired Persons provided briefs supporting the SEC rule. The petitioners made two arguments: (1) The SEC unreasonably interpreted the term "annuity contract" not to include fixed indexed annuities (FIAs), and (2) the SEC did not fulfill its statutory duty under Section 2(b) of the 1933 Act to consider the effect of the rule upon efficiency, competition, and capital formation. On July 21, 2009, the United States Court of Appeals for the District of Columbia decided the case. The court, after a thorough analysis of whether the SEC's Rule 151A was reasonable under the two-step test set forth in Chevron U.S.A. Inc. v. Natural Resources Defense Coun ci l, Inc. (Chevron) , held that the rule's interpretation of "annuity contract" was reasonable and therefore that FIAs could be treated as securities rather than insurance products. However, the court also held that the Commission did not adequately consider the effect of the rule upon efficiency, competition, and capital formation. The court therefore remanded the rule for reconsideration and a more complete analysis of the impact of the rule upon competition, efficiency, and capital formation. Petitioners first argued that the SEC improperly excluded FIAs from the Section 3(a)(8) exemption of the 1933 Act and that this argument could be supported by the text of the exemption; by two Supreme Court decisions, Securities and Exchange Commission v. Variable Annuity Life Insurance Company of America (VALIC) and Securities and Exchange Commission v. United Benefit Life Insurance Company (United Benefit) ; and by the language of the SEC's earlier rule, Rule 151. The court began its analysis with a discussion of the two-step process for reviewing the authority of an agency's interpretation of a statute as set forth in Chevron . The first step under Chevron is to determine whether the statute being interpreted is ambiguous. The court found that Chevron Step One is satisfied because the 1933 Act is ambiguous or at least silent concerning whether "annuity contract" includes every form of contract that may be described as an annuity. The court buttressed this analysis by referring to the Supreme Court decisions in VALIC and United Benefit . In VALIC , the Supreme Court decided that a variable annuity did not fall within the Section 3(a)(8) exemption because it places all of the investment risks upon the purchaser and no risks upon the insurance company. In United Benefit , the Court found that a flexible fund annuity did not fall within the Section 3(a)(8) exemption because the flexible fund appealed to a purchaser primarily for the possibility of growth and not significantly for the qualities of stability and security associated with insurance. The second step under Chevron is whether an agency's interpretation of a statute is permissible. The court discussed the United Benefit case in describing that one may reasonably believe that risk based upon the prospect of growth attaches to the purchase of a fixed indexed annuity. The court went on to state that, as in securities, there can be a wide variation in a purchaser's return on a fixed indexed annuity, resulting in risk to a purchaser. Because of this and other characteristics of FIAs, the court found that the Commission's interpretation that an FIA is not an annuity contract under Section 3(a)(8) of the 1933 Act was reasonable. As for petitioners' argument that the language of the SEC's earlier Rule 151 supported its position and that Rules 151 and 151A were inconsistent, the court responded that the SEC was consistent in its position on investment risk. The earlier rule provided a safe harbor under Section 3(a)(8) for some annuity contracts based upon an investment index. However, only those products with index-based interest rates calculated in advance were allowed the safe harbor. In the instant case, involving FIAs, the interest rate was determined only at the end of the investment year, resulting in significant risk to a purchaser. Based upon all of these reasons, the court held that the Commission's interpretation of "annuity contract" was reasonable and that the second step as set forth in Chevron was also satisfied. In its second argument, petitioners stated that the SEC did not meet the requirements of Section 2(b) of the 1933 Act because it did not adequately consider the effects of Rule 151A upon efficiency, competition, and capital formation. The court first rejected the SEC's argument that it was not required by the 1933 Act to perform a Section 2(b) analysis. Because the SEC did in fact conduct a Section 2(b) analysis, the SEC, according to the court, was required to defend the basis of the analysis that it used. In discussing the merits of the SEC's analysis, the court stated that the Administrative Procedure Act requires a court to set aside an agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." The court held that the SEC's consideration of the effects of Rule 151A upon efficiency, competition, and capital formation was arbitrary and capricious. The court went on to state that the competition analysis failed because the SEC did not make any finding on the level of marketplace competition under state law. In addition, the court, for a variety of reasons, found that the Commission's efficiency analysis and capital formation analysis were arbitrary and capricious. The court therefore remanded the rule to the SEC to address the deficiencies of the section 2(b) analysis. On July 12, 2010, the United States Court of Appeals for the District of Columbia Circuit ordered that Rule 151A be vacated and that its 2009 decision be amended accordingly. H.R. 2733 was introduced in the House on June 4, 2009, by Representative Gregory Meeks along with 21 cosponsors. It was referred to the House Financial Services Committee. Senator Benjamin Nelson introduced an identical bill, S. 1389 , in the Senate on June 25, 2009. It was referred to the Senate Banking, Housing, and Urban Affairs Committee. Neither committee has held hearing or markup on the legislation. H.R. 2733 / S. 1389 would amend the Securities Act of 1933 to specify that this act's exemption from the definition of a securities product would include "any insurance or endowment policy or annuity contract or optional annuity contract (a) the value of which does not vary according to the performance of a separate account, and (b) which satisfies standard nonforfeiture laws or similar requirements." The bill would also specifically annul Rule 151A as promulgated by the SEC. This bill would have the effect of returning the regulation of indexed annuities to the status quo before the SEC's promulgation of Rule 151A; namely, indexed annuities would be exempted from SEC regulation and solely subject to regulation by the state insurance regulators. Many opponents of the rule, who would presumably support the legislation, see the extra SEC regulatory layer as unnecessarily duplicative of the existing state insurance regulation. They may point out, for example, that the SEC has had authority over variable annuity products for many years, yet consumer complaints regarding these products continue to be heard. The SEC registration requirements that would be annulled by the legislation involve some cost. Because of the increasing cost for those offering indexed annuities, opponents of Rule 151A argue, some companies might choose to discontinue these products, or individual agents or brokers might choose to stop selling them. This could reduce the supply of what some see as an important retirement product. The SEC and supporters of Rule 151A, who would presumably oppose the legislation, do not see the additional regulation for the indexed annuity market as duplicative. Rather, they characterize Rule 151A as providing necessary protection for consumers. The SEC also argues that because indexed annuities expose consumers to investment risk, these annuities should be treated as securities products, and consumers should have the same protections when they purchase indexed annuities as when they purchase securities. They agree that this regulation has some costs, and argue the costs are offset by consumer benefits such as enhanced disclosure and standardization of selling practices. The continued existence of abuses in variable annuities, despite both SEC and state regulation, may also be an argument for supporting additional oversight for indexed annuities, which share some similar characteristics. H.R. 4173 and S. 3217 are broad bills reforming the financial regulatory system in the United States. As introduced, neither directly addressed SEC Rule 151A or the issue of SEC oversight of annuities. During floor consideration of S. 3217 , Senator Tom Harkin submitted the language of S. 1389 as an amendment ( S.Amdt. 3920 ), but this amendment was not called up or voted on prior to the Senate finishing consideration of S. 3217 . The Senate substituted the amended text of S. 3217 into H.R. 4173 and passed this amended bill on May 20, 2010. During the conference committee reconciling the differences between the House and Senate versions of H.R. 4173 , Senator Harkin offered another annuities amendment, which was ultimately adopted as Section 989J of the conference report. Although not specifically addressing SEC Rule 151A, the section requires the SEC to treat certain annuities and insurance contracts as exempt securities. The requirements for this treatment include two conditions similar to H.R. 2733 / S. 1389 , namely that the value of the contract does not vary according to the performance of a separate account and that non-forfeiture standards are in place. In addition, Section 989J requires that consumer protections meeting or exceeding the requirements of the NAIC's Suitability in Annuity Transactions Model Regulation are in place either through state regulations or through implementation by the company itself. During conference debate on Section 989J and after its passage, this language was generally interpreted as returning regulation of fixed index annuities to the status quo prior to SEC Rule 151A. Because the language does not directly nullify the rule, as H.R. 2733 / S. 1389 would have done, additional regulation or litigation may occur, particularly with regard to the consumer protection requirements. As of January 2010, five states and the District of Columbia have taken no action with regard to the NAIC model regulation and 12 states have taken action on the issue but "have not adopted the NAIC model in a uniform and substantially similar manner" according to the NAIC. The House agreed to the H.R. 4173 conference report on June 30, 2010 by a vote of 237-192. The Senate agreed to the conference report on July 15, 2010 by a vote of 60-39. President Obama signed the bill into law as P.L. 111-203 on July 21, 2010.

In January 2011, a new rule from the Securities and Exchange Commission (SEC), Rule 151A, entitled "Indexed Annuities and Certain Other Insurance Contracts," is slated to go into effect. This rule would effectively reclassify indexed annuities as both security products and insurance products. Since insurance products generally are regulated solely by the states, this rule will expand federal authority over indexed annuities, putting them in a similar classification as variable annuities, which are already regulated by both the SEC and the individual states. The SEC has cited as a primary reason for increased federal oversight numerous problems with improper marketing and sales of these annuity products. This proposal has been controversial, with nearly 5,000 comments received by the SEC. The SEC's final rule was adopted on December 17, 2008, and was published in the Federal Register on January 16, 2009. Although some changes were made from the initial proposed rule, the final rule retained the majority of the original language. The U.S. Court of Appeals considered a legal challenge to the SEC's rule, in American Equity Investment Life Insurance Co. vs. SEC. In July 2009, the court found that the SEC was not unreasonable in classifying indexed annuities as securities, but remanded the rule to the SEC for the SEC to provide a more thorough analysis of the effects of the rule upon competition, efficiency, and capital formation. More recently, on July 12, 2010, the United States Court of Appeals for the District of Columbia Circuit ordered that Rule 151A be vacated and that its 2009 decision be amended accordingly. On June 4, 2009, Representative Gregory Meeks introduced the Fixed Indexed Annuities and Insurance Products Classification Act of 2009 (H.R. 2733). Senator Benjamin Nelson introduced an identical bill, S. 1389, in the Senate on June 25, 2009. The bills would specifically nullify SEC Rule 151A and return to the states sole regulatory authority over indexed annuities. Neither individual bill has been brought up for consideration by relevant committees. During the conference committee on the Wall Street Reform and Consumer Protection Act (H.R. 4173), Senator Harkin offered an amendment, ultimately adopted as Section 989J, that directs the SEC to treat as exempt securities annuities that meet a number of conditions. This language has been generally interpreted as preventing SEC oversight of indexed annuities, although its precise impact may be clarified by future court or regulatory decisions. The House agreed to the H.R. 4173 conference report on June 30, 2010, by a vote of 237-192 and the Senate agreed to the conference report on July 15, 2010, by a vote of 60-39. President Obama signed the bill into law as P.L. 111-203 on July 21, 2010. This report explains the different types of annuities, the taxation of annuities, and disentangles the federal and state roles in the regulation of annuities. It outlines the SEC rule, including practical considerations for implementation. It also discusses legal and congressional action in response to the SEC rule. The report will be updated as legislative or regulatory events warrant.

There are two tax provisions that subsidize the child and dependent care expenses of working parents: the child and dependent care tax credit (CDCTC) and the exclusion for employer-sponsored child and dependent care. This report provides a general overview of these two tax benefits, focusing on eligibility requirements and benefit calculation. The report also includes some summary data on these benefits which highlight some of the characteristics of claimants. The child and dependent care tax credit is a nonrefundable tax credit that reduces a taxpayer's federal income tax liability based on child and dependent care expenses incurred so the taxpayer can work or look for work. Since the credit (sometimes referred to as the child care credit or the CDCTC) is nonrefundable, the amount of the credit cannot exceed a taxpayer's federal income tax liability. Taxpayers with little or no federal income tax liability--including many low-income taxpayers--generally receive little if any benefit from nonrefundable credits like the CDCTC. To claim the child and dependent care credit, a taxpayer must meet a variety of eligibility criteria. The taxpayer must have qualifying expenses for a qualifying individual, have earned income, and file taxes with an allowable filing status. These are defined briefly below. Qualifying expenses: Qualifying expenses are generally defined as expenses incurred for the care of a qualifying individual so that a taxpayer (and their spouse, if filing jointly) can work or look for work. Payments made to a relative for child and dependent care may be eligible for the credit, unless the relative is the taxpayer's dependent, child under 19 years old, spouse, or the parent of a qualifying child. Taxpayers claiming the CDCTC generally must provide the name, address, and taxpayer identification number of any person or organization that provides care for a qualifying individual. Q ualifying individual: A qualifying individual for the CDCTC is either (1) the taxpayer's dependent child under 13 years of age, or (2) the taxpayer's spouse or dependent who is incapable of caring for himself or herself. Earned income : A taxpayer must have earned income to claim the credit. The amount of qualifying expenses claimed for the credit cannot be greater than the taxpayer's earned income for the year (or the earned income of the lower-earning spouse in the case of married taxpayers). For married couples filing jointly, both spouses must have earnings unless one is either a student or incapable of self-care. T axes filed with an allowable filing sta tus: Taxpayers are generally ineligible for the CDCTC if they file their taxes as "married filing separately." Qualifying expenses for the credit are generally defined as expenses for the care of a qualifying individual so that a taxpayer (and their spouse, if filing jointly) can work or look for work. An expense is not considered work-related merely because a taxpayer paid or incurred the expense while working or looking for work. The purpose of the expense must be to enable the taxpayer to work or look for work. Whether an expense has such a purpose is dependent on the facts and circumstances of each particular case. These expenses can include those for providing care for a qualifying individual or individuals both in and outside the taxpayer's home. In-home care expenses include costs of care provided in the taxpayer's home such as the cost of a nanny to look after a child or a housekeeper to look after an elderly parent. The payroll taxes associated with these services, as well as meals and lodging provided to the caregiver as part of their employment, may be qualifying expenses. For household services that are in part for the care of qualifying individuals and in part for other purposes, generally only the portion for the care of a qualifying individual can be applied to the credit. There are different types of care provided outside the taxpayer's home that may be considered qualifying expenses for the purposes of the credit. To qualify, the care must be provided to the taxpayer's dependent child under age 13 or another qualifying person who regularly spends at least eight hours each day in the taxpayer's home (in other words, a nonchild dependent must generally live with the taxpayer even if that dependent spends the day at a care facility). This means, for example, that care provided at a live-in nursing home for a taxpayer's parent or spouse is not a qualifying expense. Common types of qualifying out-of-home care expenses include the following: Dependent care center: Care provided at a "dependent care center" can be considered a qualifying expense only if the center complies with all state and local regulations. A dependent care center is defined as a facility that provides care for more than six people (other than those who may reside at the facility) and receives a payment or grant for providing care services. Pre-K e ducation /Before- and a fter - s chool c are: Expenses for education below the kindergarten level (e.g., nursery school or preschool) may be qualifying expenses for the credit. Treasury regulations provide that expenses for education at the kindergarten level or higher do not qualify for the credit, and neither does summer school or tutoring expenses. However, before- or after-school care of a child in kindergarten or higher grades may be a qualifying expense. Day camp : Day camp may be a qualifying expense. However, overnight camp is not a qualifying expense. Transportation: Transportation by a care provider (i.e., not the taxpayer) to take a qualifying individual to or from a place where care is provided may be a qualifying expense. For example, the cost of a nanny driving a child to a day care center may be considered a qualifying expense. Payments made to a relative for child and dependent care are generally eligible for the credit. However, payments made to the following types of relatives would not be eligible for the CDCTC. Taxpayer's dependent: the relative is the taxpayer's dependent (i.e., the taxpayer or spouse is eligible to claim the relative for the dependent exemption). Child under 19 years old: the relative is the taxpayer's child and under 19 years old (irrespective of whether they are the taxpayer's dependent). Spouse: the relative is the taxpayer's spouse at any time during the year. Parent of a qualifying child: The relative is the parent of the qualifying child for whom the expenses are incurred. Taxpayers claiming the CDCTC generally must provide the name, address, and taxpayer identification number of any individual or entity that provides care for a qualifying individual or the IRS may deny the taxpayer's claim for the credit. Taxpayer identification numbers for individuals are either Social Security numbers (SSNs) or individual taxpayer identification numbers (ITINs). Entities' taxpayer identification numbers are generally employer identification numbers (EINs). Taxpayers are only required to provide the name and address (i.e., not the ITIN) of a care provider that is a tax-exempt 501(c)(3) organization. If a care provider refuses to provide information (e.g., an individual does not wish to provide the taxpayer with their SSN), the taxpayer can generally still claim the credit if they exercise due diligence in attempting to obtain the information and keep a record of their attempt to secure this information. For the purposes of the child and dependent care credit, a qualifying individual is a Young child : The taxpayer's dependent child under 13 years of age. Specifically, the child must be the taxpayer's "qualifying child" for purposes of claiming the personal exemption with the additional requirement that the child be 12 years or younger when the qualifying expenses were paid or incurred. (For more information on what a "qualifying child" is for the personal exemption, see the Appendix . Note that while the personal exemption is zero dollars from 2018 through 2025, the definition of a "qualifying child" for the personal exemption is still in effect. ) Spouse i ncapable of c aring for t hemselves: The taxpayer's spouse who is physically or mentally incapable of self-care and has lived with the taxpayer for more than half the year. Incapable of self-care means that the individual cannot care for their own hygiene or nutritional needs or requires full-time attention for their own safety or the safety of others. Other d ependent s i ncapable of c aring for t hemselves: An individual who is physically or mentally incapable of self-care (as defined above), lived with the taxpayer for more than half of the year, and is either a. The taxpayer's dependent (i.e., the taxpayer could claim a personal exemption for the individual); or is b. An individual who the taxpayer could have claimed as a dependent (for the personal exemption) except that i. He or she has gross income that equals or exceeds the personal exemption amount, ii. He or she files a joint return, or iii. The taxpayer (or their spouse, if filing jointly) could be claimed as a dependent on another taxpayer's return. Examples of individuals who may fall into this category include adult children who cannot care for themselves, as well as elderly relatives who live with the taxpayer. The taxpayer must provide the taxpayer identification number--either a Social Security number (SSN), individual taxpayer identification number (ITIN), or adoption taxpayer identification number (ATIN)--of each qualifying individual for whom they claim the CDCTC. Failure to do so can result in the denial of the credit. In order to claim the credit, a taxpayer (and if married, their spouse) must have earned income during the year. For taxpayers who do not work as a result of the taxpayer (or if married, their spouse) being incapable of self-care or a full-time student, special rules apply in calculating their annual earned income (see " Deemed Income in Cases Where an Individual is Incapable of Self-Care or a Full-Time Student. "). Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. In general only earned income that is taxable (i.e., wages, salaries, and tip income) is considered for this test. Hence nontaxable compensation like foreign earned income and Medicaid waiver payments does not count as earned income. However, taxpayers can elect to include nontaxable combat pay as earned income when claiming the credit. Generally taxpayers who file their federal income taxes as single, head of household, or married filing jointly are eligible to claim the credit, while those who file using the status "married filing separately" are ineligible for the credit. However, in certain cases, taxpayers who use the filing status "married filing separately" may be eligible for the credit if they live apart from their spouse for more than half the year and care for a qualifying individual. (Spouses who are legally separated are generally not considered married for tax purposes.) The amount of the CDCTC is calculated by multiplying the amount of qualifying expenses, after applying the dollar limits and earned income limits (discussed below), by the appropriate credit rate. Since the credit is nonrefundable, the actual amount of the credit claimed cannot exceed the taxpayer's income tax liability. The credit rate used to calculate the credit is based on the taxpayer's adjusted gross income (AGI). The credit rate is set at a maximum of 35% for taxpayers with AGI under $15,000. The credit rate then declines by one percentage point for each $2,000 (or fraction thereof) above $15,000 of AGI, until the credit rate reaches its statutory minimum of 20% for taxpayers with AGI over $43,000. This credit rate schedule is illustrated in Table 2 . The AGI brackets associated with each credit rate are not adjusted annually for inflation. The maximum amount of expenses that can be multiplied by the credit rate is $3,000 if the taxpayer has one qualifying individual and $6,000 if the taxpayer has two or more qualifying individuals. These amounts are not adjusted annually for inflation. For taxpayers with two or more qualifying individuals, the maximum expense threshold is per taxpayer irrespective of actual child and dependent care expenses of each qualifying individual. Hence, if a taxpayer has two qualifying individuals, and they have incurred no qualifying expenses for one individual and $6,000 for the other, they can claim a credit for up to $6,000 of qualifying expenses. Even though the credit formula--due to the higher credit rate--is more generous toward lower-income taxpayers, many receive little or no credit since the credit is nonrefundable, as illustrated in Figure 1 . In addition to the maximum dollar amount of qualifying expenses, as previously discussed, there are additional limits on the amount of annual work-related expenses used to calculate the credit. Specifically, qualifying expenses used to claim the credit cannot be more than the taxpayer's earned income for the year (for unmarried taxpayers) or the lower-earning spouse's earned income for the year (for married taxpayers). For example, if an unmarried taxpayer had two qualifying individuals and $6,000 of qualifying expenses but $4,000 of earned income, the maximum amount of expenses that could be applied toward the credit would be $4,000. If an individual (either an unmarried taxpayer or each spouse among married taxpayers) does not have earnings for each month of a calendar year , they can calculate their total earned income for the year by summing up their earnings for those months in which they do have earned income. (Among married taxpayers, both spouses may need to calculate their earned income for the year to determine which spouse is the lower-earning spouse. Total expenses cannot be more than the earned income of the lower-earning spouse. ) For example, if an unmarried taxpayer (or the lower-earning spouse of a two-earner couple) earned $500 for three months of the year, and did not work the remaining nine months of the year, their earned income for the purposes of the earned income limitation would be $1,500 and they could not use more than $1,500 of child and dependent care when calculating the credit. If an individual (either an unmarried taxpayer or one spouse among married taxpayers) has little or no earnings for each month of a calendar year because they are incapable of self-care or are a full-time student, they will calculate their earned income differently. For months in which an individual does not have earnings and is also incapable of self-care or a full-time student, their earned income for that month equals a "deemed" amount (instead of equaling zero). Specifically, their earned income is "deemed" to be $250 per month if they have one qualifying individual or $500 per month if they have two or more qualifying individuals. If an individual--either an unmarried taxpayer, or if married, the lower-earning spouse of a two-earner couple--is either a full-time student or not able to care for themselves for the entire year , they may be eligible (depending on their actual expenses) to apply the maximum amount of expenses when calculating the credit. Specifically, $250 and $500 multiplied by 12 months will result in an annual amount of earned income of $3,000 if they have one qualifying individual or $6,000 if they have two or more qualifying individuals--the statutory maximum amount of qualifying expenses for the credit. Among a married couple, only one spouse in any given month can be "deemed" to have earned income ($250 per month for one qualifying individual or $500 per month for two or more qualifying individuals) as a result of being incapable of self-care or being a full-time student. This implies that if both spouses are incapable of self-care or full-time students simultaneously for every month in a year, the couple will ultimately be ineligible for the credit. In this scenario only one spouse would be considered as having earned income, and hence the couple would be ineligible for the credit. In addition to the CDCTC, workers can exclude from their wages up to $5,000 of employer-sponsored child and dependent care benefits. Since the value of these benefits is excluded from wages, it is not subject to income or payroll taxes. Employer-sponsored child and dependent care benefits can be provided in various forms, including direct payments by an employer to a child care or adult day care provider, on-site child or dependent care offered by an employer, employer reimbursement of employee child care costs, and flexible spending accounts (FSAs) that allow employees to set aside a portion of their salary on a pretax basis (i.e., under a "cafeteria plan") to be used for qualifying expenses. The eligibility rules and definitions of the exclusion are similar to those of the credit. However, there is one key difference. Specifically, the $5,000 limit applies irrespective of the number of qualifying individuals. For example, a family with one qualifying child or two qualifying children can both set aside a maximum $5,000 on a pretax basis for child care. With the child and dependent care credit there are separate limits based on the number of qualifying individuals ($3,000 for one qualifying individual, $6,000 for two or more qualifying individuals). In addition, married taxpayers who file their returns as married filing separately are eligible to benefit from this exclusion, while they are ineligible for the credit. Taxpayers can claim both the exclusion and the tax credit but not for the same out-of-pocket child and dependent care expenses. For every pretax (i.e., excluded) dollar of employer-sponsored child and dependent care, the taxpayer must reduce the maximum amount of qualifying expenses for the credit (up to $3,000 for one child, $6,000 for two or more children). For example, if a family had one child, $10,000 in annual child care expenses, and contributed $5,000 annually to their employer's FSA, the family could not claim the CDCTC. The amount of pretax dollars in the FSA ($5,000) would eliminate the maximum amount of expenses that could be applied to the credit ($3,000). If in the same year, the family had a second child, and all else remained the same, they could claim $5,000 tax-free through their FSA and claim the remaining allowable expense of $1,000 ($6,000 max for two or more children minus $5,000 in the FSA) for the CDCTC. The aggregate data for the child and dependent care credit indicate several key aspects of this tax benefit. Income l evel of CDCTC c laimants: Middle- and upper-middle-income taxpayers claim the majority of tax credit dollars. Average c redit a mount: At most income levels the average credit amount is between $500 and $600. Lower-income taxpayers receive less than the average amount. Average c redit a mount o ver t ime: Over the past 30 years, the average real (i.e., adjusted for inflation) credit amount per taxpayer has steadily declined and lost about one-third of its value. Types of q ualifying i ndividuals c laimed for the c redit: While the credit is available for the care expenses of nonchild dependents (disabled family members or elderly parents), the credit is used almost exclusively for the care of children under 13 years old. Percentage of t axpayers with c hildren that c laim the CDCTC: While the credit is claimed almost exclusively for the care of children, on average 13% of taxpayers with children claim the credit. This participation rate is significantly lower for lower-income taxpayers. The CDCTC tends to be claimed by middle- and upper-middle-income taxpayers. Comparatively few claimants are low-income or very high-income, as illustrated in Table 3 . For most taxpayers, the average credit amount is between $500 and $600, although low-income taxpayers that do claim the CDCTC tend to receive a smaller tax credit. Few lower-income taxpayers benefit from the CDCTC, since the credit is nonrefundable. As previously discussed, a nonrefundable credit is limited to the taxpayer's income tax liability. Hence, taxpayers with little to no income tax liability--including low-income taxpayers--receive little to no benefit from nonrefundable credits like the CDCTC. For some taxpayers, especially higher-income taxpayers, the amount of their CDCTC will be affected by the amount of tax-free employer-sponsored child care they receive. If a taxpayer's marginal tax rate is greater than the applicable credit rate, the taxpayer will receive a larger tax savings from claiming the exclusion rather than the credit (in addition, the exclusion lowers their payroll taxes). For example, $100 of employer-sponsored child care saved in an FSA would lower a taxpayer's income tax bill by $35 if they were in the 35% tax bracket. The tax savings associated with applying that $100 to the CDCTC would, by contrast, be $20. Hence, if employer-sponsored child care is offered by their employer, a taxpayer may claim this benefit first and apply any remaining eligible expenses (if applicable) toward the credit, lowering their credit amount in comparison to if the exclusion was not available. The CDCTC was enacted in 1976. Subsequent legislative changes increased the size of the credit by increasing the maximum amount of allowable expenses and the credit rate (see " A Brief Overview of Major Legislative Changes to the CDCTC "). Between 1976 and 1988, the average credit amount and aggregate amount of the credit steadily increased, as illustrated in Figure 2 . Beginning in 1989, both the average and aggregate credit amount began to decline, with a sharp drop in the aggregate amount claimed. This decline over such a short time period may be due to measures adopted by the IRS to reduce improper claims of tax benefits, as well as legislative changes. First, beginning in 1987, taxpayers were required to provide the Social Security numbers (SSNs) of dependents on their federal income tax returns. Second, beginning in 1989, taxpayers had to provide the caregiver's taxpayer ID number (generally for individuals, their SSNs). According to one IRS researcher, "What probably happened in most cases is that people were paying their babysitter off the books, and their babysitter would not provide their Social Security numbers or go on the books, so the family had to choose between finding a new babysitter, or giving up the credit." Finally, in 1988, Congress enacted a provision as part of P.L. 100-485 (see " A Brief Overview of Major Legislative Changes to the CDCTC ") that required taxpayers to reduce the amount of expenses applied to the credit by amounts received under the exclusion. This may have resulted in a substantial reduction in the amount of expenses many taxpayers applied toward the credit, and hence a smaller credit. Since 1988, the real average value of the CDCTC has steadily fallen (see Figure 2 ). This may be driven by several factors. First, as previously discussed, the parameters of the credit, including the maximum amount of qualifying expenses and income brackets for each applicable credit rate (see Table 2 ) are not indexed for inflation. The last time the credit rate and maximum level of expenses was increased was in 2001 as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16 ). Before EGTRRA the parameters of the credit had not been increased since 1981 (see " A Brief Overview of Major Legislative Changes to the CDCTC "). If the credit as enacted in 1976 had been adjusted annually for inflation, the $800 maximum credit amount in 1976 would have equaled more than $3,300 in 2015. Hence, inflation has eroded a substantial amount of the value of the credit. Administrative data from the Internal Revenue Service, summarized in Table 4 , indicate that the CDCTC is used primarily for the care expenses of children under 13 years old. Few taxpayers claim the CDCTC for older dependents. This may be a result of several factors. First, most dependents are children. For example, in 2015, over 83 million dependent exemptions were claimed for children, while approximately 13 million were claimed for older dependents (including parents). Second, the definition of qualifying expenses excludes many expenses incurred for older dependents. For example, if older dependents are being cared for by a stay-at-home taxpayer, any expenses incurred for their care will not be considered qualifying expenses (since the caregiver is not considered to be working or looking for work). In addition, eldercare expenses, like nursing home expenses, are not considered qualifying expenses for the CDCTC since the individual being cared for is not living with the taxpayer for at least eight hours each day (see " Qualifying Expenses "). Data from the Tax Policy Center (TPC) indicate that on average about 13% of taxpayers with children claim the child and dependent care credit, as illustrated in Figure 3 . A greater proportion of higher-income taxpayers with children claim the credit than lower-income taxpayers. One possible explanation for why relatively few families with children claim the credit is that they do not have childcare expenses (perhaps because their children are older). Another possible explanation is that care expenses that are incurred are not considered qualifying expenses for the credit. For example, families with a stay-at-home parent would generally be ineligible for the CDCTC. In addition, families that pay an older child to look after a younger child after school would not be considered qualifying expenses. Finally, families eligible for the exclusion and with only one child may benefit more from the exclusion and simply not claim the credit. Fewer lower-income families with children benefit from the CDCTC, since the credit is nonrefundable. A nonrefundable credit is limited to the taxpayer's income tax liability. Taxpayers with little to no income tax liability, including low-income taxpayers, hence receive little to no benefit from nonrefundable credits. Administrative data from the IRS on the exclusion of employer-sponsored child and dependent care--comparable to the data on CDCTC--are unavailable. However, survey data from the Bureau of Labor Statistics indicate that about 41% of employees have access to child and dependent care flexible spending accounts, while 11% have access to employer-sponsored childcare. (Access means that these accounts are available to workers for their use. However, actual use of these accounts may be lower than these access rates.) The survey also found that availability of these benefits differed based on a variety of factors including the average wage paid to the employee and size of employer, as summarized in Table 5 . Overall, the data indicate that these benefits are more widely available to more highly compensated employees at larger establishments. Prior to enactment of P.L. 115-97 , taxpayers could subtract from their adjusted gross income (AGI) the standard deduction or sum of their itemized deductions (whichever is greater) and the appropriate number of personal exemptions for themselves, their spouse (if married), and their dependents. For 2017, the personal exemption amount was $4,050 per person. Under P.L. 115-97 , the personal exemption amount was reduced to zero from 2018 through the end of 2025. While the personal exemption is not in effect from 2018 through 2025, the definition of dependent for the exemption was retained and other provisions in the tax code still refer to this definition. A dependent is either (1) a qualifying child or (2) a qualifying relative. There are several tests to determine whether an individual is a taxpayer's qualifying child or relative, outlined in Table A-1 .

Two tax provisions subsidize the child and dependent care expenses of working parents: the child and dependent care tax credit (CDCTC) and the exclusion for employer-sponsored child and dependent care. (Note these provisions were not changed by P.L. 115-97.) The child and dependent care tax credit is a nonrefundable tax credit that reduces a taxpayer's federal income tax liability based on child and dependent care expenses incurred. The policy objective is to assist taxpayers who work or who are looking for work. A taxpayer must meet a variety of eligibility criteria including incurring qualifying child and dependent care expenses for a qualifying individual and have earned income. These three terms are defined below: Qualifying expenses: Qualifying expenses for the credit are generally defined as expenses incurred for the care of a qualifying individual so that a taxpayer (and their spouse, if filing jointly) can work or look for work. (Married taxpayers who do not file a joint return are ineligible for the credit). Qualifying individual: A qualifying individual for the CDCTC is either (1) the taxpayer's dependent child under 13 years of age for the entire year or (2) the taxpayer's spouse or dependent who is incapable of caring for himself or herself. Earned income: A taxpayer must have earned income to claim the credit. For married couples, both spouses must have earnings unless one is a student or incapable of self-care. The CDCTC is calculated by multiplying the amount of qualifying expenses--a maximum of $3,000 if the taxpayer has one qualifying individual, and up to $6,000 if the taxpayer has two or more qualifying individuals--by the appropriate credit rate. The credit rate depends on the taxpayer's adjusted gross income (AGI), with a maximum credit rate of 35% declining, as AGI increases, to 20% for taxpayers with AGI above $43,000. Even though the credit formula--due to the higher credit rate--is more generous toward lower-income taxpayers, many lower-income taxpayers receive little or no credit since the credit is nonrefundable. In addition to the CDCTC, taxpayers can exclude from their income up to $5,000 of employer-sponsored child and dependent care benefits, often as a flexible spending account (FSA). Eligibility rules and definitions of the exclusion are virtually identical to those of the credit. However, this is one major difference--the $5,000 limit applies irrespective of the number of qualifying individuals. Taxpayers can claim both the exclusion and the tax credit but not for the same out of pocket child and dependent care expenses. In addition, for every dollar of employer-sponsored child and dependent care excluded from income, the taxpayer must reduce the maximum amount of qualifying expenses claimed for the CDCTC. The aggregate data for the CDCTC indicate several key aspects of this tax benefit. First, middle- and upper-middle-income taxpayers claim the majority of tax credit dollars. Second, at most income levels the average credit amount is between $500 and $600. Lower-income taxpayers receive less than the average amount. Third, the credit is used almost exclusively for the care of children under 13 years old (as opposed to older dependents). On average 13% of taxpayers with children claim the credit. This participation rate is significantly lower for lower-income taxpayers. Data from the Bureau of Labor Statistics indicate that about 40% of employees have access to a child and dependent care flexible spending account, while 11% have access to other types of employer-sponsored childcare. Overall, these data indicate that these benefits are more widely available to higher-compensated employees at larger establishments.

With the November 2010 signing by Secretary of State Hillary Clinton and New Zealand Foreign Minister Murray McCully of the Wellington Declaration, which affirms a new strategic partnership between the U.S. and New Zealand, the U.S.-New Zealand relationship has been restored to one that is once again largely defined by the many areas of bilateral cooperation between the two nations rather than past differences. Past differences over New Zealand's nuclear policy, which prevents nuclear armed or powered ships from entering New Zealand ports, had hindered the relationship despite deep common interests. At the time of the signing, Clinton and McCully discussed "shared interests in the Pacific, security interests including Afghanistan, the trade agenda, and U.S. engagement with the region." New Zealand Prime Minister John Key noted at the signing of the Declaration that the relationship is "the best it's been for 25 years." Secretary of State Hillary Clinton echoed this sentiment and stated that the initiative was part of a "concerted effort to restore America's rightful place as an engaged Pacific nation." This initiative, begun under the Bush Administration, sets aside most all residual areas of policy difference that date back to the mid-1980s. The Declaration is viewed as a tangible symbol of the restoration of the relationship which reportedly followed a 2007 U.S. decision to accept New Zealand's nuclear policy as permanent. In this way, the Declaration recasts the strategic partnership between the U.S. and New Zealand to enable the two states to continue to work together and expand their cooperation as they meet shared challenges in the Asia-Pacific region and beyond. A continuing New Zealand ban on nuclear ship visits to New Zealand ports appears to be the only major remaining significant policy difference. The fourth U.S.-New Zealand Partnership Forum was held in Christchurch, New Zealand, from February 20 to 22, 2011. The first Partnership Forum was held in 2006. The Partnership Forum is a non-partisan, non-governmental forum which brings together key government, industry, and other leaders from both countries for off-the-record discussions which have reportedly acted as a catalyst for positive developments in bilateral relations. A large Congressional Delegation attended the 2011 Forum meeting. The 2011 meeting was organized by the U.S.-New Zealand Council and its counterpart the New Zealand-U.S. Council with the theme of "The Power of Partnering: Global Challenges and the Role of the U.S.-New Zealand Partnership." The meeting reportedly considered issues such as the TPP, food safety, sustainability, climate change, economic growth, security cooperation, and Antarctica. The findings of a joint Center for Strategic and International Studies and New Zealand Institute of International Affairs report "Pacific Partners: The future of U.S.-New Zealand Relations were also considered by the Forum. (See below for more discussion of this report.) On February 22, New Zealand's second largest city, Christchurch, which is located on the south island of New Zealand, suffered a powerful earthquake that killed 163 persons and left an estimated 200 missing. The quake, registering 6.3 on the Richter scale and occurring at a depth of only 3.1 miles below the surface, devastated the city center as well as much of the city's infrastructure. A previous 7.1 magnitude earthquake in September 2010 caused $3 billion in damages but left no fatalities due to its epicenter being at a greater distance from the city centre and deeper below the earth's surface. U.S. Ambassador David Huebner responded to New Zealand's request for assistance and helped coordinate approximately $1 million in U.S. Agency for International Development (USAID) Office of Foreign Disaster Assistance (OFDA) assistance. U.S. assistance also included USAID Disaster Assistance Response Team (DART) and a 74-member team from the Los Angeles County Fire Department. This quake occurred just after a meeting in Christchurch of the U.S.-New Zealand Partnership Forum, attended by a number of Members of Congress. On March 7, Representative Donald Manzullo cosponsored H.Res. 139 , Expressing Condolences to the People of New Zealand in the Aftermath of the Christchurch Earthquake. President Obama also called Prime Minister Key to express his deep condolences over the devastation wrought by the earthquake. New Zealand's population of just over four million has many shared values with the United States that stem from common historical roots as settler societies of the British empire. New Zealand, also known as Aotearoa or "the land of the long white cloud," was first settled by the Polynesian-Maori people around the tenth century. Dutch navigator Abel Tasman discovered the western coast of New Zealand in 1642 but it was English Captain James Cook who, over three expeditions in 1769, 1773, and 1777, circumnavigated and mapped the islands. The 1840 Treaty of Waitangi, between the British Crown and Maori Chiefs, serves as the basis for defining relations between the Maori and Pakeha (European) communities. Subsequent conflict over land led to the New Zealand Wars between colonial forces and Maori fighters. New Zealanders are over 80% urban and the nation has a 99% literacy rate. New Zealand has a land area of 103,733 square miles, which is about the size of Colorado. It is 28% forested, 50% in pasture, and 9% under cultivation. New Zealand's principal exports are agriculturally based. New Zealand was a part of the British Empire until 1907 when it shifted from colonial to Dominion Status. New Zealand's demographic makeup defines it as an increasingly Pacific nation that is still largely European in national origin though with an increasing Asian population as well. New Zealand's Pacific identity stems from both its indigenous Maori population and other more recent Pacific island immigrants from Polynesia and Melanesia. Maori represent 14.9% of the population while Pacific Islanders comprise 7.2%. Together these largely Polynesian people account for 22.1% of the population. New Zealanders of European and Asian origin account for 76.8% and 9.7% of the population respectively. Auckland, New Zealand's largest city, is also the world's largest Polynesian city. The British Monarch, Queen Elizabeth II, is the constitutional head of state of New Zealand. Her representative, the Governor General, acts on the advice of the New Zealand Prime Minister's Cabinet. In 1893, New Zealand gave women the right to vote. This made New Zealand the first country to do so. New Zealand gained full political independence from Britain under the Statute of Westminster Adoption Act of 1947 after attaining Dominion Status in 1907. New Zealand is a unicameral, mixed-member-proportional (MMP), parliamentary democracy. MMP was introduced in New Zealand in 1996. There are generally just over 120 seats in parliament of which 70 are electorate member seats including seven seats reserved for Maori candidates. The results of the 2008 election brought the total number of seats to 122. Fifty seats are selected from party lists. Each voter gets to cast both an electorate vote and a party vote. Under MMP a political party that wins at least one electorate seat or 5% of the party vote gets a share of the seats in parliament. This generally leads to the need for coalition government. The center-right National Party led by Prime Minister John Key and the opposition center-left Labour Party led by Phil Goff are the two main political parties in New Zealand. New Zealand's Mixed Member Proportional system gives smaller parties a key role in forming coalition government. The other political parties of New Zealand are: ACT New Zealand; Green Party; Maori Party; New Zealand First Party or NZ First; the Progressive Party; and United Future New Zealand. On February 2, 2011, Prime Minister Key announced elections for November 26, 2011. Prime Minister Key's performance in dealing with the aftermath of the 2011 earthquake will likely be a key issue in the election. The opposition will also likely focus on unemployment, cuts to social services and low wage growth. Key's handling of the earthquake and his pledge to rebuild Christchurch have maintained his popularity. Voters will be asked two referendum questions in addition to selecting a government. These questions are whether to keep the Mixed Member Proportional (MMP) system or change to another voting system and if so, which of four other voting systems they would choose. If more than half of voters want to change, parliament will decide if there will be another referendum in 2014 to choose between MMP and the most popular alternative in the 2011 referendum. The four alternative systems put forward are First Past the Post, Preferential Voting, Single Transferable Vote, and Supplementary Member. New Zealand has sought to become an influential voice in the international climate change debate. Former Prime Minister Helen Clark sought to push New Zealand to become a carbon-neutral nation and set an example for the world on climate change. Clark used the Prime Minister's Statement to Parliament on March 13, 2007, to declare her government's intention to make New Zealand the world's first truly carbon-neutral country, adding that "the pride we take in our quest for sustainability and carbon neutrality will define our nation." Clark stated that "traditional patterns of development and fast growing populations have put an intolerable strain on the planet. The future economic costs of doing nothing are dire." Clark pointed to renewable energy as a key component along with the importance of forestry to climate change mitigation as key to lowering New Zealand's carbon footprint. Renewable energy sources, such as hydroelectric and wind power, account for between 60% and 70% of total electricity output. New Zealand has undertaken a commitment to have 90% of its energy drawn from renewable sources by 2025. The New Zealand government has been keen to brand New Zealand as a "green producer" as it has already encountered difficulty with food exports over the "food miles" issue in Great Britain. New Zealand has made its case that though energy is expended in transporting New Zealand food to distant markets, its meat and dairy is free-range and grass fed, and hence relatively carbon-emissions friendly when compared with Concentrated Animal Feeding Operations (CAFO), which feed energy intensive grain, that are more common in the United States and Europe. Two studies from Lincoln University in Christchurch have found that there is greater energy efficiency in New Zealand for the production of lamb, apples, and dairy products when compared with British products. These studies took into account transportation costs from New Zealand to the United Kingdom as well as other aspects of production. New Zealand's approach to climate change is under review. The Climate Change Response Act of 2002 requires a review of New Zealand's Emissions Trading Scheme (ETS) by the end of 2011. Climate Change Minister Nick Smith announced the independent review in December 2010. The panel is to make recommendations to government on how the ETS should evolve beyond 2012. Uncertainty over the outcome of international efforts to address climate change may influence this process. New Zealand ratified the Kyoto Protocol on Climate Change in 2002. New Zealand seeks "an environmentally effective and economically efficient long-term global agreement to meet the objective of the UN Framework Convention on Climate Change." New Zealand also seeks "appropriate and effective mitigation action by all developed countries and by major emitting and advanced developing countries." New Zealand is a trade-dependant nation. As such, it is a strong advocate of free trade. New Zealand's principal exports are dairy products, meat, timber, fish, fruit, wool, and manufactured products. New Zealand has approximately 33 million sheep, 4 million cattle, and 4.2 million people. New Zealand has been pursuing free trade agreements with India and South Korea as well as seeking to promote the Trans Pacific Partnership (TPP) agreement with Singapore, Chile, Brunei, Australia, Peru, Malaysia, the United States, and Vietnam. New Zealand supports liberalized trade through the WTO process but is also seeking alternative comprehensive free trade relationships in both bilateral and regional fora. New Zealand views the TPP as a way to add momentum to trade liberalization among Asia-Pacific Economic Cooperation (APEC) member countries. New Zealand has signed Free Trade Agreements (FTA) with Australia, Singapore, Brunei, Chile, Thailand, the Association of Southeast Asian Nations (ASEAN), and China. New Zealand trade with ASEAN has increased by approximately 17% per year in recent years. (For more details on the TPP see CRS Report R40502, The Trans-Pacific Partnership Agreement , by [author name scrubbed] and [author name scrubbed].) The 2011 earthquake which struck Christchurch and caused widespread damage to the city centre has had a strong negative affect on the economy. New Zealand will as a result likely continue to focus government expenditure on reconstruction and aid efforts in the near term. It has been estimated that the economy would have grown by an additional 1.5% without the economic disruption caused by the quake. The economy is forecast to grow by 2.8% in the year ahead from April 2011. The New Zealand dollar is forecast to fall from NZ$1.39:U.S.$1 in 2010 to NZ$1.51:US$1 in 2015. The total cost of the two earthquakes in 2010 and 2011 is estimated at NZ$15 billion or 8% of GNP. Real GDP growth in the fourth quarter of 2010 was very weak or non-existent. New Zealand's government is seeking ways to boost economic growth and increase its competitiveness with Australia, with which it is closely linked through the Closer Economic Relations (CER) agreement. In October 2010, personal and corporate taxes were cut, with corporate taxes now 2% below rates in Australia. Throughout its history New Zealand has been an active participant in support of its allies and has fought alongside the United Kingdom and the United States in most of their major conflicts. New Zealand contributed troops in support of the British in the Boer War, World War I, World War II, the Malayan Emergency 1947-1960, the Korean War, and the Indonesian-Malaysia Confrontation 1962-1966. New Zealand sent combat troops in support of the U.S. in Vietnam and has a Provincial Reconstruction Team in Bamiyan Province Afghanistan. New Zealand also sent support troops to Iraq. New Zealand Defense Forces have also participated in numerous United Nations Peace Operations, many of them far from New Zealand shores. New Zealand supports a rules-based international order with safe and secure trade routes. Prime Minister Key campaigned in 2008 on the need for a major review of defense. The Defence White Paper of 2010 sought to undertake this review. This was the first Defence White Paper issued in 13 years, and it is intended to have a 25-year scope. New Zealand Minister for Defence Wayne Mapp has identified three reasons why the review was undertaken. First was the need to "more clearly understand how defence contributed to our security." Second was the need to more closely match defense capabilities with strategic interests, and third was the need to better configure the defense establishment to achieve greater "value for money" in defense expenditures. Minster of Defence Mapp perceives New Zealand's strategic environment as "far from benign" despite concluding that a direct military threat to New Zealand territory is unlikely in the foreseeable future. Mapp has described New Zealand security interests in terms of concentric circles with New Zealand itself constituting the first circle of strategic importance, Australia and the South Pacific comprising the second circle, and Southeast Asia and the larger Asia-Pacific making up the third. The White Paper identifies several areas where the use of military force by New Zealand would be appropriate. These include in response to a direct threat to New Zealand, its territories or Australia; as part of a collective action in support of a Pacific Islands Forum member; as part of New Zealand's contribution to the Five Power Defence Arrangements (FPDA); or if requested or mandated by the United Nations "especially in support of peace and security in the Asia-Pacific region." The White Paper's strategic outlook focuses on trans-boundary issues including increased pressure on maritime resources and illegal immigration, and views the South Pacific as a region of fragility. It makes the observation that "conflict within fragile, failing, or failed states is in any event likely to remain the most common form of conflict in the period covered by the White Paper." It views Australia as New Zealand's most important security partner and asserts that "we will continue to play a leadership role in the [South Pacific] region." The paper also observes that security structures in the Asia-Pacific will continue to evolve. The White Paper stresses the importance of strong international linkages for New Zealand particularly with Australia, the United States, the United Kingdom, and Canada. The White Paper takes the view that the United States will likely remain the "pre-eminent military power for the next 25 years, but its relative technological and military edge will diminish" as the economic base of other countries such as China grow. It observes that China's and other countries' expanding economies will enable them to allocate more resources to military spending. It makes the observation on security relations with the United States that "our security also benefits from New Zealand being an engaged, active, and stalwart partner of the U.S." The White Paper supports a continuing U.S. security presence in the Asia-Pacific and notes the United States' role as a contributor to regional stability. The contribution of military forces to Afghanistan has been New Zealand's most visible contribution to international security undertaken in tandem with the United States in recent years. That said, there have been other significant developments in bilateral security cooperation. It was notable that Prime Minister John Key was the only leader present at President Obama's Nuclear Summit from a state that did not possess nuclear weapons, nuclear power, or nuclear materials. Other recent notable developments in the bilateral relations include joint surveillance between the U.S. Coast Guard and New Zealand to curb illegal fishing in the South Pacific and reports that Prime Minister Key will visit the White House in the summer of 2011. U.S. Director of National Intelligence Jim Clapper met with Prime Minister John Key in New Zealand in March 2011. The New Zealand Naval Ship HMNZS Canterbury participated in joint naval exercises with the USS Cleveland in April 2011. It was also announced that New Zealand will participate in the large-scale Rimpac naval exercise in 2012 which includes naval forces from Australia, Japan, Chile, Peru, Canada, Malaysia, Singapore, and Thailand. New Zealand has not participated in such naval exercises with the United States since the mid 1980s. The December 2010 Memoranda of Understanding on Emergency Management Collaboration and the Arrangement for Cooperation on Nonproliferation Assistance signed in April 2009 also demonstrate recent diplomatic cooperation. U.S. relations with New Zealand became increasingly close in 2007. U.S. Ambassador William McCormick in 2007 described the bilateral relationship with New Zealand as an "already strong relationship" that has "stepped up a gear to become even stronger." In her remarks with then-Prime Minister Helen Clark during a visit to New Zealand in July 2008, then-Secretary of State Condoleezza Rice described New Zealand as a "friend and an ally" and pointed out that the relationship had "moved beyond a whole host of problems." She added that the relationship was now structured for cooperation to "meet the post September 11 th challenges" and stated that New Zealand is one of the "strongest and most active members" in its participation in the Proliferation Security Initiative (PSI). At that time she also pointed to New Zealand's contribution in promoting adherence to International Atomic Energy Association (IAEA) and the United Nations Security Council, the South Pacific, counterterrorism cooperation, maritime security, disaster relief, and support in Afghanistan. New Zealand's participation in PSI has also led to increased participation in military exercises with the United States. In Congressional testimony in March 2008, Admiral Timothy Keating, Commander U.S. Pacific Command, pointed to New Zealand's participation in PSI activities, including a planned PSI exercise to be hosted by New Zealand in September 2008, and stated that "... we support New Zealand Defense Force participation in approved multilateral events that advance our mutual security interests." The extent to which the bilateral relationship has grown in recent years is also demonstrated by the various areas of collaboration between the two nations ranging from security cooperation in Afghanistan, to trade negotiations, to dealing with climate change. In summary, the key areas of cooperation are as follows: Security cooperation in Afghanistan Regional cooperation and security in the South Pacific Bilateral trade and investment ties Cooperation in multilateral strategic and economic architectures such as TPP Science, technology, and education including cooperation on climate change mitigation and adaptation Non-proliferation and the Nuclear Security Summit Other transnational challenges Antarctic cooperation Socio-cultural and academic exchanges Intelligence cooperation Many of these areas of cooperation are discussed in detail in the joint Center for Strategic and International Studies and New Zealand Institute of International Affairs report Pacific P artners: The Future of U.S.- New Zealand Relations , which found a clear consensus in both the United States and New Zealand that now is the time to take the bilateral relationship to a higher level of engagement. Assistant Secretary of State Kurt Campbell described the report as "unbelievably timely" and offered that the report can be a "vision document, it can be a roadmap." The report examined five pillars of the relationship. These are (1) security and political cooperation, (2) trade and investment ties, (3) science and technology collaboration, (4) people-to-people connections, and (5) alignment on transnational issues. The report also contains a detailed list of recommendations to enhance the bilateral relationship in these areas that includes recommendations to conclude a high quality TPP trade agreement, and to initiate a bilateral strategic dialogue while expanding military-to-military engagement and increasing cooperation on nuclear non-proliferation. New Zealand also plays a leading role in maintaining stability in the Southwest Pacific in places such as Timor-Leste, the Solomon Islands, and Bougainville, Papua New Guinea, which are discussed in greater detail below. The U.S. and New Zealand have identified combating transnational crime and sustainable development as areas for collaboration in the South Pacific. It has also been reported that the intelligence-sharing relationship has fully resumed. New Zealand seeks to keep the United States engaged in the Asia-Pacific and as a result is an advocate of trans-Pacific architectures that include the United States rather than Asia-centric groups that would exclude the United States. ([For further information on the TPP and regional economic architectures of the Asia-Pacific, see CRS Report R40502, The Trans-Pacific Partnership Agreement , by [author name scrubbed] and [author name scrubbed].) New Zealand, which has a Free Trade Agreement with China, welcomes China's economic rise but there are signs that China's security linkages to Southwest Pacific states may be of concern to New Zealand. An estimated 40% of New Zealand's exports by value go to East Asian markets. Where once nuclear issues exclusively defined difference between New Zealand and the United States the subject is now also an area of shared interest. President Obama invited Prime Minister John Key to attend the Nuclear Summit in April 2010 and stated that New Zealand had "well and truly earned a place at the table." New Zealand was the only non-nuclear state invited to the conference. One of the longest standing areas of collaboration between the United States and New Zealand is cooperation in Antarctica. U.S. Antarctic operations are supported from Christchurch. In recent years, the National Science Foundation and the U.S. Antarctic Program have modeled potential affects of climate change on the West Antarctic Ice Sheet. New Zealand's military commitment in support of Western efforts in Afghanistan has been a clear demonstration of New Zealand's desire to do its share to contribute to international security despite the conflict being far from New Zealand shores. New Zealand has supported a Provincial Reconstruction Team in Bamiyan Province and also has rotating deployments of Special Forces deployed in Afghanistan. In February 2011, Prime Minister Key confirmed the extension of New Zealand's Special Air Service (SAS) contingent in Afghanistan for another year. In March 2011, Defence Minister Mapp was reported to state that New Zealand forces full departure from Afghanistan was expected to take two years but that a total withdrawal process could take longer. Opposition Labour Party Leader Phil Goff observed that the death of Osama bin Laden makes a pull out from Afghanistan "more appropriate." New Zealand forces have been in Afghanistan since October 2001. There are several organizations and groups that help promote bilateral ties between the United States and New Zealand including the United States-New Zealand Council in Washington, DC, and its counterpart, the New Zealand-United States Council in Wellington; the Friends of New Zealand Congressional Caucus and its New Zealand parliamentary counterpart; and the more recent Partnership Forum. The US-NZ Council was established in 1986 to promote cooperation between the two countries and works with government agencies and business groups to this end. The Friends of New Zealand Congressional Caucus was launched by former Representatives Jim Kolbe and Ellen Tauscher in February 2005 and has been supportive of the proposed TPP agreement which would include New Zealand. Representative Kevin Brady has since replaced Kolbe as the Republican co-chair of the caucus. The Democrat Co-chair Representative Rick Larsen replaced Ellen Tauscher when she left the House. Members of the Caucus sent a letter to U.S. Trade Representative Susan Schwab to "support the Administration's decision to enter negotiations on financial services and investment with P4 including New Zealand." The first Partnership Forum was held in April 2006 and, according to its chairman, former Prime Minister of New Zealand Jim Bolger, it "has been credited with helping develop a new forward momentum in the relationship." The bipartisan Friends of New Zealand Congressional Caucus comprises approximately 63 Members of Congress. When launching the initiative, Representative Kolbe stated "In order for the United States to continue being a world leader in free trade, we must work toward a free trade agreement with New Zealand, as New Zealand will help open the door to markets around the world." The FTA is also supported by the American Chamber of Commerce and the U.S. National Association of Manufacturers. The Caucus has been described as a "bipartisan working group that will strengthen and promote closer economic, political, and social links between the U.S. and New Zealand." Other key institutions include the New Zealand Institute of International Affairs of Wellington which has collaborated with the Center for Strategic and International Studies of Washington on a major review of the bilateral relationship in the above-mentioned Pacific Partners . The South Pacific has been described as New Zealand's "near abroad" and is an area of particular interest to New Zealand. New Zealand government priorities for the Pacific include developing enhanced governance and political stability, developing renewable energy, and better monitoring of fisheries resources. New Zealand also shares Pacific Island states' concerns over climate change and related issues. New Zealand's Pacific identity as well as its historical relationship with the South Pacific leads it to play a constructive role in the region. New Zealand works closely with Pacific Island states on a bilateral and multilateral basis through the Pacific Islands Forum, which is based in Fiji. The Forum has supported the South Pacific Nuclear Free Weapons Zone, regional security, and efforts to promote sustainable use of fisheries resources. An estimated $2 billion worth of fish is taken from the waters of the 14 Pacific Island Forum countries with an additional $400 million worth of fish thought to be taken illegally each year. New Zealand works with regional states to help them monitor their fisheries resources. New Zealand has demonstrated its resolve to help maintain peace and stability in its region through participation in operations such as the Australia and New Zealand led Regional Assistance Mission to the Solomon Islands (RAMSI). RAMSI was first undertaken in 2003 under a Pacific Islands Forum mandate to address civil unrest and lawlessness by restoring civil order, stabilizing governance, and promoting economic recovery. Differences between people of Guadalcanal and Malaita over land, natural resources, and the movement of people within the country are viewed as some of the underlying causes of the conflict in the Solomon Islands. New Zealand, along with Australia, has played a critical role in helping to stabilize the new nation of Timor-Leste, which gained its independence from Indonesia following a referendum which turned violent in 1999. The law and order situation deteriorated once again in 2006 leading the Timorese government to call for international assistance to which New Zealand responded. New Zealand Defence Force personnel continue to serve along side their Australian counterparts as part of the International Stabilization Force in Timor-Leste. Australian Defence Minister Stephen Smith announced in April 2011 that Australia would likely start drawing down its military presence in Timor-Leste following the election to be held there in 2012. Others have speculated that a foreign security presence in Timor-Leste may be necessary for a longer period. New Zealand implemented a limited range of sanctions on Fiji following the December 6, 2006 takeover by Commodore Bainimarama and Republic of Fiji Military Forces. Fiji expelled New Zealand's High Commissioner in 2007. New Zealand sanctions seek to urge Fiji to return to democracy and the rule of law and include restrictions on contact with the military and the regime, travel bans, and a refocusing of development assistance. New Zealand has not implemented sanctions on trade, investment, or tourism. New Zealand played a key role in helping to facilitate peace between the Government of Papua New Guinea and rebels on the island of Bougainville in 1997. Secessionist sentiment and conflict over the Panguna copper mine on Bougainville from 1988 to 1997 led to a nine-year low-intensity conflict between the Bougainville Revolutionary Army and Papua New Guinea Defense Force that ultimately claimed an estimated 10,000 lives. New Zealand intervened to bring key disputants together at the Burnham military camp in New Zealand in July 1997. Evidently the "powhiri, the Maoiri culture which the delegates witnessed in the camp [Maori are well represented in the New Zealand Defence Force] and beyond, and New Zealand's bicultural nature, appeared to have a near-transcendent effect" on the disputants. The result was the Burnham Declaration of July 18, 1997, in which disputant agreed to reconcile and establish processes for negotiations. This began a process that ultimately led to peace. New Zealand has a set of relationships with South Pacific island groups that is similar to the relationships that the United States has with various island groupings in the Western Pacific. New Zealand has had colonial and trusteeship relationships with the Cook Islands, Niue, Western Samoa, and Tokelau. Samoa became independent in 1962, while the Cook Islands and Niue became self governing in 1965 and 1974 in "free association" with New Zealand. New Zealand remains engaged with the islands through disaster relief, development assistance, and security stabilization efforts. These islands are concerned with the impact of projected sea level rise due to global warming. New Zealand has traditionally had particularly close ties with the United Kingdom and Australia and is a member of the Commonwealth and the Five Power Defence Arrangements (FPDA). (See below.) It has also had a close association with Singapore and Malaysia through the FPDA of 1971. In recent years, New Zealand has sought to expand its traditionally close relationships by reaching out to develop closer ties, particularly through expanded trade, with Asian states. New Zealand's closest external relationship is with Australia, while its most enduring relationship is with the United Kingdom. The closeness with Australia stems from their common origins as British colonies and includes a strong rivalry in rugby, which is New Zealand's most popular sport. Relations between New Zealand and Australia are formalized in the Closer Economic Relations (CER) and Closer Defense Relations (CDR) agreements. With a common labor market, an estimated 400,000 New Zealanders now reside in Australia out of a total estimated population of 4.2 million. On a cultural level, shared national lore, such as the Australia-New Zealand Army Corps (ANZAC) experience, which was largely forged at the battle of Gallipoli in WWI, serves to reinforce ties between New Zealand and Australia. New Zealanders' affinities for the United Kingdom (U.K.) remain strong despite the U.K.'s decision to sever its preferential trade relationship with New Zealand, as well as the rest of the British Commonwealth, in order to join the European Community in 1972. The United Kingdom purchased two thirds of New Zealand's exports in 1950. In more recent years, the U.K. has dropped to New Zealand's fourth or fifth largest destination for exports. This has made the search for new foreign markets a key aspect of New Zealand's foreign policy. New Zealand's proactive and successful policy of export diversification has expanded New Zealand's markets to include Japan, China, the European Union, Australia, and the United States. New Zealand remains a member of the Five Power Defence Arrangement (FPDA) that includes The United Kingdom and four of its former colonies: Australia, New Zealand, Malaysia, and Singapore. The FPDA was initially undertaken in 1971 following the British decision to remove ground troops east of the Suez after 1971. The FPDA was also established in the period following the Indonesian Konfrontasi of 1963 to 1966.

New Zealand is increasingly viewed as a stalwart partner of the United States that welcomes U.S. presence in its region. New Zealand and the United States enjoy very close bilateral ties across the spectrum of relations between the two countries. These ties are based on shared cultural traditions and values as well as on common interests. New Zealand is a stable and active democracy with a focus on liberalizing trade in the Asia-Pacific region. New Zealand also has a history of fighting alongside the United States in most of its major conflicts including World War I, World War II, Korea, and Vietnam. New Zealand is a regular contributor to international peace and stability operations and has contributed troops to the struggle against militant Islamists in Afghanistan, where it has a Provincial Reconstruction Team (PRT) in Bamiyan Province. The bilateral relationship between the United States and New Zealand was strengthened significantly through the signing of the Wellington Declaration in November 2010. At that time, Secretary of State Hillary Clinton and New Zealand Prime Minister John Key signaled that past differences over nuclear policy have been set aside as the two described the relationship as the strongest and most productive it has been in 25 years. In the mid-1980s New Zealand adopted a still-in-effect policy of not allowing nuclear armed or nuclear powered ships to visit New Zealand ports. In a mark of how the relationship has been changing in recent years, New Zealand's nuclear stance earned Prime Minister John Key an invitation to President Obama's nuclear summit in April 2010. The Congressional Friends of New Zealand Caucus and the ongoing Partnership Forum between the two countries, which includes Congressional participation, have played a key role in deepening relations between the two nations. New Zealand favors an open and inclusive strategic and economic architecture in the Asia-Pacific region. New Zealand also continues to seek closer strategic and economic relations and continued U.S. engagement in the Asia Pacific through U.S. participation in the Trans Pacific Partnership (TPP), a Asia-Pacific regional free trade initiative, as well as through U.S. membership in the East Asia Summit (EAS). New Zealand is a member of both the TPP group and the EAS. New Zealand's main export products include dairy products, meat, and wood products. New Zealand also plays an important role in promoting regional stability in the Southwest Pacific and in archipelagic Southeast Asia. New Zealand's commitment to such operations is demonstrated by its leading role in helping to resolve conflict on Bougainville, Papua New Guinea, and its participation in peace operations in East Timor, and through its contribution of troops to security operations related to the Regional Assistance Mission in the Solomon Islands (RAMSI). New Zealand has also contributed to peace operations in places such as Bosnia, Sierra Leone, and Kosovo outside its region. The National and Labour Parties have traditionally been the leading political parties in New Zealand. Prime Minister John Key of the National Party has faced a daunting challenge of dealing with the aftermath of a February 22, 2011 earthquake that devastated Christchurch, New Zealand's second largest city. Elections in New Zealand are to be held in November 2011. At that time, New Zealand voters will also be asked to vote on their preference for retaining the Mixed Member Proportional (MMP) system.

Problems for patients associated with dramatic increases in the cost of prescription medications have generated a great deal of interest among the media, interest groups, and legislators alike. Although no broad consensus exists regarding the causes of--and thus solutions to--the rapid increase in many pharmaceutical prices, policymakers have explored a number of options, including the recycling of unadulterated surplus drugs. Currently, many health care institutions, especially long-term care facilities (LTCFs), routinely dispose of medications that otherwise have a useful life. This practice typically occurs when drugs are dispensed to patients but remain unused because the patient switches medication, is discharged, or dies. Studies have estimated that more than one billion dollars worth of drugs are discarded each year in the United States. One way to counter this costly practice is to recycle the unused medications. However, the ability to implement recycling programs may be constrained by federal and/or state law. Current regulation of pharmaceuticals and those who dispense them consists of a complex system of federal and state laws. There are three federal laws discussed below that may impede the practice of recycling medications. At the state level, state controlled substances laws, pharmacy laws, and other rules promulgated by state boards of pharmacy govern practices relating to the manufacture, distribution, and possession of medicines. Nevertheless, state legislatures that have implemented drug recycling programs appear to tailor them to conform to existing regulations. State laws vary greatly regarding who may return and accept the medications, which medications may be recycled, and the procedures in place to safeguard against adulteration or unlawful possession of the medications. Federal laws regulating pharmaceuticals pose potential obstacles to the implementation of drug recycling programs. Specifically, many of the medications covered by recycling programs are considered controlled substances and thus are subject to the requirements of the Controlled Substances Act (CSA). Furthermore, most, if not all, of the drugs in question also require a prescription in order to be dispensed, and therefore are regulated by the Federal Food, Drug, and Cosmetics Act (FFDCA) --thus adding another layer of federal statutory regulations. Additionally, programs to recycle medications may also encounter logistical problems relating to billing under the Health Insurance Accountability and Portability Act (HIPAA). One potential impediment to drug recycling programs is the CSA. Enacted in 1970 with the main objectives of combating drug abuse and controlling traffic in controlled substances, the CSA created a regulatory regime criminalizing the unauthorized manufacture, distribution, dispensation, and possession of the substances covered by the act. Enforced by the federal Drug Enforcement Agency (DEA), the CSA establishes civil as well as criminal sanctions for its violation. The CSA is relevant to drug recycling programs because most, if not all, of the costly medications the programs seek to recycle are considered controlled substances under the CSA. Practitioners who dispense or administer controlled substances listed on Schedules II through V, including substances that may not require a prescription, must register with the DEA. Entities that apply for federal registration to handle controlled substances and those so registered must provide effective controls and procedures to guard against theft and diversion of controlled substances in accordance with security requirements. These requirements vary depending on the type of activity and the substances. However, unlike hospitals and pharmacies, most long-term care facilities (LTCFs) are not registrants. Due to the stringent safety standards imposed on registrants, registration may not be feasible or cost-effective for many facilities to implement. Because of the prohibition against handling or possessing controlled substances without DEA registration, the CSA seems to preclude LTCFs--or any entity not registered with the DEA--from effectively participating in a drug recycling program. As a result, the DEA distribution system, which is designed to prevent diversion by establishing a closed distribution loop among registrants for purposes of tracking all entities that handle controlled substances prior to dispensing, often prevents LTCFs from returning such drugs to pharmacy stock and forces them to destroy any unused controlled substances. An alternative to recycling programs that LTCFs may wish to pursue is the installation of automated dispensing systems (ADS). Similar to a vending machine, an ADS is stocked with drugs by a pharmacy, which controls the device remotely and programs it to dispense drugs on a single-dose basis. The DEA recently promulgated a rule to allow this practice as a way to "mitigate the problem of excess stocks and disposal." Using this system, the drugs are not deemed to be dispensed until provided by the ADS, so any unused drugs remain in pharmacy stock. Recycling programs must also comply with statutes that regulate the safety and efficacy of prescription drugs. Federally, this regulation occurs under the FFDCA. One of the purposes of the FFDCA is to ensure drug safety by prohibiting the introduction of adulterated or misbranded foods, drugs, or cosmetics into interstate commerce. Therefore, programs to recycle unused prescription drugs may encounter barriers if such recycling could lead to drug adulteration or misbranding. The federal Food and Drug Administration's (FDA) policy guidance reflects these concerns. In guidance that dates back to 1980, the agency states, "[a] pharmacist should not return drug products to his stock once they have been out of his possession. It could be a dangerous practice for pharmacists to accept and return to stock the unused portions of prescriptions that are returned by patrons, because he would no longer have any assurance of the strength, quality, purity, or identity of the articles." However, the FDA has no specific regulations regarding drug recycling programs and leaves these programs to the discretion of the state so long as state legislation does not offend applicable regulations relating to the safety and efficacy of prescription medications. A smaller administrative obstacle to the effective implementation of drug recycling programs is the billing requirements under HIPAA. This law requires electronic transactions for operations conducted by pharmacies--the entities that are responsible for accepting unused medications in many recycling programs. Every transaction that occurs within a pharmacy must be part of the HIPAA Transactions Code Set. However, there is currently no code for returning an unused drug to stock for credit. Without this code, such transactions cannot be properly documented and accounted for, posing an obstacle for pharmacists and doctors who would participate in drug recycling programs. In recent years, several states have attempted to combat waste associated with discarding unused medications by creating drug recycling programs. These programs aren't "as simple as returning 'leftovers.'" Rather, most state legislation typically specifies who may return the unused medication, who may accept the medication, what types of medications may be returned, and to whom the medications may be redistributed. This section provides examples of current practices regarding such recycling programs. Most laws specify who may return, who may accept, and/or who may receive unused medications. Some states allow patients to donate, while others restrict the practice to pharmacies, doctors and wholesale distribution centers. Iowa, which falls in the former category, allows any person to donate unused medications. In contrast, California law allows donations only from drug manufacturers, licensed health care facilities, and pharmacies. Some states do not place restrictions on the drugs included in their recycling program, while others specify the types they will accept. For example, Nebraska restricts its drug repository program to cancer drugs. Wisconsin began its recycling program as a cancer drug repository, but later expanded it to include prescription drugs and supplies for all other chronic diseases such as diabetes. States also impose restrictions to ensure that the medications are safe. Safety requirements are fairly uniform across most states. They typically require that medications be in their original, unopened sealed packaging or in single unit doses that are individually contained in unopened, tamper-evident packaging. Most states also prohibit the return of medications that will expire within six months or appear to be adulterated or misbranded in any way. Despite the precautions states have attempted to build into their recycling programs, some people remain unconvinced that these programs are completely safe. Critics argue that insufficient safety controls may lead to adulterated, dangerous medicines, and drugs that land in the wrong hands. They also argue that the actual process of repackaging medications can pose safety hazards. Nevertheless, states seem intent on continuing to tailor their legislation in order to conform to existing law, while simultaneously acting as laboratories to test new cost-effective measures.

In recent years, the rising costs of prescription drugs have motivated various policymakers to implement cost-saving measures. In some cases, states have pursued programs to collect and redistribute unused medications that would otherwise be discarded. However, the ability to implement these so-called drug recycling programs may be constrained by federal or state law or both. For example, medications classified as controlled substances are regulated by the Controlled Substances Act (CSA). Furthermore, drugs that require prescriptions, as many controlled substances do, are regulated by the Federal Food, Drug, and Cosmetics Act (FFDCA). Additionally, programs may encounter logistical problems related to billing under the Health Insurance Portability and Accountability Act (HIPAA), which is not designed to accommodate drug recycling. Despite these hurdles, states have begun to implement drug recycling programs. Although the details of the laws vary among states, most contain strict rules to ensure the safety of the medications. This report provides an overview of the federal laws that may affect state drug recycling programs, as well as examples of these state programs.

The Budget Control Act of 2011 (BCA; P.L. 112-25 ) provided for automatic reductions to most federal discretionary spending if no agreement on deficit reduction was reached by the Joint Select Committee on Deficit Reduction. Such reductions, referred to as sequestration, went into effect on March 1, 2013, which was the extended deadline for a deficit reduction agreement established under the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240 ). In general, sequestration requires agencies to reduce spending for certain suballocations of funds--programs, projects, and activities--within nondefense discretionary accounts by 5.3% in FY2013. To implement the sequester-related reductions, the Federal Aviation Administration (FAA) began to furlough personnel, including air traffic controllers, on April 21, 2013. In the wake of concerns about the adverse effects of furloughs on air travel, the Senate passed S. 853 , the Reducing Flight Delays Act of 2013 (RFDA), on April 25, 2013, by unanimous consent. The bill provided new authority to the Secretary of Transportation to transfer up to $253 million to FAA's "operations" account from other FAA accounts, including discretionary grants-in-aid for airports. The next day, the House agreed to H.R. 1765 under suspension of the rules. Under agreement, H.R. 1765 , being identical in content to S. 853 , was presented to the President on April 30, 2013, and was enacted on May 1, 2013, becoming P.L. 113-9 . FAA halted furlough actions even before the bill was signed by President Obama. This report provides a brief overview of FAA's implementation of the sequester in April 2013, as it relates to air traffic control operations and staff furloughs. It then considers the congressional response, including the potential impact of the funds transfers authorized under P.L. 113-9 on FAA's Airport Improvement Program (AIP). The sequester cuts reduced FAA spending for FY2013 by about $636 million below the amount specified in the FY2013 continuing budget resolution. The portion of funding designated for staff salaries and benefits varies considerably by major FAA funding account. FAA's operations account, which includes air traffic operations and aviation safety functions, is the most labor-intensive, with about 71% of outlays going to employee salaries and benefits. This is by far the largest FAA budget account. The facilities and equipment account, on the other hand, is spent largely for facility construction and technology acquisition and maintenance, and only 15% of spending is devoted to salaries and benefits. Similarly, Grants-in-Aid for Airports, also known as the Airport Improvement Program (AIP), has a very low percentage (roughly 3%) of its total devoted to salaries and benefits, as most funds designated for this account are passed on to airport authorities for carrying out construction and maintenance projects. The research, engineering, and development account mainly performs its functions through university research grants and industry contracts, with 23% of its budget going to salaries and benefits. As operations, including both air traffic services and safety-related functions, require the most internal labor resources from FAA, these functions are most heavily impacted by agency-wide furlough actions (see Table 1 ). FAA operations face a sequester reduction of roughly $486 million. P.L. 113-9 gives FAA authority to transfer up to $253 million to operations using available moneys from unspent airport funds, which were not subject to sequestration, and from other available sources. While the focus of legislative debate on P.L. 113-9 was the reduction or elimination of air traffic controller furloughs in order to avoid disruption of airline service, the effects of the legislation will hinge on FAA's specific budgetary actions under this authority. Sequestration under the American Taxpayer Relief Act of 2012 did not affect all Federal Aviation Administration (FAA) functions. FAA's grants for airport improvements, which are subject to obligation limitations, are statutorily exempt from the sequester cuts. FAA's other functions faced significant spending reductions. FAA interpreted the law as requiring it to reduce spending proportionately in all accounts other than airport grants. In response, FAA implemented agency-wide furloughs of employees, including air traffic controllers, beginning April 21, 2013. FAA employees were told they would be required to take 11 furlough days through the remainder of FY2013. FAA employs about 45,000 people in a variety of functions. Different FAA components implemented various approaches to designating furlough days. FAA's Air Traffic Organization, which includes both air traffic controllers and the technicians and engineers who maintain the air traffic control system, implemented rolling furloughs among its 33,000 employees to minimize staffing impacts to flight operations. Following negotiations with the union representing controllers, FAA agreed that all air traffic controllers nationwide would be required to take one unpaid furlough day in each two-week pay period, irrespective of the workload or potential impact of reduced staffing at a particular facility. FAA implemented various air traffic management initiatives to mitigate impacts of the reduced staffing due to furloughs, including increased aircraft spacing, which reduces the number of flights an airport can handle in a given period. These measures led to delays during the first week of reduced staffing, most noticeably in the New York City area and at Dallas-Fort Worth, Las Vegas, Chicago, and Tampa airports. In total, delays related to staffing reductions appear to have affected about 3%-4% of flights, with some acute delay impacts occurring in congested airspace, particularly in the New York City area. Airlines warned that prolonged furloughs and associated delays could impact revenues, but this could be offset somewhat by lower fuel prices. Also, in response to the furlough delays, airline advocacy groups sought exemption from the Department of Transportation's tarmac delay rules, which generally require airlines to allow passengers to disembark from aircraft delayed more than three hours and carry fines for airlines that fail to comply. On April 27, 2013, following House and Senate passage of legislation to allow it to transfer $253 million from other accounts to its operations account, FAA announced that it had suspended all employee furloughs and that air traffic facilities would resume operations under normal staffing levels. It is not certain that these steps will avert all furloughs of FAA employees in FY2013. As explained below, FAA may be unable to transfer the entire $253 million from AIP to its operations account without triggering reductions in many airports' entitlements under AIP. One way for FAA to avoid this problem would be for it to transfer some of the funds from programs other than AIP. This would necessitate spending reductions in those programs, which could potentially include employee furloughs. FAA previously furloughed employees in the summer of 2011. Its furlough actions in April 2013 had significantly different impacts due to the fact that they had a different legal basis from those in 2011. The 2011 furloughs resulted from the effective temporary shutdown of the Airport Improvement Program (AIP) and a lapse in revenue collection authority for the Airport and Airways Trust Fund (AATF), which provides major funding for FAA programs. When short-term extensions of FAA authority under the Airport and Airway Extension Act of 2011, Part III ( P.L. 112-21 ), expired on July 22, 2011, employees working for FAA's office of airports and funded under AIP were immediately furloughed. Other employees paid from the facilities and equipment and research, engineering, and development accounts were also furloughed, as the sole funding source for those FAA programs, the AATF, could no longer collect revenue. Certain employees funded from the facilities and equipment account who inspected FAA navigation and communications equipment were ordered to stay on the job without pay because they were deemed to be essential to the safety of the air traffic system. About 4,000 FAA employees in total, roughly 9% of FAA's total workforce, were affected. As general fund moneys were available to continue paying employees, including any air traffic controllers paid out of the FAA's operations account, these employees were not immediately furloughed. A subsequent short-term extension of AIP expenditure authority and AATF revenue collection authority ( P.L. 112-27 ) was enacted on August 5, 2011, ending the furloughs for affected FAA employees and eliminating the need for possible additional furloughs of other employees paid through the operations account. Although additional legislation (e.g., H.R. 2814 , 112 th Congress) sought to compensate FAA employees for lost wages under the August 2011 furlough, the legislation was determined to be unnecessary, and employees were subsequently granted back pay for furloughed days under existing Department of Transportation authority. The term "furlough" refers to placement of an employee in temporary nonduty, nonpay status because of lack of work or funds, or other nondisciplinary reasons, but with continued benefits under certain conditions, such as health insurance. There are two types of furloughs: "shutdown furloughs" (also called "emergency furloughs") and "administrative furloughs." This distinction explains why, during FAA's April 2013 implementation of the sequester, federal civil service employees such as air traffic controllers were treated differently in comparison with the 2011 shutdown of certain FAA activities in response to a lapse in budget authority. Under a shutdown, an agency suddenly may lack authority to obligate and spend certain funds due to a lapse in annual appropriations, or, alternatively, due to expiration of an authorizing act that provides access to certain funds. In these situations, it is generally understood that the lapse (or expiration) is temporary, due to an impasse in negotiations within Congress or between Congress and the President, and not intended by policymakers to be a permanent change in law. Some employees who are paid from affected funds are "excepted" by law from a specific kind of furlough ("shutdown furlough"). In the context of a shutdown, for example, employees whose duties involve the safety of human life or the protection of property may be told by an agency to come to work during the period of time in which funds are lapsed or an authorizing statute is expired. In other words, they are excepted from furlough. Other employees whose duties do not fit that criterion, however, may be placed on shutdown furlough and told to not come to work during this time period. The so-called Antideficiency Act, in particular, generally prohibits agencies from accepting voluntary services and employing personal services exceeding that authorized by law, "except for emergencies involving the safety of human life or the protection of property" (31 U.S.C. SS1342). The statute elaborates that "the term 'emergencies involving the safety of human life or the protection of property' does not include ongoing, regular functions of government the suspension of which would not imminently threaten the safety of human life or the protection of property." Two legal opinions from former Attorney General Benjamin R. Civiletti, written in 1980 and 1981, have strongly influenced activities in the executive branch related to shutdowns. The opinions and subsequent guidance from the Office of Management and Budget (OMB) and Office of Personnel Management (OPM) direct agencies in interpreting the Antideficiency Act and the exceptions from the act that are authorized by law, including the exception related to safety of human life and protection of property. These interpretations generally tell agencies which groups of employees may be directed to come to work in the absence of appropriations (i.e., which employees are excepted from shutdown furlough). The interpretations do not require agencies to make exceptions for all employees whose activities involve the safety of human life or the protection of property. However, it is possible that agencies may interpret law and guidance as generally communicating an expectation that all or many of these employees should (or shall) be excepted from furlough. Affected excepted employees and nonexcepted employees do not receive pay during a shutdown, due to lack of available budget authority. Arguably, there is a legal obligation for an agency to pay excepted employees for their work during the lapse period, once funding resumes, however. In historical practice, subsequent law has provided for both excepted and nonexcepted personnel to be paid for the work days that pass during a shutdown period. Under the process known as sequestration, a sequester--such as the one associated with the Budget Control Act of 2011 (BCA; P.L. 112-25 )--provides for the automatic cancellation of previously enacted spending, making largely across-the-board reductions to nonexempt programs, activities, and accounts. In this situation, certain percentage reductions are applied across major categories of spending. For each category, a uniform percentage reduction of nonexempt budgetary resources is determined. The reduction then is applied to each program, project, and activity (PPA) within each budget account that falls within the category. Ultimately, sequestration could be characterized as an elaborate process for making a policy decision to reduce the budgets for certain federal activities. As such, Congress and the President may, through law, reduce the budgets of activities that involve the safety of human life or the protection of property. When agencies face these across-the-board reductions at the account level and the PPA level, they may adjust the incidence of the reductions for a given account or PPA through any available authorities to transfer funds from one account to another and reprogram funds from one PPA to another within the same account. A transfer or reprogramming may cushion some activities from across-the-board reductions, but this may increase the extent of reductions elsewhere. One way in which an agency may cope with budget cuts is to use administrative furloughs. These furloughs reduce an agency's personnel costs, because employees are not required to be paid for furlough days and, in practice, are not paid for these days. Agencies generally have considerable discretion to choose which employees are subject to administrative furlough. OPM's guidance says that "[a]gencies are responsible for identifying the employees affected by administrative furloughs based on budget conditions, funding sources, mission priorities (including the need to perform emergency work involving the safety of human life or protection of property), and other mission-related factors." In the context of sequestration related to BCA, OMB has offered similar guidance to agencies to implement sequestration-related reductions--including any transfers or reprogramming--in a way that mitigates operational risks and negative impacts on an agency's core mission. Although OMB and OPM both make reference to work involving the safety of human life or protection of property, budget reductions may affect and reduce the extent of this work that an agency undertakes, which in some cases may make administrative furloughs unavoidable. RFDA provides FAA with the authority to transfer up to $253 million of FAA funds from other uses to operations. Although worded broadly, the transfer authority is meant primarily to counteract the impact of sequestration on the air traffic control system. The act allows FAA to transfer funds from two sources. Amounts made available for obligation under the Airport Improvement Program (AIP) in FY2013 for discretionary grants derived from apportioned funds not required in FY2013, pursuant to 49 U.S.C. 47117(f), can be transferred to other uses. Further, the act allows for transfers from "any other program or account" of FAA. The transferred amounts are to be available immediately for obligation and expenditure as directly appropriated budget authority. The Airport Improvement Program provides federal grants to airports for airport development and planning. The 3,355 airports eligible for AIP grants range from major international hubs to county general aviation airports that have no commercial service. There are two forms of grant distribution to these airports: entitlement and discretionary. The entitlement funds (also called apportionments) are based on formulas that determine the amount that each eligible airport is entitled to for a fiscal year. Airports do not need to compete with one another for these funds. Once the entitlements are fulfilled, the remaining funds are distributed as discretionary funds by FAA. The distribution is conditioned by certain set-asides and is based on project priority and other selection criteria. The federal share under AIP varies from 75% for projects at large and medium hub airports to 90% for most small airports. The local match is generally paid for by the airport. Entitlements are available to recipient airports for either three or four years, depending on the type of airport. If an airport has not obligated its entitlement funds within the allowed period, the amounts are reclassified as discretionary funds and remain available for FAA to distribute until expended. AIP spending authority is based on contract authority, which is a kind of spending authority that allows obligations to be incurred in advance of appropriations. Because of this characteristic, AIP spending is controlled through a limitation on obligations. The annual limitation on obligations is usually set in appropriations legislation and restricts the amount of AIP contract authority that can be obligated (i.e., awarded) in a particular year. Controlling the rate of the annual obligation of funds allows Congress to control the rate of eventual outlays. Section 2(a)(1) of RFDA allows FAA to transfer any apportioned entitlement funds that airports have elected not to use in the year that the funds are apportioned, for use as discretionary funds. These sums historically were referred to as "carryover" funds, but FAA now uses the term "protected entitlement funds." These entitlement funds are "protected" in the sense that airports have the right to use them in later years of their eligibility. This movement of funds from entitlement to discretionary (carryover) status and back to restored entitlement status is done because of the multiyear nature of the entitlements and the desire to obligate the entire obligation limitation level each year. In recent years, the balance of protected entitlement funds (i.e., carryover funds) has grown. This could have occurred for a number of reasons. Some airports, especially small ones, sometimes let the funds build up so that they draw on two or more years' entitlements at once to fund larger projects. In some cases, the sequence of a project's construction schedule requires entitlement funds to be held for a period before being spent. Some airports in recent years have had difficulty raising their local matching shares. Also, prior to the enactment of the FAA Modernization and Reform Act of 2012 ( P.L. 112-95 ), FAA funding underwent 23 short-term extensions that made systematic planning difficult for some airports. These factors have caused some airports to defer the obligation of their apportionments to the later years of their eligibility, and the "carryover" balance has reportedly grown to roughly $700 million. It is important to understand that the use of the terms "carryover funds" or "unused entitlement funds" does not mean that these are idle surplus funds with no intended use. The transfer of these funds to other parts of FAA under RFDA will reduce eventual AIP discretionary outlays by a like amount. Airports of all sizes benefit from the discretionary grants, but unlike entitlement funds, not every airport receives funding every year. In general, small airports depend on AIP funds for airport improvements more than large airports, because small airports are less likely to be able to finance improvements by selling bonds or imposing passenger facility charges. Section 2(b)(2) of the act appears to require the amount transferred to be considered an obligation for grants-in-aid airports, effectively reducing the spending authority made available for such purposes. In effect, the act appears to reduce the obligation limitation for FY2013. Should this be the case, there would be two major implications. Because the transferred amounts reduce the FY2013 obligation limitation by a like amount (pursuant to Section 2 (b)(2)), FAA might have to refrain from making additional awards or reduce the rate of award-making of discretionary grants from now until the end of FY2013 to keep AIP within its reduced obligation limitation. This reduction of obligational authority for AIP discretionary funding will eventually lead to reductions in outlays for airport improvements unless Congress decides to restore the funding in the future. Under the Wendell H. Ford Aviation Investment and Reform Act for the 21 st Century ( P.L. 106-181 ; codified under 49 U.S.C. 47114), a threshold of at least $3.2 billion must be made available for airport planning and development under Section 48103 in order for FAA to implement certain "special rules" that provide for more generous entitlements. Consequently, if the transfers authorized by RFDA reduce the $3.343 billion made available for FY2013 below $3.2 billion, most airports' entitlements could be reduced for the remainder of FY2013. The $3.2 billion threshold has been met every year for the last 10 fiscal years, and airports have become accustomed to the larger entitlement distributions. To prevent reductions in entitlements, FAA would have to forgo transferring from AIP roughly $100 million to $110 million of the $253 million it is authorized to transfer under RFDA. If FAA determines that it needs the entire $253 million amount to avoid controller furloughs, then, to avoid breaching the threshold, it appears that it would have to transfer roughly $100 million to $110 million from FAA accounts other than AIP unless Congress were to provide some other legislative solution.

In response to across-the-board funding reductions in federal programs through the budget sequestration process implemented in FY2013, the Federal Aviation Administration (FAA) began to furlough personnel, including air traffic controllers, on April 21, 2013. In conjunction with air traffic controller furloughs, FAA implemented various air traffic management initiatives to mitigate impacts of the reduced staffing on controller workload. This resulted in some delays affecting about 3%-4% of flights, with some acute delay impacts occurring in congested airspace, particularly in the New York City area. Amid concerns over the impacts of air traffic controller furloughs, Congress passed the Reducing Flight Delays Act of 2013 (P.L. 113-9). The act authorized FAA to transfer up to $253 million from funding available for airport grants or other FAA programs and accounts to the FAA operations account for necessary costs to prevent reduced operations and staffing and ensure a safe and efficient air transportation system. Following passage of this legislation in Congress, FAA suspended all employee furloughs and resumed air traffic control operations under normal procedures and full staffing levels. Prior to the April 2013 furloughs, FAA furloughed employees in the summer of 2011. However, the FAA furlough actions associated with sequestration had a different legal basis and were consequently implemented quite differently. The summer 2011 furloughs arose as a result of a lapse in authority to collect Airport and Airways Trust Fund (AATF) revenues, the sole funding source for FAA's facilities and equipment (F&E) account, the Airport Improvement Program (AIP), and research, engineering, and development activities. Expenditure authority for AIP also expired in the summer of 2011. The expiration of these authorities resulted in immediate furloughs for most employees funded from these accounts. Some employees funded through the F&E account responsible for ensuring the safety and reliability of navigation and communications equipment were ordered to stay on the job. Employees paid through FAA's operations account, including air traffic controllers, were not furloughed in 2011. Certain AIP grants-in-aid funds for airport development and planning are now subject to provisions of the Reducing Flight Delays Act of 2013. It appears that the transfer of the designated AIP discretionary funds to air traffic operations reduces the amount made available to airports under 49 U.S.C. 48103. This has implications for both the eventual spending of AIP discretionary funds and the calculation of the amount of AIP entitlement funding available for distribution. Unless Congress takes further action, the transferred funds will eventually lead to real reductions in AIP discretionary spending. FAA may need to stop or reduce its AIP discretionary grant making for the remainder of FY2013 to comply with the act. Individual airports' formula "entitlements" could be reduced for the remainder of the fiscal year if FAA transfers most or all of the $253 million allowed under the act.

RS21404 -- U.S. Occupation of Iraq? Issues Raised by Experiences in Japan and Germany January 30, 2003 Planning, Duration, Force Size. (1) Planning for both occupations, which began asearly as 1942, was marked by sharp disagreements within the Roosevelt administration that continued into the earlyphases of theoccupations. The first of many documents discussing the post-war political configuration of Japan , in particular the status of theemperor and the possibilities and particulars of democratization, was issued in March 1943. The final directives,which provided theparticulars of political reform, were issued by the inter-agency State, War, and Navy departments' coordinatingcommittee (SWNCC)after the Japanese surrender. For Germany , initial moderate plans of the State Department andthe Army were replaced by morepunitive measures that would hold the economy to subsistence level through severe deindustrialization, as reflectedin a January 1945revision of what became the occupation blueprint, the Joint Chief of Staff Document 1067 (JCS 1067). In the end,it was the leadingU.S. official of each occupation who proved a major voice in redirecting early punitive policies. It was presumed that both military occupations would be relatively short. For Japan , the Supreme Commander of the Allied Powers(SCAP) Gen. Douglas MacArthur judged the occupation would last no more than three years. (2) It lasted six years and eight months(August 1945-April 1952). For Germany , the first Military Governor of the U.S. sector, Gen.Dwight D. Eisenhower, anticipated thatthe U.S. military would "provide a garrison, not a government, except for a few weeks." (3) Instead, direct military government lastedfour years, the important first phase of the occupation (May 1945 - May 1949). (Some analysts believe the U.S.military occupationof Germany was prolonged by problems in establishing self-government because of differences with the otheroccupying powers:Great Britain, France, and the Soviet Union, each of which controlled its own sector.) In both cases, a substantial drawdown of U.S. occupation forces occurred after the first year, as there was virtually no armedresistance. In Japan , a peak level of 385,649 was reached by November 1945, but dropped to160,000 by the end of May 1946. In Germany , the 1.6 million troops in Germany in May 1945, dropped to 277,584 in 1946, 119,367in 1947, and 79,370 by 1950. (4) In Japan , most major reforms had been accomplished within four years and six months. In Germany , the U.S. occupation wasphased out in two stages. Germans in the U.S., British, and French sectors jointly gained control of most domesticaffairs in May 1949with the ratification of a new constitution, dubbed the Basic Law, establishing a parliamentary democracy, theFederal Republic ofGermany or 'West Germany." Until 1955, these occupying countries retained emergency powers, a veto over lawsinconsistent withoccupation policy, and authority over such matters as foreign relations, foreign trade, the level of industrialproduction, and militarysecurity. In its zone, the Soviet Union created an authoritarian Soviet-style state, the German Democratic Republicor "EastGermany." (The "West" and "East" entities persisted until reunification in 1990.) Objectives. The objectives of the U.S. occupations of both countries have beensummed up in two lists of four "d"s. In both Japan and Germany , the primary objective was demilitarization . All U.S. plannersagreed that the ability of both countries to wage war in the future should be destroyed. This included destroyingelements of militarypower, including the economic apparatus that fueled war, and punishing war criminals. In Japan ,the next goals were the disarmament and decentralization of the economic apparatus, the latter through thedismantling of the large industrial and bankinggroups. In Germany , they were denazification and deindustrialization . Regarding the fourth "d", democratization , many U.S.policymakers and occupation planners doubted that the Japanese and Germans had the cultural background andpsychologicaldisposition necessary to function in a democracy. After the occupations began, democratization assumed greaterweight in bothexperiences, as those forces who had argued that the inhabitants of those countries were capable of establishingdemocracies gainedcredibility, and as the start of the Cold War fostered the concept of a community of democracies as a counterweightto the SovietUnion. Humanitarian Situation. The occupations commenced amidst a grave humanitarian situation, with large parts of the population homeless, and on subsistence diets or below. In Japan , according to onesource, the war had produced 1.8 million military and civilian casualties, and destroyed 25% of Japan's nationalwealth. Air attacks had destroyed 20% of the country's housing (and a greater amount in some cities), and 30% of its industrialcapacity. (5) In Germany ,between a quarter to a half of housing and transport had been destroyed, leaving some 20 million homeless in theWestern zones. (6) Although the United States provided humanitarian aid at the outset to ward off mass hunger and starvation,occupation authorities andoversight officials soon worried that the U.S. will to continue such relief efforts would flag well before the needfor aid diminished. This trepidation was one consideration reorienting economic policies. In 1949, under pressure from Congress,Military GovernorLucius D. Clay abandoned a central feature of occupation policy in Germany (with which he hadoriginally agreed): the punitivedismantling of what was left of Germany's industrial base to make Germans pay for waging war. (7) Instead, he actively promotedGermany's economic revival. In Japan , the inter-agency SWNCC approved in January 1948 aneconomic recovery program"intended to make Japan self-sufficient through the 'early revival of the Japanese economy'" and encouragingindustrial growth andforeign trade to enable Japan to "make its 'proper contribution to the economic rehabilitation of the worldeconomy.....'" (8) Accomplishments. In both countries, the occupations are credited with the construction of functioning democracies. In Germany , the direct occupation period ended in theWest with the 1949 establishmentof the Federal Republic of Germany, a parliamentary system built on improvements in the constitution andinstitutions of Germany'smajor experience with democracy, the 1919-1933 Weimar Republic. In Japan , the SCAPrevamped the laws, institutions, and moresof the country's "divine right" monarchy. The key reform was a new constitution, largely drafted by the SCAP staff,which transferredsovereignty from the Emperor to the people (while retaining the Emperor in a largely symbolic role) and banneda military, arms, andparticipation in war. It also dismantled the feudalistic structure, creating a more decentralized and representativegovernment throughreforms in the Japanese legislature (the Diet), local governments, and the civil code, among other measures. (9) Other political changesin Japan included the separation of church and state, the enfranchisement of women, the promotion of a free press,and theliberalization of education. Important economic changes, including the dismantling of the large, family-run industrialand bankinggroups, and a wide-scale agrarian reform, are seen as essential to the creation of a functioning democracy, becausethey broke thepower of economic and military elites. Recent assessments of the importance of the occupation governments in establishing these democracies give much greater weight totheir contribution in Japan than in Germany. Indeed, one academic believes that while the United States wasimportant to ademocratic outcome in Japan, "by contrast the strength of democratic forces in West Germany was such that theAmericancontribution appears relatively marginal." (10) Some historians have noted that unique preconditions and circumstances contributed to the success of these occupations, particularlyin Japan. Four crucial points of convergence often cited as important to the success of those occupations inestablishing democracies,raise questions concerning the applicability of these models to a U.S. occupation of Iraq. Although there ispredictably disagreementover their relevance, these issues provide a backdrop for post-Saddam planning. Populations' Acceptance of U.S. Occupations and Democratization Objective Occupation. Occupation by U.S. forces, and democratic reforms, were widely accepted by the JapaneseandGermans themselves, who came to blame their own leaders for the war. Indeed, although historically much iscredited to the UnitedStates for remaking these democracies, many analysts believe that the high degree of cooperation from post-warJapanese and Germanleaders was also crucial to their success. Analysts writing during the occupation of Japan attributed success there "largely...to the wholehearted cooperation of the averageJapanese citizen," (12) a conclusion whichsubsequent research supports. This cooperation has been attributed to several factors,including Emperor Hirohito's plea, before the landing of U.S. forces that the population cooperate fully withoccupation directives. This ensured not only the cooperation of the average citizen, but more importantly of Japan's powerful bureaucracy. Moreover, thegreat majority of Japanese rejected the old political system and military leadership, and were receptive to change.In the early 20thcentury, Western-style democratic political institutions had begun to develop, with increasing influence exercisedby political partiesand greater democratization of parliamentary practices, culminating in 1920 - 1932. (13) In Germany, U.S. occupation officials quickly became convinced that most Germans thoroughly rejected Nazi Fascism, and desiredpolitical change to a successful democracy in line with democratic developments before Adolf Hitler took power. Germany hadexperience with a limited democracy and the rule of law, within an authoritarian culture and political context, duringthe "SecondReich" (or the German Empire) of 1871-1918, even before its experience with democracy during the WeimarRepublic. Manydemocratic leaders of the Weimar Republic had remained in Germany, and were eager to work towards therestoration of democracy. Prospects for democracy may have been further enhanced because the areas of U.S. occupation had more of ademocratic ethos, incontrast to the legacy of Prussian authoritarianism in the Soviet occupation zone. To what extent would a model of Western democracy be acceptable to the Iraqis? Even if Iraqis accepted such a model, mightproblems arise from Iraq's lack of experience with democracy? If such a model is not acceptable to Iraqis, to whatextent do theyshare a common purpose of unifying their country around a political model acceptable to the United States? Giventhe history ofWestern colonialism in the Middle East, U.S. support for Israel, and the drastic effects of current U.S. backedeconomic sanctionsagainst Iraq, would the United States have the nearly unanimous backing of the Iraqi population for an occupation,as it did in Japanand Germany? If not, would a U.N. force enjoy greater support? What difficulties could arise from the lack ofgeneral consent? Homogeneity of Occupied Populations. Although politically diverse, the Japaneseand the German populations as of 1945 were each ethnically homogeneous, and largely without religiousanimosities. To what extent will ethnic and sectarian differences among Iraqis impede effective government by a U.S. occupation force? Giventhose differences, will Iraqis be able to govern themselves within a short period of time? If not, what arrangements(such asco-government, as exists in Afghanistan) might be desirable to promote effective government? What likelihoodis there that such agovernment would succeed? Ability to Manage Their Own Affairs Largely Using Existing Institutions. Although the U.S. military governments held power and issued orders, most of the functions of government werecarried out byJapanese and German institutions. This delegation of functions was the decision of the two dominant figures in theoccupationgovernments, MacArthur in Japan and Clay (14) inGermany. The decision was based in their assessments of the willingness and abilityof Japanese and German citizens to perform these duties, and the scarcity of suitable Americans to do so. In Japan, MacArthur retained and worked through Japan's existing, and centralized, governmental institutions, issuing orders thatwere then carried out by the Japanese government. (15) (He also insisted on autonomy from U.S. agencies to interpret instructions as hesaw fit.) Military government teams, usually of military and civilian personnel, and local liaison offices were alsoestablished at theprefecture (i.e., state) level, and charged with observing, investigating and reporting on compliance. However,according to oneauthor, the "lack of an established policy for local military government activity" resulted in abuses, and a"patchwork of wide localvariations developed." (16) MacArthur entrustedthe Japanese government with demobilizing its forces. In the U.S. sector of Germany, the Office of the Military Government, United States (OMGUS) proceeded immediately to reconstructGerman government institutions to administer occupation laws and policies, even before all U.S. officials wereconvinced thatGermans were ready for it. With the German defeat, the Nazi government collapsed, leaving the allies to replaceofficials andstructures. From the beginning, Clay sought to turn government over to Germans as quickly as possible, starting atthe local level. Insome cases, the OMGUS appointed former German government officials from the pre-1933 period. As early asOctober 1945, Clayissued an order that limited local OMGUS military activities to observing government activities at the city, countyand state level, andreporting problems to higher headquarters. Elections for village officials were held in January 1946, followed bycounty officials inMarch and city officials in May. Clay then pushed for the drafting of state constitutions and establishment of stategovernments. To what extent would Iraqi existing institutions continue to function? What governmental functions would U.S. or other militaryforces have to assume, and for how long? What new institutions would have to be created? To what extent mightgrievances of thosedisplaced from existing institutions, or of those removed and punished for crimes related to participation in theHussein regime, beviewed as legitimate by other Iraqis, and other Middle Eastern governments and populations? To what extent couldsuch sympathiesundermine effective administration by occupation forces? How much autonomy would a U.S. or U.N.administration have to adapt tolocal conditions? International Legitimacy and Support. The U.S. occupations in Japan andGermany were viewed by other countries as morally and legally legitimate, and there was widespread support forthem. Thisinternational consensus meant that U.S. policy could be developed relatively free of competing foreign policyinterests. This wasespecially true in the case of Japan. For Germany, however, the development of economic policy was complicatedby considerationsregarding other European economies. If the United States were to invade Iraq without the full backing of the international community, to whatextent would this lack ofconsensus or agreement undermine the basis of U.S. international legitimacy or support? What U.S. interests wouldbe affected bythe presence of a U.S. occupation force in Iraq? Should the United States expect significant opposition to a U.S.occupation amongthe leaders or populations of neighboring countries? To what extent would its short-term success be judged by itsability to meethumanitarian needs?

This report provides background on the U.S. occupation experiences in Japan andGermany after World War II, and discusses four sets of factors from this period that could be relevant to a U.S.occupation of Iraq. These are: (1) acceptance of U.S. goals, (2) homogeneity of the occupied populations, (3) ability to manage theirown affairs, and (4)international legitimacy and support. This report will not be updated

Pollution from excessive levels of phosphorus and other nutrients has long been recognized as a major contributor to the environmental degradation of the Florida Everglades ecosystem. In 1988, the federal government sued the State of Florida and two of its state agencies, alleging that water released onto federal lands from agricultural sources contained elevated levels of phosphorus and other nutrients in violation of state water quality standards. Based on a 1992 Consent Decree settling this lawsuit, Florida enacted the Everglades Forever Act in 1994. This act required the state to establish a numeric limit for phosphorus by December 2003 (i.e., phosphorus criterion) and required actions to comply with this limit by December 2006. Several Everglades-related lawsuits have since been filed by environmental, agricultural, and tribal stakeholders. In spring 2003, Florida amended the 1994 Act to create significant flexibility in deadlines for phosphorus mitigation, and in July 2003, Florida issued a rule establishing a limit for phosphorus and methods to measure compliance with that limit. These new laws and the rule have generated controversy among several stakeholders in the restoration effort underway in the Everglades and caused concern among some Members of Congress that the state may not meet the 2006 deadline for mitigating phosphorus. This concern is reflected in the FY2004 Energy and Water Development Appropriations Act ( P.L. 108-137 , signed into law December 1, 2003) and the FY2004 Interior and Related Agencies Appropriations Act ( P.L. 108-108 , signed into law November 10, 2003). These laws condition FY2004 Everglades funding based on Florida meeting phosphorus mitigation and water quality standards by the 2006 deadline (as specified in the Consent Decree and the EFA) and require federal agencies to determine whether Florida is meeting the deadline. If not, the laws state that Congress may disapprove FY2004 funding for Everglades restoration projects. The FY2004 Energy and Water Development Appropriations Act ( P.L. 108-137 ), and FY2004 Interior and Related Agencies Appropriations Act ( P.L. 108-108 ), both include provisions related to phosphorus mitigation and water quality in the Everglades. Both condition funding for Everglades restoration on one or more reports that determine whether certain Everglades waters meet water quality requirements as specified in the legislation. deadline. The provisions require federal agencies to determine whether Florida is meeting the deadline, and if not, the provisions state that Congress may disapprove FY2004 funding for some Everglades restoration projects. The FY2004 Interior and Related Agencies Appropriations Act conditions funds for two items related to restoration in the Everglades: (1) the Modified Water Deliveries Project and (2) Florida land acquisitions near the Everglades. The House Appropriations committee report ( H.Rept. 108-195 ) contained several pages of language stating committee members' strong disapproval of Florida's new legislation and its potential effects on Everglades restoration, including members' concern that the new Florida laws could delay the restoration and protection of LNWR and ENP and hinder implementation of the shared $7.8 billion federal-state Comprehensive Everglades Restoration Project (CERP). P.L. 108-108 states that both FY2004 funds and funds appropriated in prior years for the Modified Water Deliveries project should be available unless an annual report filed by the Secretaries of the Interior and the Army, the Attorney General, and the U.S. Environmental Protection Agency (EPA) finds that Florida is not meeting state water quality standards, and the state numeric phosphorus criteria and water quality requirements set forth in the 1992 Consent Decree in Arthur R. Marshall Loxahatchee National Wildlife Refuge (LNWR) and Everglades National Park (ENP). This report must be submitted to five Congressional committees: The House and Senate Appropriations Committees; the House Transportation and Infrastructure Committee; the House Resources Committee; and the Senate Environment and Public Works Committee. For funding to be disapproved, an unfavorable report must be submitted and both House and Senate Appropriations Committees must disapprove funding for the project in writing. This report is due 90 days after the date of enactment of the bill, which is February 8, 2004, and every year thereafter through 2006. P.L. 108-108 directs the Interior Department to reallocate unused funds originally intended to help Florida purchase lands near the Everglades. These funds are estimated at $32 million. Funds are to be reallocated to other agencies, including the U.S. Fish and Wildlife Service (FWS) and the U.S. Army Corps of Engineers (Corps), to improve water quality in LWNR. H.Rept. 108-195 has provisions that direct the Administrator of the Environmental Protection Agency to report on three issues: (1) whether Florida's recent amendments to its 1994 Everglades Forever Act (EFA) are consistent with the federal Clean Water Act, (2) whether EPA has approved Florida's numeric phosphorus criterion, and (3) whether the phosphorus criterion will protect LNWR and ENP consistent with the requirements of the 1992 Consent Decree. The House report does not specify a due date for the EPA reports. The FY2004 Energy and Water Development Appropriations Act provides that $137 million appropriated for restoring the Everglades (including funding for the Central and Southern Florida project, the Everglades and South Florida Ecosystem Restoration project, and the Kissimmee River Restoration project) will be available unless: (1) the Secretary of the Army files an unfavorable report with the House and Senate Appropriations Committees and the State of Florida on whether Florida is meeting water quality requirements in the 1992 Consent Decree, within 30 days of enactment of the bill (December 31, 2003); (2) Florida fails to submit a plan to comply within 45 days of the report; (3) the Secretary files a report confirming that Florida has not delivered the plan; and (4) either the House or Senate Committee on Appropriations issues a written notice disapproving further expenditure of the funds. The conference report left intact both House and Senate committee report language regarding the Everglades. House committee report language accompanying the bill states that the Committee may divert the restoration funds to other uses if Florida does not meet its responsibilities under the Consent Decree ( H.Rept. 108-212 ). In addition, S.Rept. 108-105 states that water entering LNWR and ENP must meet state water quality standards and the phosphorus criterion throughout LNWR and ENP, as well as the Consent Decree requirements. This report also directs the EPA Administrator to send a report on these issues to the House and Senate Appropriations Committees, the House Transportation and Infrastructure Committee, and the Senate Environment and Public Works Committee. Provisions in these acts indicate that Congress has strong concerns about whether the State of Florida will meet the 2006 deadline to reduce phosphorus pollution in the Everglades. These laws may cause some to question the viability of the federal-state partnership which has guided Everglades restoration over the last decade. This view was supported in H.Rept. 108-212 , which stated that "The Committee is concerned that recent changes to the State of Florida's 1994 Everglades Forever Act represent a departure from the commitments and obligations of the State to improve the quality of the water entering the Everglades by December 31, 2006...." Some may also view these provisions as evidence of the federal government establishing oversight mechanisms to monitor state actions related to restoration. This could be interpreted as a departure from the status quo of federal-state cooperation to restore the Everglades. These provisions could also be significant for other large-scale ecosystem restoration projects that use the Everglades as a model, including similar federal-state cooperation, such as the CALFED Bay-Delta Program in California. The Appropriations Acts passed place conditions on different amounts of funding. The FY2004 Interior Appropriations affects FY2004 funding for the Modified Water Deliveries project as well as unobligated funds for that project, and $32 million in land acquisition funds. The Energy and Water legislation could affect $137.5 million in funding for the Central and Southern Florida Project, the Everglades and South Florida Ecosystem Restoration Project (also known as "Critical Projects"), the Kissimmee River Restoration, and CERP. While the Energy and Water legislation requires water entering LNWR and ENP to meet Consent Decree standards, the Interior legislation is broader, requiring water entering and water throughout LNWR and ENP to meet Florida water quality standards, Florida phosphorus criterion standards, and Consent Decree requirements. (Although Florida's phosphorus rule specifies that methodology laid out in the Consent Decree will be used to measure phosphorus in LNWR and ENP, it leaves the decision to Florida as to whether the criterion was violated.) The Interior legislation requires the waters to meet a broader set of standards, as state water quality standards will include limits on several substances besides phosphorus. Where water is measured (e.g., entering the land or throughout the land) may be significant as phosphorus levels can vary greatly depending on the point of measurement. Further, given the uncertainty surrounding nutrient measurements in the Everglades, it is uncertain if all state water quality standards can be measured and reported annually to comply with reporting requirements. Some stakeholders are concerned that delays or changes to related projects or CERP components may jeopardize CERP's feasibility. This concern was illustrated when land acquisitions for the Modified Water Deliveries Project were stalled due to litigation and protest over the use of eminent domain. According to the CERP authorization, without the completion of the Modified Water Deliveries Project, portions of CERP could not be funded according to federal law. Similarly, the delay or loss of funding, as provided in these appropriations bills for non-compliance with water quality standards, could also lead to delays in the overall restoration process. This Florida State Law, Chapter 2003-12, as amended (hereafter referred to as the Amended EFA) changes the Everglades Forever Act of 1994 (EFA; Florida Statutes SS373.4592) by authorizing a new plan to mitigate phosphorus pollution in the Everglades, known as the "Everglades Protection Area Tributary Basins Conceptual Plan for Achieving Long-Term Water Quality Goals Final Report" or Long-Term Plan. This report provides for a planning process to ensure that discharges of water into the Everglades will comply with state water quality standards and that phosphorus levels in these waters will not alter the native Everglades ecosystem. In contrast to the EFA, the new law contains provisions that appear to create flexibility in this goal. For example, the Long-Term Plan is to be implemented from 2003 to 2016 and is expected to "provide the best available phosphorus reduction technology"(SS3(b)). Further, the new law allows the Long-Term Plan to be changed through adaptive management, which may lead to changes in the implementation of phosphorus reduction activities and an extension of any compliance deadlines. The amended EFA does contain provisions that suggest the December 2006 deadline for meeting the phosphorus criterion is expected to be met. For example, the bill states that "by December 31, 2006, the department and the district shall take such action as may be necessary to implement the pre-2006 projects and strategies of the Long-Term Plan so that water delivered to the Everglades Protection Area achieves in all parts of the Everglades Protection Area state water quality standards, including the phosphorus criterion and moderating provisions" (SS3(b)). Note that this provision requires the implementation of projects and strategies by December 2006 to achieve the phosphorus criterion, but does not require the phosphorus criterion be met by 2006. The new law does not specify a particular date by which the phosphorus criterion must be met. The Long-Term Plan also specifies that a second 10-year phase (2017-2026) to reduce phosphorus may be necessary to achieve the Plan objective. The objective in the Plan is to obtain, to the maximum extent practicable, a long-term geometric average phosphorus concentration in waters discharged to the Everglades that is within the upper annual concentration limit of the criterion as calculated in the 2003 Everglades Consolidated Report . This mean has been defined by the Florida Department of Environmental Protection as 10 ppb over a 5-year period, with no single year going beyond 15 ppb. The Amended EFA has generated criticism from some stakeholders in the Everglades restoration effort. Some Members of Congress, environmentalists, the Miccosukee Tribe, and others argue that the bill allows phosphorus mitigation to extend far beyond a compliance deadline of December 2006 set by the EFA and the Consent Decree. Some critics also argue that if phosphorus mitigation is delayed, it may compromise the state and federal governments' efforts to restore the Everglades, as well as jeopardize federal appropriations for CERP. In a joint statement issued by six U.S. Representatives, five criticisms of the Amended EFA were listed: (1) there is an uncertain period for compliance with water quality standards; (2) there is uncertainty over the water quality standard for phosphorus discharge; (3) because of delays in phosphorus mitigation, discharges of phosphorus-polluted water may enter federal lands such as Everglades National Park; (4) this bill provides for discharges of phosphorus-polluted water in unpolluted dry areas; and (5) this bill does not reflect the state's intent to fully fund water quality improvements in the Everglades and may shift some of the cost to the federal government. Proponents of the new law, which include the Florida legislature and agricultural interests in the Everglades, claim that it provides a realistic opportunity for mitigating phosphorus pollution in the Everglades. Some claim that lowering the phosphorus concentration in the Everglades by December 2006 to 10 ppb may not be feasible considering the technology and implementation of restoration projects to date. Indeed, they argue that it is more cost-effective and productive to implement a substitute plan for the plan provided in the original EFA, as (1) some of the more expensive projects are aimed at waters which contribute relatively little phosphorus to the Everglades and (2) CERP projects incorporate water quality standards and call for diverting water away from the Everglades anyway. Under this new plan, they argue, CERP and state efforts to lower phosphorus will work together more efficiently, and that the 1994 law did not foresee the creation of CERP. They support a new plan for restoring water quality that incorporates adaptive management and the best technology available to reduce phosphorus. Further, some proponents argue that the new law will lead to fewer lawsuits and will allow restoration projects to proceed without delays from an excessive number of lawsuits. In response to critics of the amendments, a second set of amendments (Chapter 2003-394) was passed in June 2003 amending the EFA a second time. This second set of amendments deleted phrases that implied that phosphorus pollution was expected to be mitigated to the "maximum extent practicable," and included provisions that emphasized that projects planned for implementation prior to 2006 not be delayed. This amendment did not explicitly set a 2006 deadline, or any deadline, for phosphorus mitigation. Instead, this law provided for flexibility in the plan to mitigate phosphorus through an adaptive management process. The second set of amendments changed relatively few of the new provisions, and many of the same arguments criticizing and supporting the law remain. Phosphorus is one of the primary water pollutants in the Everglades and is generally thought to be caused by natural leaching, urban runoff, and agricultural runoff from sugar plantations, vegetable farms, and livestock operations (e.g., from animal waste). Some researchers have also attributed phosphorus in the Everglades to atmospheric deposition, but measurement techniques and values for this are highly uncertain. The 2003 Everglades Consolidated Report documents total phosphorus concentrations as being highest in the northern Everglades (waters flowing into LNWR and Water Conservation Areas; see Figure 1 ), and lowest in the southern Everglades, where ENP is located. The report states that this is indicative of phosphorus-rich water in the canals that carry water from the Everglades Agricultural Area, although urban runoff has also been identified as contributing phosphorus to the Everglades. In the Everglades, as in other ecosystems, excessive levels of phosphorus and other nutrients lead to eutrophication . Eutrophication is a natural process that occurs when bodies of water experience an increase in the inflow of nutrients, including phosphorus, leading to an increase in organic matter (e.g., plants in the case of the Everglades). When plants begin to die and decompose, they consume dissolved oxygen from the water. A rapid inflow of excessive nutrients can speed this process to an unnatural pace. If dissolved oxygen levels fall substantially and rapidly, fish and aquatic plant populations will suffer. Eutrophication also favors plants that can use high levels of nutrients. For example, excessive levels of phosphorus in the Everglades is thought to be the primary factor behind the conversion of native sawgrass marshes and sloughs to vegetation stands dominated by cattails. This shift in vegetation has resulted in less habitat for wading birds and other wildlife and reduced populations of several native plant species. Further, the rapid growth of cattails is partly responsible for clogging waterways and altering the hydrology in parts of the Everglades. The beginning of excessive phosphorus input into the Everglades can be traced back to the 1940s, when several thousand acres of land were cleared and converted to agricultural production. This clearing exposed soils, which began to erode and leach phosphorus into waterways that connected to the Everglades. Production intensified after the Cuban revolution in 1959, as Cuban exiles fled to Florida and established sugar plantations. By the mid-1960s, Florida sugar production had increased four-fold. Today, sugarcane production contributes two-thirds of the economic production of Everglades agriculture, and uses nearly 80% of the crop land in the Everglades Agricultural Area (EAA). (See Figure 1 .) Sugar production contributes phosphorus to the ecosystem primarily through fertilizers and to a lesser extent through decomposition of plants. Fertilizers and plant decomposition are also the main causes of phosphorus leaching from vegetable production. By the 1980s, the problem with phosphorus had gained visibility. In 1988, the federal government sued the South Florida Water Management District (SFWMD) and the Florida Department of Environmental Regulation, alleging that these agencies were not enforcing state water quality standards in ENP and the LNWR. State water quality standards at the time included a narrative criterion stating that nutrient concentrations in water should not cause an imbalance in natural populations of aquatic flora and fauna. After nearly three years of litigation, the parties reached a settlement in 1991 acknowledging that water entering LNWR did cause such an imbalance in violation of state water quality standards, and that water entering ENP from the state Water Conservation Areas also contained harmful levels of phosphorus. The settlement outlined the steps Florida would take to restore and maintain water quality, including: achieving specified interim phosphorus limits by 1997 and specified long-term phosphorus limits by 2002 (later extended to 2006) in the ENP and LNWR; establishing Stormwater Treatment Areas (STAs), which are large filtration marshes that would filter agricultural runoff from the EAA; and establishing a regulatory permit program requiring farmers to use Best Management Practices (BMPs) to reduce agricultural run-off (including phosphorus) from the EAA. The phosphorus limits established were different for LNWR and ENP. For example, by July 2002, water in the Shark River Slough in eastern ENP was supposed to meet phosphorus limits of less than 8 ppb (in a wet year) to less than 13 ppb (in a dry year). Water in LNWR was expected to meet phosphorus limits of 7 ppb (in a wet year) to 17 ppb (in a dry year) by July 2002. As part of the phosphorus reduction strategy, STAs and BMPs were expected to limit phosphorus in waters flowing from the EAA into LNWR to a long-term average of 50 ppb. This settlement agreement was entered as part of a Consent Decree in United States v. South Florida Water Management District (847 F. Supp. 1567) in 1992. Litigation ensued after the Consent Decree was reached. In 1994, Florida passed its EFA in an attempt to end lawsuits and administrative appeals generated from the settlement agreement. This Act provided the current framework for restoration efforts in Florida regarding water quality and phosphorus pollution. It differed from the Consent Decree in two important ways: (1) it covered state Everglades lands in addition to federal Everglades lands, and (2) it established a deadline for meeting state water quality requirements by December 31, 2006. The EFA also acknowledged that waters entering the Everglades contained an excessive level of phosphorus and provided for: (1) implementation of the Everglades Construction Project through the construction of six STAs; (2) monitoring and research programs in the EAA; (3) a mandate for the Florida Department of Environmental Protection (DEP) to propose a numerical phosphorus criterion and adopt a rule by December 31, 2003, with a default criterion of 10 ppb if this is not achieved; (4) creation of an agricultural privilege tax in the C-139 basin (agricultural area) and EAA; (5) the right of the SFWMD, to use funds from Florida's Preservation 2000 program to construct STAs; and (6) by December 31, 2006, the DEP and the SFWMD must take the necessary actions to ensure that water delivered to the EAA achieves state water quality standards and the phosphorus criterion. It also specified that the agricultural sector use BMPs to lower phosphorus runoff. Phosphorus mitigation by agriculture in the Everglades seems to be working. Some stakeholders point to this to justify added flexibility in reaching phosphorus mitigation goals. Due to BMPs and STAs, phosphorus loads in the Everglades have been decreasing. The 2004 Draft Everglades Consolidated Report by SFWMD states that the BMPs and STAs have reduced average total phosphorus discharges from the stormwater treatment areas to about 35 ppb of phosphorus (with a potential range of 25-45 ppb), compared to the interim goal of 50 ppb established by the 1994 Act. The report also states that these practices removed more than 1,400 tons of phosphorus that otherwise would have entered the Everglades. In 2003, the SFWMD Governing Board determined that meeting the deadlines in the original EFA (without integrating CERP projects with SFWMD projects) would require actions in addition to the STAs and BMPs, many of which would be costly--approximately $700 million--and possibly unnecessary once CERP components are in place. The board decided instead to recommend flexibility in achieving the phosphorus criterion to allow SFWMD projects to be integrated with CERP projects. Based on these concerns and a review of the reduced phosphorus levels in water discharged into the Everglades Protection Area, the board endorsed the Everglades Protection Area Tributary Basins Conceptual Plan for Achieving Long-Term Water Quality Goals Final Report or Long-Term Plan. This plan recommends an initial phase from 2003-2016 for achieving the 10 ppb threshold for phosphorus and a second phase of 2017-2023 if needed. The plan has three primary components, including (1) the implementation of structural and operational modifications to projects that aim to lower phosphorus levels in the Everglades (e.g., STAs) by December 2006; (2) optimization of water quality performance and integration with CERP by December 2006; and (3) adaptive management and resulting modifications and improvements to enhance water quality after December 2006. This plan formed the basis for Florida's amendments to the EFA in May 2003. The preceding history provides some context for the FY2004 appropriations provisions that restrict federal funding for Everglades restoration based on compliance with water quality standards. The following appendices provide further context in the form of (1) a historical timeline of efforts to address Everglades phosphorus pollution and (2) a side-by-side analysis of pending appropriations legislation. Appendix A. Timeline of Phosphorus Mitigation in Florida Appendix B. Comparison of Pending Legislation

Provisions in the FY2004 Energy and Water Development Appropriations Act ( P.L. 108-137 ) and the FY2004 Interior and Related Agencies Appropriations Act ( P.L. 108-108 ) restrict funding for restoration activities in the Florida Everglades if Florida does not achieve certain phosphorus mitigation and water quality standards in Everglades waters by 2006. The provisions also require several federal agencies to report whether Florida is meeting the deadline. If not, some provisions state that Congress may disapprove funding for some Everglades restoration projects, including some projects in the $7.8 billion Comprehensive Everglades Restoration Plan (CERP). (For more information, see CRS Report RS20702, South Florida Ecosystem Restoration and the Comprehensive Everglades Restoration Plan , by [author name scrubbed] and [author name scrubbed].) These provisions may represent a turning point in the 10-year federal-state partnership to restore the Everglades. Since 1993, the federal, state, tribal and local governments have generally worked together towards restoration. Congress has not previously conditioned federal Everglades funding on Florida taking specific actions towards restoration, both because of this partnership and because a federal Consent Decree and a state law (the Everglades Forever Act) set a deadline of 2006 for phosphorus mitigation. However, in spring 2003, the Florida legislature amended the Everglades Forever Act to extend the deadline until at least 2016. Phosphorus pollution has been a concern in the Everglades for many years. Excess phosphorus can cause imbalances in vegetation and habitat and alter native ecosystems. Much of this phosphorus is discharged in water from the Everglades Agricultural Area (EAA), which is located north of the Arthur R. Marshall Loxahatchee National Wildlife Refuge and the Everglades National Park. The EAA has been used intensively for farming, particularly sugar cane, since the 1950s. In 1988, the federal government sued the State of Florida and two of its agencies, alleging that water released onto federal lands from agricultural sources contained elevated levels of phosphorus and other nutrients in violation of state water quality standards. Based on a 1992 Consent Decree settling this lawsuit, Florida enacted the Everglades Forever Act in 1994. This act required the state to establish a numeric limit for phosphorus by December 2003 and required actions to comply with this limit by December 2006. The federal judge overseeing the Consent Decree later adopted the December 2006 deadline. In spring 2003, Florida amended the 1994 Act to create flexibility in meeting deadlines for phosphorus mitigation to 2016 or later, and in July 2003, Florida issued a rule establishing a limit for phosphorus of 10 parts per billion and methods to measure compliance with that limit. This report discusses the FY2004 appropriations provisions that condition federal funding for Everglades restoration on compliance with water quality standards, provides a side-by-side analysis of pending appropriations legislation, and provides background and a timeline of efforts to address Everglades phosphorus pollution. This report will be updated as events warrant.

Although the most recent figures for 2007 indicate a drop, the number of uninsured persons generally has grown during the past several years, as health care costs to consumers, employers, and the government have also grown. State legislators and policymakers have responded to these trends by proposing a spectrum of reforms to address concerns regarding coverage, cost, and other issues. State governments are in a unique position to impact the availability and affordability of health insurance. They are the primary regulators of this industry, and provide funding toward the coverage of millions of residents. States can be receptive to local economic, labor, and other conditions, and adopt policies tailored to their own needs. Given this, health reforms vary greatly from state to state. For instance, some states may pursue comprehensive reform, while others may design reform initiatives that are more narrow in scope. These more limited reform efforts may focus on a particular component of the health care system, such as the availability of private health insurance options, the delivery of health care, or public financing for health coverage. Reform strategies also vary in terms of the target stakeholder group (e.g., children) and policy lever used (e.g., tax code). This report identifies general approaches proposed at the state level to reform health insurance, and describes specific strategies to illustrate the breadth of possible reform options. It discusses a selection of current reform strategies; it is not meant to be inclusive of all health reforms. While the states have implemented a wide range of reforms to address concerns about both coverage and the health care delivery system, most health reform discussions focus primarily on health insurance. Under this broad policy area, coverage and cost concerns are paramount. The primary objective related to coverage is reducing the number of uninsured persons. Reforms may target a specific group (e.g., small businesses), or address the uninsured population as a whole. Cost reforms primarily address concerns about the affordability of health insurance for individuals, families, and employers. This typically results in policies that invest public resources to assist consumers and firms with the cost of health insurance. Below are general descriptions of select reform strategies that have been proposed or implemented at the state level. Since an all-inclusive analysis of state reforms is beyond the scope of this report, these descriptions include examples of both common and innovative initiatives to illustrate the breadth of reforms. The selected strategies reflect the current diversity of reform approaches, in terms of scope of reforms, policy levers used, and populations affected. The reform strategies have been identified according to targeted stakeholder groups: consumers, employers, purchasers of health coverage, and health plans. In addition, the report explores key design and implementation challenges related to coverage and cost, and provides a succinct state example for each reform strategy. State reforms that focus on consumers generally target vulnerable populations that make up a disproportionate share of the uninsured, such as low-income individuals and young adults. However, reform in this area may also be very broad and include all consumers, regardless of health status, family income, or other characteristic. An individual mandate is a requirement that all persons have health insurance coverage. Such a mandate may specify the source of that coverage, such as a government program or through an employer. Only Massachusetts currently has an individual mandate, but other states have included such a requirement in their reform proposals. For states that intend to achieve universal coverage, an individual mandate lends itself to such a goal. However, implementation of a mandate requires policies to address compliance and enforcement issues that are integral to the success of this reform strategy. Also, the effectiveness of this approach depends on the availability of insurance options to all persons who must meet this requirement. For example, unemployed adults with poor health status currently may not have any coverage options available to them, because they cannot get employment-based insurance, are ineligible for public programs, and private insurers deny them coverage based on pre-existing health conditions. Complying with an individual mandate may be difficult for low-income persons who find insurance unaffordable. States that have proposed an individual mandate usually also include subsides and/or exemptions for poor individuals. In the former situation, the cost to the government would increase to finance those subsidies. In the latter situation, exemptions defeat the intent of an individual mandate. Young adults make up a disproportionate share of the uninsured, compared to their representation in the overall population. Nearly half of all states have sought to address this issue by enacting laws to increase young adults' access to health coverage. Such laws typically require private health insurers to allow adult dependents to continue to be eligible for coverage under their family's health insurance policy, up to a specified age and under certain conditions, such as being unmarried or attending college. This reform approach could apply to a moderate share of the uninsured. However, its reach is limited given that the family would also have to have coverage in order for the dependent to benefit. Moreover, this is a temporary solution since the individuals would eventually age out of this benefit, regardless of their educational, marital, or other personal circumstances. Since the premium for a family policy typically does not vary with the number of dependents covered, this reform strategy would not affect the family's costs when purchasing insurance. However, if the cumulative impact of this reform results in more individuals with health coverage, that would likely lead to an increase in overall health care spending. Given that a majority of Americans obtain health insurance through the workplace, many states target employers in their coverage expansion efforts. Some states focus their work-based reforms on small firms, given the disadvantages that small firms face in obtaining private health coverage, compared with large firms. These disadvantages include limited ability to spread insurance risk, limited ability to leverage size to negotiate better benefits and lower premiums, no economies of scale, and a more transient, lower-wage workforce. Cafeteria plans are employer-established benefit plans under which employees may choose between receiving cash (typically additional take-home pay) and certain benefits (such as health insurance) without being taxed on the value of the benefits if they select the latter. Essentially, section 125 of the Internal Revenue Code provides a tax incentive to workers to obtain health coverage or other benefits. While this benefit is through the federal tax code, states have used cafeteria plans as a vehicle for making health insurance more affordable for workers. A handful of states require employers to establish section 125 plans to allow employees to buy insurance using pre-tax dollars. However, these states do not necessarily require employers to fund these plans once they have been established. Small firms typically are exempt from requirements to establish cafeteria plans. This reform strategy benefits only individuals who are employed and whose employer establishes cafeteria plans. Therefore, cafeteria plans have limited reach as a coverage strategy. Cafeteria plans allow individuals to buy coverage using pre-tax dollars. Because consumers are using money that is not taxed to buy insurance, they are in effect receiving a discount on the price of that insurance. On the flip side, the government "loses" tax revenue that it would have collected if those funds were in the form of take-home pay as opposed to benefits. An employer mandate typically refers to a requirement that employers provide health benefits to their employees and those employees' dependents. Such a mandate may allow exemptions for small firms, who find it more difficult to provide health benefits than large firms. Employer mandates may also encompass "pay or play" policies (also referred to as "fair share" laws), which require employers either to contribute to a fund to finance coverage provided through a public program, or provide health benefits to their workers. Currently, only Hawaii and Massachusetts have employer mandates in place, but several other states have proposed such a requirement in the recent legislative sessions. Requiring employers to insure their workforce may be the beginning steps to a universal coverage initiative, when paired with other related policies. However, there is ongoing debate whether a state may impose any kind of benefit requirement on employers. While states are the primary regulators of health insurance, the Employee Retirement Income Security Act of 1974 (ERISA) places the regulation of private- sector employee benefits (including health insurance) under federal jurisdiction. This leaves open the possibility of legal challenges to any state planning to implement an employer mandate. Costs related to complying with an employer mandate would be directly borne by employers. However, economic theory would argue that the additional costs would ultimately be borne by workers in the form of lower wages. Moreover, even with employer contributions toward a health care fund or health benefits to employees, individuals may still have to pay a premium to get coverage. And to the extent that the state would enforce compliance of this mandate, there are administrative costs and capacity issues related to enforcement. Some state reforms target both consumers and businesses as purchasers of health insurance. These reforms may attempt to address availability and cost concerns, as well as administrative burden issues. A health insurance connector or exchange is a clearinghouse that provides "one-stop shopping" for purchasers of insurance, typically individual consumers and small businesses. This entity generally offers a choice of insurance options, simplifies plan administration, and provides portable coverage that allows a person to remain covered regardless of life and work changes. It may also have other responsibilities, such as negotiating with plans regarding benefits and premiums, but fundamentally it functions as a "store" or "facilitator" that brings together health insurance carriers and purchasers. Massachusetts established a connector as part of its overall health reform plan, but a few others states have proposed creating one within the context of their reform initiatives. While a connector or exchange may provide additional insurance options to any given state resident, such options do not automatically lead to increased coverage by themselves. Questions regarding the value of benefits offered and affordability of insurance still apply. Through the clearinghouse function, a connector may reduce administrative costs, and through negotiations, it may be able to get favorable rates, but this is dependent on what other reforms and market rules have been enacted in any given state. In other words, these entities, in and of themselves, do not necessarily lead to significant reductions in premiums for those buying insurance through them. In order to make coverage more affordable, many states provide financial assistance to individuals and families for the purpose of buying health insurance, and businesses to encourage the provision of health benefits through the workplace. Assistance may be in the form of direct subsidies for premiums, or reimbursement through the tax system. For assistance to consumers, states may specify that subsidies be used to purchase only certain types of insurance, such as a policy in the nongroup market. For assistance to firms, states often focus on small businesses. Some states provide tax credits to small firms to encourage those firms to provide health benefits to their employees. Given that health insurance premiums have grown faster than wages and increasing numbers of people and businesses find coverage to be unaffordable, premium assistance addresses a primary reason why people are uninsured. However, subsidies do have their limits if they are tied to insurance options that are not available to everyone, or in every area. States may have to provide a generous subsidy to encourage either uninsured individuals to purchase coverage or small firms to offer coverage who otherwise would not. Depending on the scope of the coverage expansion, the cost to taxpayers for financing these subsidies may be large. This set of reform strategies focuses on what private insurance carriers may offer, how plans formulate premiums, how insurers conduct their business, and other requirements that states may impose on the insurance industry. The spectrum of issues addressed may target the benefit package (e.g., minimum benefit requirements), rating rules (e.g., community rating requirement), other access provisions (e.g., guaranteed issue), and cost-sharing limits (e.g., maximum out-of-pocket costs). In an effort to entice both small employers to offer coverage to employees and individuals to purchase insurance, many states have enacted legislation to allow insurance carriers to offer limited-benefit health plans, or established coverage programs that provide a limited set of benefits. Limited-benefit plan policies allow insurers to avoid all or some benefits mandated by the state. By decreasing the number of covered services, such policies may lead to a reduction in premiums. States may increase insurance options through limited-benefit plan policies, but value and affordability considerations still apply. For uninsured but otherwise healthy people, these policies may be an attractive option. However, persons with pre-existing health conditions may find little to no value in limited-benefit plans. Likewise, individuals with low incomes may still find such plans unaffordable. Existing studies have found that such plans do reduce premiums, but the overall impact varies both within and across states. That impact often depends on the specific mandates that no longer apply and any accompanying policies--such as premium subsidies or increased cost-sharing--which may be coupled with these plans. In the former example, a subsidy reduces the premium that a consumer pays, but there is a cost to the government. In the latter example, the consumer may pay a lower premium but at the expense of higher out-of-pocket costs once he/she uses services. Insurance carriers face the risk that the premiums they collect will not be sufficient to cover their expenses and generate profit, so they seek reinsurance to provide some protection from significant financial losses. Given that reinsurance is insurance for insurers, state reinsurance programs benefit carriers directly and consumers indirectly. The impact on coverage depends greatly on the premiums charged by carriers participating in the reinsurance program. Unless a reinsurance program requires participating insurers to reduce premiums in order to receive the reinsurance benefit, the insurer has complete discretion over what premiums will be, which directly affects the potential for coverage expansion. And because reinsurance benefits carriers directly, the subsequent impact on premiums (and consumers) varies. States may finance reinsurance programs through assessments on all insurers in that market, as well as general revenue and the collection of premiums from participating insurers. To compensate insurers that may end up enrolling a sicker, more expensive population, the state may withhold a portion of premiums collected and distribute those withholds at a later time according to the actual risk enrolled by each participating insurer (this concept is referred to as "risk adjustment"). The above-mentioned state reforms (and other strategies) are policy levers that are available to federal legislators and policymakers. But while state experiences provide some insight, they are not directly generalizable to the nation as a whole. The differences between state-level reform and national reform relate not only, or even primarily, to scope, but also involve fiscal and legal constraints, the regulatory environment, economic conditions, labor market supply, and other factors. The complexity of national reform poses unique challenges and opportunities. For example, each state sets regulatory standards with which insurance carriers licensed in their state must abide, such as benefit mandates, rating rules, and solvency standards. Some states establish very strict standards, others impose less restrictive requirements, and some not at all, depending on the regulatory area and segment of the health insurance market. Given that state laws and regulations vary, any new standard imposed nationwide would place unequal burden on insurance carriers, depending on which state they already operate in. On the other hand, only federal law applies to health coverage that is self-insured. Given that self-insured plans provide coverage to approximately half of all workers with health insurance, federal action is necessary if the objective is to apply health reforms broadly. In addition, while individual states have achieved some measureable successes in their efforts to expand coverage or make health insurance more affordable, those successes have had their limitations and trade-offs. For example, while Massachusetts has achieved near-universal coverage two years after enactment of comprehensive health reform, the costs associated with reform have exceeded initial estimates and long-term financing is an ongoing concern. Moreover, the increase in newly insured residents has highlighted a common feature in health care delivery in Massachusetts and other states: severe physician labor shortages, particularly in primary care. Overall, the Massachusetts experience exemplifies the eventuality that any national reform will involve consideration of trade-offs. And in the climate of limited resources, such consideration will necessitate priority setting.

States have taken the initiative to propose and enact health care reforms to address perceived problems related to health insurance coverage, health care costs, and other issues. These reform efforts vary in scope, intent, and target demographic group. While not all members of Congress agree in the need to reform health care, many have expressed interest in learning about these state efforts to inform ongoing debate at the national level. Each state has implemented a unique set of reform strategies to address concerns about health insurance and the health care delivery system. However, most health reform discussions, at both the state and federal level, focus primarily on insurance. Under this broad policy area, coverage and cost concerns are paramount. The primary objective related to coverage is reducing the number of uninsured persons. Related reforms may target a specific group, or address the uninsured population as a whole. Cost reforms primarily address concerns about the affordability of health insurance for individuals, families, and employers. This typically results in policies that invest public resources to assist consumers and firms with the cost of health insurance. This report identifies general approaches proposed at the state level to reform health insurance, and describes selected reform strategies. These descriptions are intended to be illustrative, not exhaustive. They include examples of both common and innovative initiatives to reflect the diversity of reform approaches, in terms of scope, policy levers used, and populations affected. The reform strategies have been identified according to targeted stakeholder groups: consumers, employers, purchasers of health coverage, and health plans. In addition, the report explores key design and implementation challenges related to coverage and cost, and provides a succinct state example for each reform strategy. This report will be updated as circumstances warrant.

The General Services Administration (GSA) is the federal government's primary civilian real property management agency with 11 regional offices that oversee GSA owned and leased properties across the nation. At the end of FY2012, GSA--through its real property office, the Public Buildings Service (PBS)--owned or leased 8,708 buildings with more than 422 million square feet of floor space, which represents about 12.6% of the government's 3.354 billion total building square footage. GSA's inventory includes offices, courthouses, and land ports of entry. Given the breadth of GSA's holdings, the agency is sometimes referred to as "the government's landlord." Until Congress enacted the Public Buildings Act in 1926, construction authority for each federal building was approved and funded in separate pieces of legislation. The 1926 act provided the basic authority for the construction of federal buildings through the congressional authorization and appropriation process. Congress later enacted the Public Buildings Act of 1949 to authorize the planning, site acquisition, and design of federal buildings located outside of Washington, DC, and for improvements to existing federal buildings. Congress also enacted the Federal Property and Administrative Services Act of 1949, which established the General Services Administration (GSA), and gave the GSA Administrator (Administrator) responsibility for administering federal real property. In 1954, Congress amended the Public Buildings Act of 1949 to authorize the Administrator to acquire titles to real property and to construct federal buildings through lease-purchase contracts. Under this procedure, a building was financed by private capital, and the federal government made installment payments on the purchase price in lieu of rent payments. Title to the property was vested in the federal government at the end of the contract period, which could range from 10 to 30 years. When authority for lease-purchase contracts expired in 1957, Congress approved a successor statute, the Public Buildings Act of 1959. The 1959 act re-established earlier requirements to provide for direct federal construction of public buildings through the congressional authorization and appropriation process. This act, as amended and re-codified over the years, remains the basic statute authorizing the Administrator to construct, own, lease, operate, maintain, and renovate buildings to serve civilian agencies of the federal government. Notably, while GSA works with many executive branch agencies and the judiciary to meet their space needs, it generally does not perform real property functions on behalf of the legislative branch. GSA is responsible for the design and construction of its buildings and courthouses, and for repairs and alterations to existing facilities, including those that are leased. As part of the President's annual budget submission to Congress, GSA requests funding for new construction projects, as well as for purchasing, renovating, and leasing existing properties. Congress authorizes appropriations for these projects, however, through the prospectus approval process, which is discussed below. Under the Public Buildings Act, as amended (PBA), GSA is required to submit a formal document, known as a prospectus, to the Senate Committee on Environment and Public Works and the House Committee on Transportation and Infrastructure (referred to throughout this report as the authorizing committees) as part of the process to authorize and appropriate funds for constructing, purchasing, leasing, or renovating real property. Each prospectus must include a brief description of the building to be constructed, altered, or leased; the building's location; an estimate of the maximum cost of the project; a statement by the Administrator that suitable space in existing government-owned buildings is not available; a statement of rents and other housing costs currently being paid by agencies that would occupy the newly constructed, renovated, or leased space; and an estimate of the future energy performance of the building. A prospectus is only required for projects with estimated costs that meet or exceed a specified amount, referred to as the prospectus threshold. Under authorities provided in 40 U.S.C. SS 3307, GSA establishes annual prospectus thresholds for four different types of real property activities. A description of each threshold is provided in Table 1 below. GSA has the authority to adjust these thresholds each year in order "to reflect a percentage increase or decrease in construction costs during the prior calendar year." GSA adjusts the thresholds based on the Building Cost Index of the Engineering News-Record , an industry trade journal published by McGraw-Hill. As noted, for each project that meets or exceeds the appropriate threshold, GSA must submit a prospectus to the authorizing committees. Each committee must pass a resolution approving the prospectus before the project is authorized to receive appropriations. The resolutions must only be approved at the committee level--floor action is not required. If an appropriation is not made within one year after the date the prospectus was approved, the committees may pass resolutions rescinding their approval. Congress appropriates funds for GSA's authorized construction and leasing projects each fiscal year through the Financial Services and General Government appropriations bill. Once a proposed project receives congressional funding--and not all authorized projects do--GSA's Public Buildings Service contracts with private sector firms for design and construction work. When leasing space, GSA searches for space that meets energy efficiency and renewable energy performance goals. In times of emergency or disaster--such as when a hurricane causes structural damage to a federal building--the normal prospectus thresholds and procedures are temporarily lifted to enable GSA to quickly find new space for displaced federal employees. To that end, GSA is authorized to enter into an emergency lease agreement without an approved prospectus during any period "declared by the President to require emergency leasing authority." Emergency leases may not exceed 180 days, however, without an approved prospectus. It is not uncommon for the cost of real property projects--particularly the construction of new buildings--to escalate as the project proceeds. GSA is required to resubmit an amended prospectus for congressional approval if the cost of the project exceeds the approved estimated maximum amount by more than 10%. The prospectus approval process provides Congress with an opportunity to exercise oversight of GSA's real property activities. With a multi-billion dollar budget and thousands of buildings under its control, GSA manages one of the government's largest and most diverse real property portfolios. Moreover, given its role as the procurer of space for numerous other agencies, congressional oversight of GSA's prospectus-level proposals has broad implications. In recent years, for example, GSA has submitted prospectuses to consolidate the headquarters of the Department of Homeland Security at the St. Elizabeth's Campus in Washington, DC; construct a new courthouse in Rockford, IL; and expand a land port of entry in San Diego, CA. These projects illustrate the central role GSA-controlled buildings often play in helping federal agencies fulfill their unique missions. The prospectus process provides an opportunity for Congress to assess how well GSA's proposals meet the needs of its clients and to reject those that it finds poorly conceived or unnecessary. Congress may also use the prospectus approval process to evaluate cost and space projections. It is not uncommon for GSA to estimate that a single real property project will cost hundreds of millions, or even billions of dollars. Poor project planning may result in cost escalation and unneeded space. The 33 courthouses built between 2000 and 2010, for example, included 3.56 million square feet of unneeded space, which in turn resulted in an additional $835 million in construction expenditures. This prompted Congress to ask the Government Accountability Office (GAO) to audit multiple courthouse construction and renovation projects to identify the origins of widespread cost overruns, and to hold hearings on how to address courthouse cost escalation. At a time when the debt and deficit are salient issues, prospectus approval may be considered an opportunity for Congress to control costs and avoid wasteful spending. The usefulness of the prospectus approval process as an oversight tool may be limited by data that are not available to authorizing committees. The lack of data that directly compare the cost of leasing versus owning space means that Congress is unable to determine whether it is being asked to approve the most cost-effective option for meeting an agency's real property needs. Similarly, the lack of data on the cost of alterations may prevent Congress from knowing the full costs associated with a particular lease prospectus. Oversight may also be limited by the number of real property projects for which prospectuses should be submitted as required by statute, but are not. One of the primary reasons GAO has listed federal real property management as a high-risk area since 2003 is that the government increasingly acquires space through leases rather than by constructing or purchasing buildings. Since 2008, GSA's portfolio has included more leased than owned space, even though leasing is often less cost effective, particularly if the space will be needed for long-term occupancy (20 years or more). One study of 27 long-term leases estimated that the government will spend $866 million more than it would have spent building or buying comparable space. Nonetheless, GSA's lease prospectuses do not include a comparison of the costs of leasing versus owning space over time, known as an alternative analysis. While GSA is not required by law to include an alternative analysis in its prospectuses, the absence of comparative cost data means Congress is making decisions without knowing whether a proposed lease is the most cost-effective option. The cost of leasing space is more than the sum of rent and operating expenses--in some cases, agencies need to alter leased space in order for it to meet the agencies' needs. An agency may determine, for example, that while the location and square footage are suitable, security features may need to be enhanced, technological capabilities upgraded, or conference rooms added. Such alterations are not necessarily included in the cost estimate of a lease prospectus because the actual building in which space will be leased has not been selected when GSA submits a prospectus. Typically, GSA first seeks authorization to enter into a lease and then identifies suitable space through a competitive process. Moreover, any investment in alterations will be lost if the agency moves to another location at the end of the lease term--a factor that may dissuade the agency relocating, even if a different property was less costly or otherwise more suitable. Alterations to leased space can add millions of dollars to the cost of the lease and affect agency decision-making, but authorizing committees may not know about them and thus not take them into consideration because they are not part of the prospectus. As noted, GSA is required by law to obtain congressional approval if a project exceeds its authorized cost estimate by more than 10%. This approval is obtained by submitting an amended prospectus with the new estimate to the House and Senate authorizing committees. For example, GSA submitted amended prospectuses for courthouse construction projects that exceeded their authorized cost estimates by more than 10%, as required. While the same rule applies to leased space, there is evidence that GSA does not consistently submit amended prospectuses when the cost of a previously authorized lease increased by more than 10%. Similarly, a prospectus must be submitted for leases that initially fell below the prospectus threshold--and therefore did not require congressional authorization--but which were amended so that the new cost of the lease exceeded the threshold. As with leases that increased in cost by more than 10%, auditors have identified multiple instances where GSA did not submit a prospectus for leases that exceeded the prospectus threshold after being amended. In an effort to make GSA's real property activities more cost effective and transparent, Representative Lou Barletta introduced H.R. 2612 , the Public Buildings Service Savings and Reform Act, on July 8, 2013. The legislation was co-sponsored by Delegate Eleanor Holmes Norton, Representative Bill Shuster, and Representative Nick Rahall. The bill was referred to the Committee on Transportation and Infrastructure, and then on July 9, to the Subcommittee on Economic Development, Public Buildings and Emergency Management. The following day, after committee markup, the committee ordered the bill to be reported; the subcommittee was discharged from further consideration of the bill. No further action has been taken. The bill would make numerous changes to the way that the Public Buildings Service (PBS)--the office within GSA responsible for real property management--constructs and leases space, reports on the size and cost of GSA's portfolio, and tracks administrative expenses, such as travel and conference costs. The provisions that relate specifically to the prospectus approval process are discussed below. Section 2(a) would require any prospectus that proposes new space, whether leased or owned, in fiscal years 2014, 2015, 2016, and 2017, to include the details of the elimination of at least an equal amount of space from GSA's inventory. The following paragraph, 2(b), does not apply to prospectuses but would prohibit GSA from increasing its leased or owned space when compared to its FY2012 inventory as a baseline. Section 2(a) therefore appears to establish a mechanism for Congress to verify that GSA is implementing the offset requirements of Section 2(b). Section 3(b) would prohibit GSA from entering into a lease that falls below the prospectus threshold but exceeds the "maximum rental rate established by the Administrator for the respective geographical location" unless GSA notifies the authorizing committees in writing at least 10 days before entering into the lease. This provision appears to codify existing GSA policy. In essence, the proposed language would prevent GSA from signing a lease where the rental rate would be greater than that paid for comparable properties in a geographic area. This language would apply specifically to leases that fall below the annual threshold and therefore do not have prospectuses approved by authorizing committees. This may suggest that the provision is intended to prevent GSA from paying above-market rental rates on smaller leases that have less oversight. Section 4(a) would require GSA to submit to the authorizing committees, by December 3 of each year, a list of all leases that it entered into during the previous fiscal year. The list must include, for each lease, its size, location, tenant agency, total annual rent, and authorized annual rent (for prospectus-level leases only). Section 5(3) would require GSA to include in all prospectuses, whether for construction, purchase, alteration, or lease of space, an explanation of why such space could not be obtained from existing unused space in federal properties. Section 13 would clarify that a project may not increase or decrease in scope or size by more than 10% unless an amended prospectus is submitted to, and approved by the authorizing committees. It would also require GSA to notify the authorizing committees, in writing, of any project that would increase in cost, or increase or decrease in scope or size beyond its authorized size or scope by 5% or more. If H.R. 2612 is enacted it could result in significant changes in GSA's management of real property, the most sweeping of which might be the offset of space requirements. These requirements, found in Section 2 of the bill, would prohibit GSA from increasing the size of its portfolio above its FY2012 level. Any proposal to build, lease, or purchase new space would have to be offset by an equivalent reduction in existing GSA space, and the details of that offset would have to be included in the project's prospectus. The government owns tens of thousands of properties with unused space--including approximately 11,600 buildings that are less than half-occupied--and GSA is currently required to first try to fill new space needs at those underutilized federal properties before constructing, purchasing, or leasing space from the private sector. H.R. 2612 would go further, mandating that GSA actually dispose of--rather than merely consider utilizing--unneeded federal building space as a condition of obtaining new space. The principle of offsetting space is consistent with current legislative proposals to streamline and accelerate the disposal of unneeded federal property. With regard to H.R. 2612 , the current disposal process presents a challenge of timing: statutory disposal requirements and local market conditions make it difficult to estimate how long it will take to dispose of a property. Agencies are required by statute, for example, to first offer to transfer unneeded property to other federal agencies that may need it, then offer to convey it to state or local governments and non-profits that might use it for a public benefit, such as a homeless shelter or medical center, and, finally, if the property was neither transferred nor conveyed, offer it for sale to the public. Each step can take weeks--or months--as properties are assessed by interested parties, applications are submitted and reviewed, and financial and legal terms established. Moreover, the condition of the building, the need for the kind of space that is available, and the cost of any required historical or environmental remediation are all local factors that could affect how long it takes to dispose of the property. Some properties may generate no interest at all. It is not clear how H.R. 2612 would take the unpredictable nature of disposition into account. The bill requires "the details of the elimination" of space, but it does not specify whether the space must have already been disposed of prior to the submission of the prospectus, or whether GSA would meet the offsetting requirement by providing a plan for disposing of equivalent space within a given timeframe. It is also not clear how Congress would track proposed disposals to ensure they are completed as detailed in the prospectus. Congress may consider requiring GSA to include in its Performance and Accountability Report or annual budget justification a list of the status of all offset activities approved through the prospectus process. A related provision of H.R. 2612 , the zero-space justification requirement, would also use the prospectus process to constrain the size of GSA's portfolio. By requiring GSA to justify, in its prospectuses, why it must obtain the space requested from a private landholder instead of a federal agency, the provision would increase transparency into GSA's decision-making. Currently, GSA is required to first consider acquiring space in underutilized federal buildings before looking to the private sector to lease or buy space, or to construct new buildings. It is not known how consistently it is undertaken or what criteria are evaluated when determining suitability. The bill does not establish what specific information should be included in the explanation, which could limit the usefulness of the prospectus as an oversight mechanism. GSA could simply state, for example, that there was no suitable space available given the tenant's requirements. Congress may wish to consider whether to require certain information, such as the criteria used to determine whether a federal property was suitable for the tenant, the properties evaluated, and the factors that disqualified each property from consideration. H.R. 2612 also includes provisions designed to monitor and control real property acquisition costs. As noted, project cost escalation has become a concern to many Members of Congress, highlighted by massive cost overruns among courthouse construction projects. The bill proposes a new requirement that may provide Congress with a "red flag" for projects at risk for significant cost escalation. This requirement--that GSA notify the authorizing committees in writing of any increase or decrease of more than 5% of the estimated maximum cost or scope or size of a project--may give Congress an opportunity to hold hearings and work with GSA to prevent further cost escalation. The 5% requirement also stipulates that GSA must provide an explanation of why a project's cost or size exceeds the amount authorized. The explanation may be useful in making revisions to the project management plan and preventing further escalation, but it also may help identify factors that contribute to escalation across projects. It was determined, for example, that courthouse costs often escalated because the method for calculating the amount of courtroom space needed was flawed, resulting in costly over-building, and GSA agreed to use a new asset management planning method for courthouses going forward. Quickly identifying the factors that drive cost escalation may allow GSA to take steps to prevent similar problems in other projects. A second cost containment measure in the bill would require GSA to notify the authorizing committees in writing before entering into certain leases that fall below the prospectus threshold. This provision would apply specifically to leases for which a prospectus is not required to be submitted and therefore have little congressional oversight. It reaffirms the principle that the government should obtain suitable space in the most cost-effective manner, regardless of the amount of funds involved. As policy, the bill would require GSA to ensure it is not paying above the local market rate for the type and amount of space being leased, even if the lease is below the prospectus threshold. With little data available on these leases, Congress may wish to request periodic audits from the GSA Inspector General or from GAO to (1) determine the extent to which GSA complies with the requirement and (2) estimate of the cost of leases that exceed local market rates. H.R. 2612 would require additional reporting on GSA leases. Much, but not all of the information the bill would require to be reported is already made available in spreadsheets on GSA's website. These lease inventory reports provide data on the size, address, tenant agency, and rental rate of GSA's leases--which represents four of the five data elements GSA would be required to report under H.R. 2612 . The one required data element that GSA does not currently report is the amount authorized for leases that exceed the prospectus threshold. GSA's inventory reports also differ from the requirements of H.R. 2612 in that they are issued monthly, rather than annually, and they include data on all of GSA's active leases, not just leases entered into during the previous fiscal year. However, given that the data required by the bill are either already being reported or should be readily accessible, there should not be significant burden placed on GSA in meeting these requirements. In addition, given the limitations on oversight discussed in this report, Congress may wish to consider whether to require GSA to provide additional data, either through the report mandated by H.R. 2612 or through GSA's monthly lease inventory reports. Congress may find it useful to know, for example, the projected and actual costs invested in each lease beyond rent (i.e., upgrades and renovations), whether the lease has increased 5% in cost or size beyond authorized parameters, whether GSA has notified the authorizing committees of this increase, whether the lease has increased 10% in cost or size beyond authorized parameters, and whether an amended prospectus has been approved. While GSA may be commonly referred to as "the government's landlord," it only controls approximately 422 million square feet in buildings, which represents about 12.6% of the government's 3.354 billion total building square footage. There may be oversight provisions that would be useful if they applied to all federal landholding agencies, or at least the 24 large agencies commonly referred to as the Chief Financial Officer Act (CFO Act) agencies, which control 3.302 billion square feet in federal buildings. There are several committees that are considering real property reform bills which share some of the core objectives of H.R. 2612 --reducing inventory, increasing transparency, and controlling costs--but which would apply to a broader range of federal landholders. Particular provisions that do not appear in these government-wide real property reform bills but that committees might consider incorporating could include the required offset of new space, zero-based space-justification, and additional cost-escalation warnings. By the same token, there may be provisions in active legislation which, if enacted, could provide mechanisms for implementing provisions of H.R. 2612 . Several bills propose increased public reporting of agency real-property data or providing public access to GSA's Federal Real Property Profile, an existing database which contains a great deal of information about owned and leased properties government-wide. A publicly accessible, government-wide real-property database, if established, might be able to incorporate additional information as proposed in H.R. 2612 , such as lease data, as well as data that are not specifically required by H.R. 2612 or other reform bills but which might be a valuable cost-assessment tool--an alternative analysis of all proposed leases which would compare the cost of leasing versus owning new space over a 20- or 30-year period.

The General Services Administration (GSA) controls more than 8,700 owned and leased buildings with 422 million square feet of floor space, which represents about 12.6% of the government's 3.354 billion total building square footage .Sometimes referred to as the "government's landlord," GSA has the authority to acquire, operate, and dispose of real property on behalf of other federal agencies, including the judiciary. Its portfolio includes courthouses, land ports of entry, and federal office space. Prior to seeking appropriations, GSA is required to obtain congressional authorization for constructing, purchasing, leasing, or renovating real property. To that end, GSA submits a prospectus to two committees--the Senate Committee on Environment and Public Works and the House Committee on Transportation and Infrastructure--for each proposal that exceeds $2.85 million. The prospectus provides detailed information about the project, including its location and estimated cost. By law, a project that exceeds the $2.85 million threshold may not receive appropriations unless both committees pass resolutions approving of the prospectus. While the prospectus process provides Congress an opportunity to evaluate GSA real property activities, oversight may be limited by data that are not available to the authorizing committees. GSA's prospectuses, for example, do not always include a comparison of the costs of leasing versus owning space over time, which means Congress is making decisions without knowing whether a proposed project is the most cost effective option. Similarly, many lease prospectuses do not include the cost of altering space to meet agency needs, such as upgraded security, which means authorizing committees may not be aware of the full costs of the projects they are considering. In addition, there are instances where GSA fails to submit prospectuses for projects that exceed the threshold. Several bills in the 113th Congress propose reforms to the real property process, particularly the process for disposing of unneeded buildings. Examples include the Excess Federal Building and Property Disposal Act (H.R. 328), the Federal Real Property Asset Management Reform Act (S. 1398), and the Civilian Property Realignment Act (H.R. 695 and S. 1715). Another bill, the Public Building Service Savings and Reform Act of 2013 (H.R. 2612) proposes changing the prospectus approval process. The bill would require GSA to include in its prospectuses a plan to offset any new space acquired by eliminating an equal amount of existing space from its inventory. It would also require GSA to ensure it is obtaining the best possible rental rate for leases that fall below the prospectus threshold. Other provisions would require GSA to provide the authorizing committees with an annual report listing all of the leases it entered into during the previous fiscal year; to notify Congress if a project's costs increased by 5% or more; and, when requesting authorization to acquire space, to explain why existing federal space could not be used. H.R. 2612 could mitigate several long-standing weaknesses in the prospectus process. The bill proposes to help control costs by ensuring that the authorizing committees have access to comparative cost data, and by requiring GSA to provide cost estimates of alterations associated with a new lease that are not included in the estimate of rent. In addition, H.R. 2612 might enhance oversight by requiring GSA to provide a more detailed justification for requesting new space, and to notify Congress when a project exceeds the cost and size parameters established in the prospectus. This report will be updated as events warrant.

This report analyzes the threat to U.S. security posed by the Al Qaeda organization. The State Department's report on international terrorism for 2004 deems the organization as "the most prominent component" of a global movement of Islamic militants that has "adopted the ideology and targeting strategies of [Al Qaeda founder Osama] bin Laden and other senior Al Qaeda leaders." This report will not analyze all Al Qaeda-inspired movements worldwide, but it will address Al Qaeda's relationship with some of its known affiliates. The primary founder of Al Qaeda, Osama bin Laden, was born in July 1957, the seventeenth of twenty sons of a Saudi construction magnate of Yemeni origin. Many Saudis are conservative Sunni Muslims, and bin Laden appears to have adopted militant Islamist views while studying at King Abdul Aziz University in Jeddah, Saudi Arabia. There he studied Islam under Muhammad Qutb, brother of Sayyid Qutb, the key ideologue of a major Sunni Islamist movement, the Muslim Brotherhood. Another of bin Laden's instructors was Dr. Abdullah al-Azzam, a major figure in the Jordanian branch of the Muslim Brotherhood. Azzam is identified by some experts as the intellectual architect of the jihad against the 1979-1989 Soviet occupation of Afghanistan, and ultimately of Al Qaeda itself; he cast the Soviet invasion as an attempted conquest by a non-Muslim power of sacred Muslim territory and people. Bin Laden went to Afghanistan shortly after the December 1979 Soviet invasion, joining Azzam there. He reportedly used some of his personal funds to establish himself as a donor to the Afghan mujahedin and a recruiter of Arab and other Islamic volunteers for the war. In 1984, Azzam and bin Laden structured this assistance by establishing a network of recruiting and fund-raising offices in the Arab world, Europe, and the United States. That network was called the Maktab al-Khidamat (Services Office), also known as Al Khifah ; many experts consider the Maktab to be the organizational forerunner of Al Qaeda. Another major figure who utilized the Maktab network to recruit for the anti-Soviet jihad was Umar Abd al-Rahman (also known as "the blind shaykh"), the spiritual leader of radical Egyptian Islamist group Al Jihad. Bin Laden apparently also fought in the anti-Soviet war, participating in a 1986 battle in Jalalabad and, more notably, a 1987 frontal assault by foreign volunteers against Soviet armor. Bin Laden has said he was exposed to a Soviet chemical attack and slightly injured in that battle. During this period, most U.S. officials perceived the volunteers as positive contributors to the effort to expel Soviet forces from Afghanistan, and U.S. officials made no apparent effort to stop the recruitment of the non-Afghan volunteers for the war. U.S. officials have repeatedly denied that the United States directly supported the volunteers. The United States did covertly finance (about $3 billion during 1981-1991) and arm (via Pakistan) the Afghan mujahedin factions, particularly the Islamic fundamentalist Afghan factions, fighting Soviet forces. By almost all accounts, it was the Afghan mujahedin factions, not the Arab volunteer fighters, that were decisive in persuading the Soviet Union to pull out of Afghanistan. During this period, neither bin Laden, Azzam, nor Abd al-Rahman was known to have openly advocated, undertaken, or planned any direct attacks against the United States, although they all were critical of U.S. support for Israel in the Middle East. In 1988, toward the end of the Soviet occupation, bin Laden, Azzam, and other associates began contemplating how, and to what end, to utilize the Islamist volunteer network they had organized. U.S. intelligence estimates of the size of that network was about 10,000 - 20,000; however, not all of these necessarily supported or participated in Al Qaeda terrorist activities. Azzam apparently wanted this "Al Qaeda" (Arabic for "the base") organization--as they began terming the organization in 1988--to become an Islamic "rapid reaction force," available to intervene wherever Muslims were perceived to be threatened. Bin Laden differed with Azzam, hoping instead to dispatch the Al Qaeda activists to their home countries to try to topple secular, pro-Western Arab leaders, such as President Hosni Mubarak of Egypt and Saudi Arabia's royal family. Some attribute the bin Laden-Azzam differences to the growing influence on bin Laden of the Egyptians in his inner circle, such as Abd al-Rahman, who wanted to use Al Qaeda's resources to install an Islamic state in Egypt. Another close Egyptian confidant was Dr. Ayman al-Zawahiri, operational leader of Al Jihad in Egypt. Like Abd al-Rahman, Zawahiri had been imprisoned but ultimately acquitted for the October 1981 assassination of Egyptian President Anwar Sadat, and he permanently left Egypt for Afghanistan in 1985. There, he used his medical training to tend to wounded fighters in the anti-Soviet war. In November 1989, Azzam was assassinated, and some allege that bin Laden might have been responsible for the killing to resolve this power struggle. Following Azzam's death, bin Laden gained control of the Maktab 's funds and organizational mechanisms. Abd al-Rahman came to the United States in 1990 from Sudan and was convicted in October 1995 for terrorist plots related to the February 1993 bombing of the World Trade Center in New York. Zawahiri stayed with bin Laden and remains bin Laden's main strategist today. The August 2, 1990 Iraqi invasion of Kuwait apparently turned bin Laden from a de-facto U.S. ally against the Soviet Union into one of its most active adversaries. Bin Laden had returned home to Saudi Arabia in 1989, after the completion of the Soviet withdrawal from Afghanistan that February. While back home, he lobbied Saudi officials not to host U.S. combat troops to defend Saudi Arabia against an Iraqi invasion, arguing instead for the raising of a " mujahedin "army to oust Iraq from Kuwait. His idea was rebuffed by the Saudi leadership as impractical, causing bin Laden's falling out with the royal family, and 500,000 U.S. troops deployed to Saudi Arabia to oust Iraqi forces from Kuwait in "Operation Desert Storm" (January 16 - February 28, 1991). About 6,000 U.S. forces, mainly Air Force, remained in the Kingdom during 1991-2003 to conduct operations to contain Iraq. Although the post-1991 U.S. force in Saudi Arabia was relatively small and confined to Saudi military facilities, bin Laden and his followers painted the U.S. forces as occupiers of sacred Islamic ground and the Saudi royal family as facilitator of that "occupation." In 1991, after his rift with the Saudi leadership, bin Laden relocated to Sudan, buying property there which he used to host and train Al Qaeda militants--this time, for use against the United States and its interests, as well as for jihad operations in the Balkans, Chechnya, Kashmir, and the Philippines. During the early 1990s, he also reportedly funded Saudi Islamist dissidents in London, including Saad Faqih, organized as the "Movement for Islamic Reform in Arabia (MIRA)." Bin Laden himself remained in Sudan until the Sudanese government, under U.S. and Egyptian pressure, expelled him in May 1996; he then returned to Afghanistan and helped the Taliban gain and maintain control of Afghanistan. (The Taliban captured Kabul in September 1996.) Bin Laden and Zawahiri apparently believed that the only way to bring Islamic regimes to power was to oust from the region the perceived backer of secular regional regimes, the United States. During the 1990s, bin Laden and Zawahiri transformed Al Qaeda into a global threat to U.S. national security, culminating in the September 11, 2001 attacks. By this time, Al Qaeda had become a coalition of factions of radical Islamic groups operating throughout the Muslim world, mostly groups opposing their governments. Cells and associates have been located in over 70 countries, according to U.S. officials. The pre-September 11 roster of attacks against the United States that are widely attributed to Al Qaeda included the following: In 1992, Al Qaeda claimed responsibility for bombing a hotel in Yemen where 100 U.S. military personnel were awaiting deployment to Somalia for Operation Restore Hope. No one was killed. A growing body of information about central figures in the February 1993 bombing of the World Trade Center in New York, particularly the reputed key bomb maker Ramzi Ahmad Yusuf, suggests possible Al Qaeda involvement. As noted above, Abd al-Rahman was convicted for plots related to this attack. Al Qaeda claimed responsibility for arming Somali factions who battled U.S. forces there in October 1993, and who killed 18 U.S. special operations forces in Mogadishu in October 1993. In June 1995, in Ethiopia, members of Al Qaeda allegedly aided the Egyptian militant Islamic Group in a nearly successful assassination attempt against the visiting Mubarak. The four Saudi nationals who confessed to a November 1995 bombing of a U.S. military advisory facility in Riyadh, Saudi Arabia claimed on Saudi television to have been inspired by bin Laden and other radical Islamist leaders. Five Americans were killed in that attack. The September 11 Commission report indicated that Al Qaeda might have had a hand in the June 1996 bombing of the Khobar Towers complex near Dhahran, Saudi Arabia. However, then director of the FBI Louis Freeh previously attributed that attack primarily to Saudi Shiite dissidents working with Iranian agents. Nineteen U.S. airmen were killed. Al Qaeda allegedly was responsible for the August 1998 bombings of U.S. embassies in Kenya and Tanzania, which killed about 300. On August 20, 1998, the United States launched a cruise missile strike against bin Laden's training camps in Afghanistan, reportedly missing him by a few hours. In December 1999, U.S. and Jordanian authorities separately thwarted related Al Qaeda plots against religious sites in Jordan and apparently against the Los Angeles international airport. In October 2000, Al Qaeda activists attacked the U.S.S. Cole in a ship-borne suicide bombing while the Cole was docked the harbor of Aden, Yemen. The ship was damaged and 17 sailors were killed. After the 1998 embassy bombings, the Clinton Administration began to exert pressure on Al Qaeda's host, the Taliban regime of Afghanistan. On August 20, 1998, two weeks after those attacks, the United States launched cruise missile strikes against an Al Qaeda camp in an attempt to hit bin Laden, but the strike apparently missed him by a few hours. In July 1999, President Clinton imposed a ban on U.S. trade with Taliban-controlled Afghanistan and froze Taliban assets in the United States. On December 19, 2000, U.N. Security Council Resolution 1333 banned any arms shipments or provision of military advice to the Taliban. The Clinton Administration also pursued a number of covert operations against bin Laden during 1999-2000, and the Bush Administration considered some new options prior to September 11, including arming anti-Taliban opposition groups. The September 11 attacks instilled greater urgency in the U.S. effort against Al Qaeda. Although U.S. officials say that the post-September 11 struggle against Al Qaeda uses all aspects of U.S. national power (legal, economic, diplomatic, as well as military), a cornerstone of the post-September 11 U.S. effort has been the military effort in Afghanistan. The U.S.-led war succeeded in ousting the Taliban regime there (December 2001) and replacing it with a pro-U.S., moderate government. Approximately 18,000 U.S. troops remain in and around Afghanistan, searching for remaining Al Qaeda and Taliban leaders and fighters. However, bin Laden and Zawahiri are not widely believed to be in Afghanistan proper; they reportedly escaped from their redoubt in the Tora Bora mountains (near the city of Khost) during the war and, according to most assessments, fled into Pakistan. Central Intelligence Agency paramilitary officers and other U.S. personnel (some as contractors) in Pakistan are dedicated to this search, assisting Pakistani forces and agents. Acting on the assumption that bin Laden and Zawahiri are in remote areas of Pakistan rather than in or around urban areas, in March 2004, Pakistan deployed about 70,000 troops against suspected Al Qaeda hiding places in the South Waziristan region, but failed to find the two, or any other major Al Qaeda figures. Current Pakistani military operations are centered around North Waziristan. There are very few indications of their whereabouts, but, in Time Magazine 's June 27, 2005 issue, Director of Central Intelligence Porter Goss said that the United States had an "excellent idea" where bin Laden was, but he did not specify any exact location. White House spokesman Scott McLellan subsequently clarified the Goss comment to reflect less certainty than Goss indicated. Some experts believe the two might be in settled areas, perhaps even a large Pakistani city. The videotaped statements by the two, released over the past six months, appear to demonstrate that they have access to technology and physical infrastructure. Many of the 15 top Al Qaeda operatives captured or killed since September 11--of the 37 such operatives identified after September 11--have been found in urban areas. These include number three leader Mohammad Atef, killed in Kabul, Afghanistan by U.S. Predator; September 11 planner Khalid Shaikh Mohammed, arrested by Pakistani agents near Rawalpindi; key recruiter and planner Abu Zubaydah, arrested by Pakistani agents in Faisalabad; September 11 plotter Ramzi bin al-Shibh, arrested by Pakistani agents in Karachi; and Abu Faraj al-Libbi, arrested by Pakistani forces near Peshawar in May 2005. Al Libbi is perceived as an operative who has risen in the organization since September 11, but some question al-Libbi's seniority and importance to recent Al Qaeda plotting. Other senior Al Qaeda leaders have been found outside Pakistan or Afghanistan. Hanbali (Riduan Isammudin), a key operative of Al Qaeda- affiliate Jemaah Islamiyah was arrested in Thailand. Abdul Ali al-Harithi, a key plotter, was killed by a U.S. Predator strike in Yemen. In the aggregate, since the September 11 attacks, about 3,000 suspected Al Qaeda members have been detained or arrested by about 90 countries, of which 650 are under U.S. control. Some other senior figures are apparently beyond U.S. reach. Al Qaeda spokesman Suleiman Abu Ghaith, operations planner Sayf al-Adl, and bin Laden's son Saad are believed to be in Iran. Iran has acknowledged publicly that it has some senior Al Qaeda figures "in custody"--without naming them specifically--but Iran has refused to transfer them to their countries of origin for interrogation and trial. Many doubt the degree of constraint, if any, that Iran has placed on them, and the Bush Administration has publicly alleged that the three were responsible for planning the May 2003 suicide attacks on a housing complex in Riyadh, Saudi Arabia. If true, this would suggest that the three are in contact with Al Qaeda operatives outside Iran. Some might argue that, if these three senior figures are able to communicate with bin Laden and Zawahiri, a major portion of the core of the Al Qaeda leadership as it existed on September 11, 2001 is still operating and possibly in control of ongoing operations. Those who take this view tend to believe that the United States should exert greater efforts to capture bin Laden and Zawahiri on the grounds that they remain pivotal leadership figures and that their capture would greatly deflate the organization. Another view is that the Al Qaeda organization, as it still exists, is less central to the overall Islamic terrorist threat faced by the United States than it was at the time of the September 11 attacks. Reflecting this view, the State Department report on terrorism for 2004 (p. 7) says, as do many experts, that: ... the core of al-Qa'ida has suffered damage to its leadership, organization, and capabilities...At the same time, al-Qa'ida has spread its anti-U.S., anti-Western ideology to other groups and geographical areas. It is therefore no longer only al-Qa'ida itself but increasingly groups affiliated with al-Qa'ida, or independent ones adhering to al-Qa'ida's ideology, that present the greatest threat of terrorist attacks against U.S. and allied interests globally. Al Qaeda's evolution since September 11 could change the nature of the threat posed by the organization. Many believe that the weakening of central direction renders Al Qaeda less able to conduct catastrophic attacks inside the United States because its diffusion limits its ability to orchestrate complicated, coordinated plots similar to the September 11, 2001 attacks. The Bush Administration asserts that the absence of attacks inside the United States since September 11 demonstrates that the main thrust of Administration policy is succeeding. However, it could be argued that more autonomous affiliates might be better able to adapt attacks to local conditions and goals, making them a major collective threat. Younger Al Qaeda figures, some of whom fled the Afghanistan battlefield, are said to be emerging as major planners, and these activists apparently see Al Qaeda as inspiration rather than as a structured organization. According to this view, bin Laden and Zawahiri are far less operationally relevant than they were at the time of September 11 and U.S. and allied counter-terrorist efforts might be better spent on countering the ideology that is promoted by Al Qaeda. Experts have advanced some ideas for doing so, including enhanced U.S. public diplomacy and stepped up efforts to engage moderate Islamic clerics in the Islamic world to enlist them in an effort to de-legitimize Al Qaeda's tactics. Some experts believe that Al Qaeda is not significantly more diffuse than it was prior to the September 11 attacks. Al Qaeda has always been more a coalition of different groups than a unified structure, many argue, and it has been this diversity that gives Al Qaeda global reach--the ability to act in many different places and to pose a multiplicity of hard-to-predict threats. In most cases, the degree of involvement, if any, by bin Laden, Zawahiri, or other known Al Qaeda leaders in the operations of these diverse groups has never been precisely known. Some major groups were part of the Al Qaeda coalition before September 11, and most remain active and still associated with Al Qaeda today, to varying degrees, are as follows: the Islamic Group and Al Jihad (Egypt). Zawahiri was the operational and political leader of Al Jihad before he "merged" it with Al Qaeda in 1998; the Armed Islamic Group and the Salafist Group for Call and Combat (Algeria); the Islamic Movement of Uzbekistan (IMU). This group has been less active since its military commander, Juma Namangani, was killed by a U.S. airstrike on fighters at Konduz, Afghanistan in November 2001; the Jemaah Islamiyah (Indonesia). This group allegedly was responsible for the attack on a Bali nightclub in October 2002 that killed 180 persons; the Libyan Islamic Fighting Group (Libyan opposition); and Harakat ul-Mujahedin, Jaish-e-Mohammad, Lashkar-e-Tayyiba, and Lashkar-e-Jhangvi (Kashmiri militant groups based in Pakistan); and Asbat al-Ansar (Lebanon). Since the September 11 attacks, some other Al Qaeda affiliates have been established or publicly identified, and they have been active. One notable example is the Al Qaeda Jihad Organization in Mesopotamia, headed by Abu Musab al-Zarqawi, a 38-year-old Jordanian Arab who reportedly fought in Afghanistan. The group, which is designated as a Foreign Terrorist Organization (FTO), consists of foreign volunteers fighting alongside Iraqi insurgents against U.S.-led and Iraqi forces. It is an offshoot of another group called Ansar al-Islam, which is named as an FTO, and was based in Kurdish-controlled northern Iraq prior to the U.S.-led war to oust Saddam Hussein. Ansar al-Islam, which consists of both Islamist Kurds and Arabs, is said to be continuing to operate in Iraq under the banner of a group called Ansar al-Sunna, although some see this as a distinct group. Although Zarqawi reputedly sees himself as a potential leader of Islamic forces in his own right, in 2004 he formally swore fealty to bin Laden and affiliated with Al Qaeda. Some maintain that Zarqawi is successfully stoking Muslim opposition to the U.S. intervention in Iraq to recruit Muslim fighters not only for combat in Iraq, but possibly also for terrorist operations in other Western countries and in other Middle Eastern countries, including his native Jordan. In this view, which reportedly is shared by the Central Intelligence Agency in a recent assessment, the U.S. involvement in Iraq has strengthened rather than weakened groups connected to or influenced by Al Qaeda. The reputed CIA assessment says that Iraq is now playing a role similar to that of Afghanistan during the Soviet occupation - a training ground for Islamic militants who might travel elsewhere after the Iraq conflict winds down. Zarqawi's formal affiliation with bin Laden gives some support to the view that the remaining Al Qaeda leaders might be trying to rebuild the organizational structure of Al Qaeda before its leadership was ousted from Afghanistan in late 2001. A range of other terrorist groups that have not been formally named as Foreign Terrorist Organizations are associated with Al Qaeda, according the State Department. These groups, either in partnership with Al Qaeda or on their own, are attempting to destabilize established regimes in the region. These include the Islamic Army of Aden (Yemen), and Hizb-e-Islam/Gulbuddin), named after radical Afghan faction leader Gulbuddin Hikmatyar. The latter group is fighting against the government of President Hamid Karzai, the leader of post-Taliban Afghanistan. Another such pro-Al Qaeda organization is the Moroccan Islamic Combatant Group, which allegedly was responsible for a suicide bomb attack against five sites in Casablanca killing about 40 people in May 2003. According to the State Department report for 2004 (p.52), Spanish authorities are also investigating the possibility that members of the group were behind the March 11, 2004 bombings of commuter trains in Madrid, which killed 191 persons. Another group, "Al Qaeda in the Arabian Peninsula," is believed to consist of Al Qaeda or pro-Al Qaeda fighters seeking to overthrow the ruling Al Saud family in Saudi Arabia. The faction has claimed responsibility for the December 6, 2004 attack on the U.S. consulate in Jeddah. It also was allegedly responsible for two car bombs that exploded outside the Interior Ministry in Riyadh on December 29, 2004. Saudi counter-efforts have generally been effective, reducing the frequency of attacks in Saudi Arabia in recent months. In 2004, Saudi security forces capture or killed all but seven of its 26 most-wanted terrorists, including the leader of the faction, Abd al-Aziz al-Muqrin, who was killed in a raid in June 2004. Al Qaeda in the Arabian Peninsula is not named as an FTO and is not analyzed separately in the 2004 State Department report on international terrorism. Depending on the outcome of investigations, some of the bombings and attempted bombings of the London transportation system in July 2005 might support the belief in the Administration and among some outside experts that there is a growing Al Qaeda presence in East Africa. Two of the suspects arrested in the failed July 21 bombings were of East African origin, and there had been longstanding fears among Western intelligence agencies that Al Qaeda might be recruiting or controlling cells consisting of East Africans for operations in Europe or elsewhere. Al Qaeda was allegedly responsible for the bombing of an Israeli-owned hotel and the related firing (and near miss) of shoulder-fired missiles at an Israeli passenger aircraft, both in Mombasa, Kenya in November 2002. Reflecting Administration fears about Al Qaeda's expansion in Africa, the U.S. military has begun a program to train the militaries of nine African nations to prevent infiltration by terrorist groups, particularly Al Qaeda. It is not yet known to what extent, if any, the July 21 bombers might have had links to the bombers who set off the July 7 explosions in London that killed 52 persons. Some of those alleged perpetrators (who died in the bombings) were British-born but of South Asian origin, but some press reports indicate that the July 7 and the July 21 bombers might have visited Pakistan simultaneously, suggesting a possible tie between them and perhaps to the Al Qaeda leadership that is thought to be in Pakistan. A claim of responsibility for the July 7 attacks came from a previously little known group called "The Secret Organization of Al Qaeda in Europe," a name that suggest some linkage to or affinity with Al Qaeda. Two days after the failed July 21 London attacks, suicide bombers in Sharm el-Sheikh, Egypt killed 88 in attacks on a hotel district; an investigation is under way to determine linkages, if any, of those attacks to Al Qaeda, to radical Islamist groups in Egypt, or to October 2004 bombings in Taba, Egypt that killed 34 persons. The assessment of the degree and character of the threat posed by the Al Qaeda organization might suggest strategies for combating it. Those who believe that Al Qaeda as an organization is marginal to the overall global Islamist threat might focus on such policy objectives as addressing regional conflicts, promoting democracy in the Arab world, cooperating with regional governments to prevent terrorism financing and terrorist infiltration, and improving public diplomacy to better explain U.S. policies in the Middle East. On the other hand, some who believe that Al Qaeda remains central to the Islamist terrorism threat might tend to recommend policies that focus on finding, combating, and arresting Al Qaeda leaders and operatives that are still at large. Many believe that, no matter the structure and capabilities of Al Qaeda, stabilizing Iraq will likely be crucial to reducing the recruitment of militants willing to conduct acts of terrorism against the United States and its allies. Others believe that the Al Qaeda and global Islamic terrorist threat is difficult to assess, no matter how much intelligence is shared and gathered, and that combating Al Qaeda and its affiliates abroad could have only partial success. Those who take this view tend to believe that U.S. counter-efforts should focus more intently on homeland security, stressing such measures as improving airline security, establishing enhanced security measures for passenger train travel, and expanding security of U.S. ports. Some tend to favor additional powers for law enforcement to investigate potential Islamist cells in the United States. The latter suggestions often trigger debate from civil liberties and American Muslim organizations who believe that such measures will inevitably impinge on the civil liberties of Arab and Muslim Americans through profiling and other investigative techniques.

There is no consensus among experts in and outside the U.S. government about the magnitude of the threat to U.S. national interests posed by the Al Qaeda organization. Virtually all experts agree that Al Qaeda and its sympathizers retain the intention to conduct major attacks in the United States, against U.S. interests abroad, and against Western countries. In assessing capabilities, many believe that the Al Qaeda organization and its leadership are no longer as relevant to assessing the global Islamic terrorist threat as they were on September 11, 2001. Some believe U.S. and allied counter efforts have weakened Al Qaeda's central leadership structure and capabilities to the point where Al Qaeda serves more as inspiration than as an actual terrorism planning and execution hub. According to this view, the threat from Al Qaeda has been replaced by a threat from a number of loosely affiliated cells and groups that subscribe to Al Qaeda's ideology but have little, if any, contact with remaining Al Qaeda leaders. Those who take this view believe that catastrophic attacks similar to those on September 11, 2001 are unlikely because terrorist operations on that scale require a high degree of coordination. An alternate view is that the remaining Al Qaeda leadership remains in contact with, and possibly even in control of numerous Islamic militant cells and groups that continue to commit acts of terrorism, such as the July 7, 2005 bombings of the London underground transportation system. According to those who subscribe to this view, Al Qaeda as an organization has not been weakened to the degree that some Administration officials assert, and the global effort against Islamic terrorism would benefit significantly from finding and capturing Al Qaeda founder Osama bin Laden and his top associate, Ayman al-Zawahiri. Subscribers to this view believe that a coordinated attack on the scale of September 11 should not be ruled out because the remaining Al Qaeda structure is sufficiently well-organized to conduct an effort of that magnitude. This paper will focus on the Al Qaeda organization and its major affiliates, but not the full spectrum of like-minded Islamist cells or groups that might exist. This report will be updated as warranted by developments. See also CRS Report RL32759, Al Qaeda: Statements and Evolving Ideology, by [author name scrubbed].

The 2016 U.S. presidential election drew much attention to the country's trade policies as candidates advanced trade proposals intended to improve the economy and the terms of certain trade agreements. These proposals raise questions about the President's authority to act unilaterally in this area, especially his ability to impose tariffs on imported goods from certain countries, and continue to prompt debate post-election. While tariffs fell out of favor in international trade negotiations by the 1970s, the 2016 election cycle brought renewed consideration of the use of tariffs as a means to aid U.S. businesses. An understanding of the constitutional and statutory underpinnings of the tariff-making power, a cognizance of the role of tariffs in U.S. trade law over time, and an examination of the evolution of related trade legislation are necessary to evaluate any future executive actions with regard to U.S. trade policy. In this vein, this report describes the constitutional framework establishing Congress's tariff powers, as well as the President's authority to act pursuant to specific legislation from Congress. It then provides examples of statutory provisions that delegate tariff powers to the President. Finally, it concludes with an overview of how the President's exercise of his delegated tariff powers may be challenged in the courts. Article I of the Constitution gives Congress the "Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States," and "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." Thus, Congress is constitutionally authorized to raise revenue through taxes, tariffs, duties, and the like, and to regulate international commerce. As with all of its express constitutional powers, Congress has the accompanying authority to "make all Laws which shall be necessary and proper for carrying into Execution" these powers. Under Article II of the Constitution, the President has the "Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur." The Constitution, however, assigns no specific power over international commerce and trade to the President. In other words, under the Constitution, the President has the authority to negotiate international trade agreements, but Congress has sole authority over the regulation of foreign commerce and the imposition of tariffs. Thus, because the President does not possess express constitutional authority to modify tariffs, he must find authority for tariff-related action in statute. Prior to the early 1930s, Congress itself usually set tariff rates for imported products. In 1934, Congress for the first time expressly delegated to the President the authority to reduce tariffs in the Reciprocal Tariff Act. This authority, however, was limited by statutorily prescribed time periods within which the President could exercise such power, and was subject to periodic review and renewal. From 1934 until 1974, Congress continued to enact legislation delegating some authority to the President to negotiate tariff rates with other countries within pre-approved levels, and to implement agreed-upon tariff rates through proclamation, rather than through congressional legislation. As the focus of international trade negotiations shifted from the imposition of tariffs to other non-tariff barriers to trade, such as antidumping duties, Congress was less inclined to authorize the President to implement these non-tariff measures by presidential proclamation. Instead, in the Trade Act of 1974, Congress provided for legislative implementation of international trade agreements under an expedited legislative procedure, now known as trade promotion authority, so long as certain criteria were met. Over the past few decades, Congress has continued to enact various provisions governing the negotiation and implementation of trade agreements, including free trade agreements, but has not delegated to the President a general authority to modify tariff rates outside of the confines of particular trade agreements or the trade promotion authority framework. Congress's delegations of tariff and other international trade-related powers to the President through legislation have been worded in various ways. A non-exhaustive list of sample statutory provisions that delegate some authority to the President to take trade-related action follows. What can be culled from these examples is that most of the provisions require the President to make some threshold finding or determination before he may take some circumscribed trade-related action to counteract his finding. For example, under the International Emergency Economic Powers Act of 1977, certain importation/exportation powers were given to the President if he first "declares a national emergency ... to deal with an unusual and extraordinary threat." Similarly, in the Trade Expansion Act of 1962, if the Secretary of Commerce determines that "an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security," then the President is authorized to take certain "actions necessary to adjust the imports of such article." More recent statutes frequently begin with the word "Whenever" to set out this threshold determination before delineating the specific authority given to the President. As the following list illustrates, these delegations of power are usually accompanied by clearly defined conditions and frequently include time restrictions. Trading with the Enemy Act of 1917 SS 5(b)(1)(B) : 22 "During the time of war, the President may ... investigate, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest, by any person, or with respect to any property, subject to the jurisdiction of the United States." This is an example of a fairly broadly worded authority that can be exercised only "[d]uring the time of war." Tariff Act of 1930 SS 338(a) : 23 "The President when he finds that the public interest will be served shall by proclamation specify and declare new or additional duties as hereinafter provided upon articles wholly or in part the growth or product of, or imported in a vessel of, any foreign country whenever he shall find as a fact that such country--(1) Imposes, directly or indirectly, upon the disposition in or transportation in transit through or reexportation from such country of any article wholly or in part the growth or product of the United States any unreasonable charge, exaction, regulation, or limitation which is not equally enforced upon the like articles of every foreign country; or (2) Discriminates in fact against the commerce of the United States...." Trade Expansion Act of 1962 SS 232(b)-( c) : 24 If the Secretary of Commerce "finds that an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security," then the President is authorized to take "such other actions as the President deems necessary to adjust the imports of such article so that such imports will not threaten to impair the national security" (subject to certain procedural requirements). Trade Act of 1974 SS 122 : 25 "Whenever fundamental international payments problems require special import measures to restrict imports--(1) to deal with large and serious United States balance-of-payments deficits, (2) to prevent an imminent and significant depreciation of the dollar in foreign exchange markets, or (3) to cooperate with other countries in correcting an international balance-of-payments disequilibrium, the President shall proclaim, for a period not exceeding 150 days (unless such period is extended by Act of Congress)--(A) a temporary import surcharge, not to exceed 15 percent ad valorem, in the form of duties (in addition to those already imposed, if any) on articles imported into the United States; (B) temporary limitations through the use of quotas on the importation of articles into the United States; or (C) both a temporary import surcharge described in Subparagraph (A) and temporary limitations described in subparagraph (B)." This example clearly expresses a time period restriction ("for a period not exceeding 150 days") and the permissible tariff range ("not to exceed 15 percent ad valorem"). This section also authorizes the President "to proclaim, for a period of 150 days (unless such period is extended by Act of Congress)--(A) a temporary reduction (of not more than 5 percent ad valorem) in the rate of duty on any article; and (B) a temporary increase in the value or quantity of articles which may be imported under any import restriction, or a temporary suspension of any import restriction." Trade Act of 1974 SS 123(a) : 26 "Whenever--(1) any action taken [that is related to relief from injury caused by import competition, the enforcement of U.S. rights under trade agreements, or the trade relations with countries not receiving nondiscriminatory treatment occur]; or (2) any judicial or administrative tariff reclassification that becomes final after August 23, 1988; increases or imposes any duty or other import restriction, the President ... may proclaim such modification or continuance of any existing duty, or such continuance of existing duty-free or excise treatment, as he determines to be required or appropriate to carry out any such agreement." Trade Act of 1974 SS 301 : 27 Delegates authority to the Executive to modify certain tariff rates when "the rights of the United States under any trade agreement are being denied" or "an act, policy, or practice of a foreign country ... (i) violates, or is inconsistent with, the provisions of, or otherwise denies benefits to the United States under, any trade agreement, or (ii) is unjustifiable and burdens or restricts United States commerce." Trade Act of 1974 SS 501 : 28 "The President may provide duty-free treatment for any eligible article from any beneficiary developing country in accordance with the provisions of this subchapter" after considering certain conditions. This is an example of a statute authorizing the President to grant certain duty preferences. International Emergency Economic Powers Act of 1977 SS 203(a)(1)(B) : 30 If the President "declares a national emergency" "to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States" under Section 202(a) (50 U.S.C. SS1701(a)), "the President may ... investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States." In exercising this power, Section 204 (19 U.S.C. SS1703) specifies that "The President, in every possible instance, shall consult with the Congress before exercising any of the authorities granted by this chapter and shall consult regularly with the Congress so long as such authorities are exercised." North American Free Trade Agre ement Implementation Act SS 201(a)(1) (1993) : 31 "The President may proclaim--(A) such modifications or continuation of any duty, (B) such continuation of duty-free or excise treatment, or (C) such additional duties, as the President determines to be necessary or appropriate to carry out or apply [specified] articles ... of the Agreement." This is an example of an Agreement-specific delegation that allows the President to act within the confines of the Agreement. North American Free Trade Agreement Implementation Act SS 201(b)(1) (1993) : 32 "[T]he President may proclaim--(A) such modifications or continuation of any duty, (B) such modifications as the United States may agree to with Mexico or Canada regarding the staging of any duty treatment set forth in Annex 302.2 of the Agreement, (C) such continuation of duty-free or excise treatment, or (D) such additional duties, as the President determines to be necessary or appropriate to maintain the general level of reciprocal and mutually advantageous concessions with respect to Canada or Mexico provided for by the Agreement." This is another example of an Agreement-specific delegation that allows the President to act within the confines of the Agreement. Uruguay Round Agreements Act SS 111(a) (1994) : 33 "[T]he President shall have the authority to proclaim--(1) such other modification of any duty, (2) such other staged rate reduction, or (3) such additional duties, as the President determines to be necessary or appropriate to carry out Schedule XX." This is another example of an Agreement-specific delegation that allows the President to act within the confines of the Agreement. Dominican Republic-Central America Free Trade SS 201(a) (2005 ) : 34 "The President may proclaim--(A) such modifications or continuation of any duty, (B) such continuation of duty-free or excise treatment, or (C) such additional duties, as the President determines to be necessary or appropriate to carry out or apply [specified] articles ..., and [specified] Annexes ... of the Agreement." This is an example of limited tariff-reduction authority under the implementing legislation of a free trade agreement, and is another example of an Agreement-specific delegation that allows the President to act within the confines of the Agreement. Bipartisan Congressional Trade Priorities and Accountability Act of 2015 SS 103(a) : 35 "Whenever the President determines that one or more existing duties or other import restrictions of any foreign country or the United States are unduly burdening and restricting the foreign trade of the United States and that the purposes, policies, priorities, and objectives of this chapter will be promoted thereby, the President ... may ... proclaim--(i) such modification or continuance of any existing duty, (ii) such continuance of existing duty-free or excise treatment, or (iii) such additional duties, as the President determines to be required or appropriate to carry out any such trade agreement.... The President shall notify Congress of the President's intention to enter into an agreement under this subsection." This authority is subject to the following restrictions: "No proclamation may be made under paragraph (1) that--(A) reduces any rate of duty (other than a rate of duty that does not exceed 5 percent ad valorem on June 29, 2015) to a rate of duty which is less than 50 percent of the rate of such duty that applies on June 29, 2015; (B) reduces the rate of duty below that applicable under the Uruguay Round Agreements or a successor agreement, on any import sensitive agricultural product; or (C) increases any rate of duty above the rate that applied on June 29, 2015." This act is the most recent example of trade promotion authority legislation, but also includes tariff-modifying authority with set ranges and timelines. When the President exercises trade-related powers delegated to him by Congress, his actions might be challenged in court. Certain legal issues commonly emerge from such challenges, including whether the federal courts have jurisdiction to review the President's exercise of delegated power, and, if so, which court; whether Congress's delegation of power was constitutional; whether a President's course of action falls within the scope of the specific powers delegated to him by Congress; and whether the action taken by the President bears a reasonable relation to the power delegated. The following discussion of court challenges to presidential proclamations highlights how the courts have addressed these issues. As a threshold matter, a court must determine whether it has jurisdiction to review a challenge to a presidential proclamation issued pursuant to a congressional delegation of power. In Cornet Stores v. Morton , a case involving a challenge to a presidential proclamation that imposed a 10% surcharge duty on certain imported merchandise in light of a declared national emergency, the plaintiffs sought recovery of the import surcharges they had paid, relying on the jurisdictional provisions of the Trading with the Enemy Act of 1917. Both the district court and the U.S. Court of Appeals for the Ninth Circuit dismissed the matter, finding it fell within the exclusive jurisdiction of the former Court of Customs and Patent Appeals Court (Customs Court), which has since been replaced at the trial level by the U.S. Court of International Trade (CIT). Thus, a challenge to a trade-related presidential proclamation may need to be filed at a specific court like the CIT. The CIT's jurisdictional statute vests that court with jurisdiction over certain challenges to presidential proclamations issued under trade-related powers delegated to the Executive by Congress. Indeed, today, with some exceptions, challenges to presidential proclamations involving tariffs and other trade-related issues are filed at the CIT, with appeals going to the U.S. Court of Appeals for the Federal Circuit (Federal Circuit). The following describes a few such challenges. In U.S. Cane Sugar Refiners' Association v. Block , an association of sugar refiners brought a challenge to a presidential proclamation that imposed quotas on the importation of sugar into the United States. The proclamation was issued under Section 201 of the Trade Expansion Act of 1962. The government argued that the CIT lacked jurisdiction over the challenge because the Association had not followed the statutory scheme of the Tariff Act, which requires that parties exhaust their options at the administrative agency level before turning to the courts. The CIT found, however, that such an exercise would require the plaintiff "to attempt to import over-quota sugar simply in order to obtain a protestable exclusion of the merchandise ... before seeking judicial review of the validity of the proclamation imposing the quota in a suit for injunctive and declarative relief." Determining that exhaustion was an unreasonable requirement in light of the need for "expeditious resolution" of this case, the court exercised jurisdiction after concluding the Association had no other remedy reasonably available to it. On appeal, the former Customs Court affirmed the CIT's exercise of jurisdiction over the case in a footnote: Respecting jurisdiction ..., we note the provision of injunctive powers to the [CIT] in the Customs Courts Act of 1980 and the special circumstances of this case which, absent that provision, would have required Association to present its case to the District Court. We are persuaded that in this case, involving the potential for immediate injury and irreparable harm to an industry and a substantial impact on the national economy, the delay inherent in proceeding under [the usual route requiring the exhaustion of remedies at the administrative level] makes relief under that provision manifestly inadequate and, accordingly, the court has jurisdiction in this case under [19 U.S.C.] SS 1581(i). More recently, however, the CIT declined to exercise its jurisdiction over a challenge to a presidential proclamation. In Michael Simon Design, Inc. v. United States , the plaintiffs challenged a presidential proclamation adopting the International Trade Commission's (Commission's) recommended modifications to the Harmonized Tariff Schedule of the United States pursuant to powers delegated to him by the Omnibus Trade and Competitiveness Act of 1988. The plaintiffs brought their challenge under the Administrative Procedure Act (APA). Because the Commission's recommendations were not final agency action for purposes of the APA, but were merely advisory in nature, the CIT held the final action was the presidential proclamation itself, which is not subject to APA review because the President is not an "agency" whose actions constitute "agency action. The Federal Circuit affirmed on the same grounds. To reconcile the outcome of these cases, it is important to note that the U.S. Cane Sugar Refiners' Association's challenge sought declaratory and injunctive relief under the jurisdictional statute of the CIT itself, while the Michael Simon Design case challenged the presidential proclamation under the APA. The CIT has limited exclusive jurisdiction over specific matters arising under the Tariff Act of 1930, and also possesses "residual jurisdiction" over related trade matters under 28 U.S.C. SS1581(i). Further, the CIT "possess[es] all the powers in law and equity of, or as conferred by statute upon, a district court of the United States," including declaratory and injunctive relief. Thus, combining the CIT's equitable powers under Section 1585 with its residual jurisdiction under Section 1581(i), the Association was able to establish jurisdiction in that court. By contrast, the Michael Simon Design plaintiffs proceeded by filing a challenge to administrative action under the APA. Challenging a presidential proclamation in this fashion will likely fail because, although an administrative agency may serve an advisory role in the issuance of a presidential proclamation, the President will be considered the ultimate actor for jurisdictional purposes. Therefore, the law underlying a claim for relief based on a trade-related executive action is crucial to determining which court has jurisdiction to review the challenge. Early challenges to the President's exercise of tariff powers delegated to him by Congress addressed whether the delegation was constitutional in the first instance. These cases established the principles guiding this inquiry, while clarifying the constitutional parameters of Congress's ability to apportion some part of its exclusive tariff powers to the President. One such case, Marshall Field & Co. v. Clark , 143 U.S. 649 (1892), involved the Tariff Act of 1890, which contained a "free list" of 300 items that would be exempt from import duties "unless otherwise specifically provided for in this act." Section 3 of the act included the following language: [W]henever and so often as the president shall be satisfied that the government of any country producing and exporting [certain products], imposes duties or other exactions upon the agricultural or other products of the United States, which in view of the free introduction of such sugar, molasses, coffee, tea, and hides into the United States he may deem to be reciprocally unequal and unreasonable, he shall have the power, and it shall be his duty, to suspend, by proclamation to that effect, the provisions of this act relating to the free introduction of such sugar, molasses, coffee, tea, and hides, the production of such country, for such time as he shall deem just , and in such case and during such suspension duties shall be levied, collected, and paid upon sugar, molasses, coffee, tea, and hides, the product of or exported from such designated country. In other words, Congress delegated to the President authority to reinstate tariffs on otherwise duty-free items if he determined "that the government of any country producing and exporting [the covered articles], imposes duties or other exactions upon the agricultural or other products of the United States, which in view of the free introduction of such [articles] into the United States he may deem to be reciprocally unequal and unreasonable." After the President exercised this delegated power by suspending the duty-free treatment of certain articles, several U.S.-based importers of textile goods challenged the resulting duties that were assessed and collected. The importers claimed, among other things, that Section 3 of the act was unconstitutional "so far as it authorize[d] the president to suspend the provisions of the act relating to the free introduction of sugar, molasses, coffee, tea, and hides," because it "delegat[ed] to him both legislative and treaty-making powers, and, being an essential part of the system established by congress, the entire act must be declared null and void." The Supreme Court disagreed. While observing "[t]hat congress cannot delegate legislative power to the president is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the constitution," the Court found the act in question "is not inconsistent with that principle" because "[i]t does not, in any real sense, invest the president with the power of legislation." In support, the Court noted that "congress itself determined that the provisions of the act ... should be suspended as to any country producing and exporting them that imposed exactions and duties on the agricultural and other products of the United States." Furthermore, "Congress itself prescribed, in advance, the duties to be levied, collected, and paid on sugar, molasses, coffee, tea, or hides, produced by or exported from such designated country while the suspension lasted. Nothing involving the expediency or the just operation of such legislation was left to the determination of the president." In 1928, a similar challenge was brought in the Customs Court in J.W. Hampton, Jr., & Co. v. United States . In Hampton , an importer challenged an increase in duties on certain imported goods as a result of a presidential proclamation issued under Section 315 of the Tariff Act of 1922, which provides: [W]henever the President, upon investigation of the differences in costs of production of articles wholly or in part the growth or product of the United States and of like or similar articles wholly or in part the growth or product of competing foreign countries, shall find it thereby shown that the duties fixed in this act do not equalize the said differences in costs of production in the United States and the principal competing country he shall, by such investigation, ascertain said differences and determine and proclaim the changes in classifications or increases or decreases in any rate of duty provided in this act shown by said ascertained differences in such costs of production necessary to equalize the same. Similar to Marshall Field , the importer in this case argued that, because Section 315 was an unlawful delegation of Congress's legislative powers to the President, it was unconstitutional. Once again, the Supreme Court disagreed, concluding: If Congress shall lay down by legislative act an intelligible principle to which the person or body authorized to fix such rates is directed to conform , such legislative action is not a forbidden delegation of legislative power. If it is thought wise to vary the customs duties according to changing conditions of production at home and abroad, it may authorize the Chief Executive to carry out this purpose, with the advisory assistance of a Tariff Commission appointed under congressional authority. As is evident from these cases, a delegation by Congress will likely be upheld as constitutional so long as the statute allows the President to act as the "agent" of the legislative department, rather than play a law-making role. In other words, a constitutional delegation of tariff powers is one in which the President is simply asked to carry out the will of Congress as expressed in its statute. These principles were reaffirmed in Federal Energy Administration v. Algonquin SNG, Inc. , which involved a challenge brought in federal district court to a presidential proclamation that raised license fees on imported oil under the authority of Section 232(b) of the Trade Expansion Act of 1962, as amended by the Trade Act of 1974. The license fees were challenged by eight states and their governors, 10 utility companies, and a Member of Congress, who argued that the fees were beyond the President's authority and were an unconstitutional delegation of power by Congress. The Supreme Court again disagreed. Drawing upon the "intelligible principle" test articulated in Hampton , the Court upheld the delegation of power in Section 232(b) because it "establishe[d] clear preconditions to Presidential action." Once a court has determined it has jurisdiction to review a case and that a delegation of power by Congress was constitutional, the issue of whether the President's action fell within the scope of the power delegated to him might arise. In United States v. Yoshida International , an importer of zippers from Japan challenged a presidential proclamation that imposed an import duty surcharge of 10%. The proclamation followed a declaration of a national emergency by the President. The Customs Court observed that Section 5(b) of the Trading with the Enemy Act of 1917 contained a broad, express delegation of power. In light of this broad, express delegation, the court concluded that "[i]t appears incontestable that SS 5(b) does in fact delegate to the President, for use during war or during national emergency only, the power to 'regulate importation.' The plain and unambiguous wording of the statute permits no other interpretation." The court's inquiry did not end there; it went on to note that, "Though courts will not normally review the essentially political questions surrounding the declaration or continuance of a national emergency, they will not hesitate to review the actions taken in response thereto or in reliance thereon." Therefore, the court went on to examine whether the "means of execution of the delegated power are permissible." To guide this inquiry, the court articulated the following test: "A standard inherently applicable to the exercise of delegated emergency powers is the extent to which the action taken bears a reasonable relation to the power delegated and to the emergency giving rise to the action." Accordingly, "[t]he nature of the power determines what may be done and the nature of the emergency restricts the how of its doing, i.e., the means of execution." Similarly, in U.S. Cane Sugar Refiners' Association , the CIT and the Customs Court both upheld a presidential proclamation imposing quotas on imports of sugar under Section 201 of the Trade Expansion Act of 1962. The Customs Court described the dispositive issue as "whether the President acted within his delegated authority in issuing Proclamation 4941." In reaching its conclusion that the President acted within the scope of the powers delegated to him by Congress, the court noted that "[t]he President's action being authorized by the statute on which he relied, his motives, his reasoning, his finding of facts requiring the action, and his judgment, are immune from judicial scrutiny." That is, so long as the President's action is authorized by statute, his reasoning for determining that action is necessary will likely not be reviewed by the court. Both cases demonstrate that while courts will not review the reasoning behind a threshold determination made by the President, such as the existence of a national emergency, or the fact-finding involved in arriving at that determination, they will closely review whether the action taken in response bears a reasonable relationship to that determination. These sample statutory provisions and court cases highlight several considerations for drafting new legislation or amending older statutes that delegate tariff-modifying powers to the President. First, to be upheld as constitutional, the delegation by Congress should not bestow law-making powers upon the President. In other words, a delegation should empower the President to act as the agent of the legislative department by carrying out its will, as clearly expressed in the statute. The test likely to be used by the courts to determine whether a delegation is constitutional is whether Congress has included in the statute an "intelligible principle to which the [President] is directed to conform." If so, the delegation will likely be upheld as constitutional. Second, courts will generally not examine the President's decisionmaking process in arriving at a determination that some condition exists that triggers his ability to take action under the statute. This condition precedent, frequently denoted by "Whenever ..." language at the beginning of the statute, should be carefully drafted to define the conditions under which the President is authorized to act. The language that defines the scope of the delegated power trigged by the condition as set forth in the statute, however, will likely be subject to closer scrutiny by the courts. Indeed, courts will likely begin by determining whether the President acted within the scope of his delegated power as defined by the words of the statute. Third, the closest scrutiny will likely be reserved for an examination of the President's selected means of executing his delegated powers to determine whether his actions are permissible. While this appears to be in the hands of the Executive, Congress can assist in this determination by providing clearly defined limitations on the authorized means of exercising the delegated powers, including time restrictions and durations, tariff ranges, and the like, to circumscribe clearly the trade-related action that is being authorized. The courts will likely examine the President's selected means of execution to determine whether they "bear a reasonable relation" to the condition precedent that allows the President to act. By providing limitations and descriptions of these actions in the statute itself, Congress can increase the likelihood that a court will find the President's actions to be authorized, so long as he adheres to the conditions set forth in the statute.

The United States Constitution gives Congress the power to impose and collect taxes, tariffs, duties, and the like, and to regulate international commerce. While the Constitution gives the President authority to negotiate international agreements, it assigns him no specific power over international commerce and trade. Through legislation, however, Congress may delegate some of its power to the President, such as the power to modify tariffs under certain circumstances. Thus, because the President does not possess express constitutional authority to modify tariffs, he must find authority for tariff-related action in statute. Prior to the early 1930s, Congress itself usually set tariff rates for imported products. Over time, however, Congress increasingly delegated authority to the President to reduce tariffs, subject to statutorily prescribed time periods, periodic review, and renewal. As the focus of international trade negotiations shifted from the imposition of tariffs to other non-tariff barriers to trade, such as antidumping duties, however, Congress was less inclined to authorize the President to implement such measures by presidential proclamation. Instead, Congress provided for legislative implementation of international trade agreements under an expedited procedure, so long as certain criteria were met. Over the past few decades, Congress has continued to enact various provisions governing the negotiation and implementation of trade agreements, but has not delegated to the President a general authority to modify tariff rates. Congress's delegations of tariff and other trade-related powers to the President through legislation have been worded in various ways. A non-exhaustive list of sample statutory provisions that delegate some authority to the President to take trade-related action shows that most provisions require that the President make some threshold finding or determination before he may take some circumscribed trade-related action to counteract his finding. More recent statutes frequently begin with the word "Whenever" to set out this threshold determination before delineating the specific authority given to the President. These delegations of power are usually accompanied by clearly defined conditions and frequently include time restrictions. When the President exercises powers over trade delegated to him by Congress, his actions might be challenged in court. These challenges often involve both procedural matters and substantive issues related to the scope of the President's authority under the Constitution and statute. As a threshold matter, a court must determine whether it has jurisdiction to review a challenge to a trade-related presidential proclamation. The jurisdictional statute of the U.S. Court of International Trade has been construed to vest that court with jurisdiction over challenges to trade-related presidential proclamations because the court has limited exclusive jurisdiction over specific matters arising under the Tariff Act of 1930 and possesses all of the equitable powers of a federal district court. As to the merits of such a challenge, a delegation of power by Congress will likely be upheld as constitutional so long as the statute asks the President to carry out the will of Congress as expressed in its statute, rather than to play a law-making role. Once a court determines it has jurisdiction to review a case and that a delegation of power by Congress was constitutional, it will likely turn to whether the President acted within the scope of his delegated powers as defined by the words of the statute. While a court will probably not review the reasoning behind a President's determination that executive action is warranted, it will likely examine closely whether the selected means of executing the delegated powers bear a reasonable relationship to that determination.

The natural gas market is composed of three major components on the supply side; producers,pipelines, and local distribution companies. The price of natural gas paid by consumers is layered,in the sense that the wellhead price paid to producers forms a baseline. Pipeline transportation costsare then added, which yields the city gate price. Finally, local distribution companies add additionalcharges to yield the prices actually paid by consumers. Consumer markets themselves are dividedinto segments, each of which tends to pay a different, in many cases a significantly different, price. Residential consumers pay the highest prices, followed by commercial, industrial, and electricityusers. Table 1 shows the relationship between these prices in recent months. The residential prices presented in Table 1 represent an increase of 7% over residential pricesfor a comparable period in 2003. The most recent EIA natural gas price data available at the timeof this report was August 2004. On the New York Mercantile Exchange (NYMEX), natural gas fordelivery in December 2004 was trading at $6.80 per mcf and January and February 2005 natural gaswas trading at over $7.50 per mcf. (1) Table 1. Natural Gas Prices Source : EIA Natural Gas Price Data, measured as dollars per mcf. Natural Gas Monthly, October,2004, Table 4, p.8. In addition to multiple prices faced by consumers, other prices are key variables for supply and policy decisions. The wellhead price of natural gas, as noted in this report, is competitivelydetermined by market forces. This was not always the case. The process of natural gas pricederegulation began in 1978 when the Natural Gas Policy Act ( P.L. 95-621 ) became law. Under theNatural Gas Policy Act, nearly all price controls were phased out by the end of 1984. (2) The spot price of natural gas is recorded at a transportation hub, the largest in the United Statesbeing Henry Hub in Louisiana, and is generally somewhat higher than the wellhead price becauseit includes some processing and transportation costs. Natural gas futures contract trading on theNYMEX establishes forward prices for natural gas, and allows market participants to hedge shortand medium term price risk. The NYMEX future price is determined by the interaction of traderswho have business interests in the real, physical natural gas market, and financial traders whospeculate on the market. Natural gas is also traded by numerous brokers and other entities forphysical delivery at a number of local markets. Interstate pipeline rates are not directly regulated and their pricing structure largely reflects open access for shippers and market pricing. The Federal Energy Regulatory Commission (FERC)monitors pipeline tariffs to assure "just and reasonable" pricing, and has intervened in a number oftariff situations. The city gate price includes the addition of these pipeline transportation charges. Residential and small commercial consumers buy gas from a local distribution company, which delivers gas from a long-haul pipeline to the customer's premises. Local distribution companies areregulated by state public service commissions, who set distribution charges. The price data in Table1 indicates that residential prices have recently been almost double city gate prices in 2004. Theprice premium paid by residential and commercial consumers reflects the high fixed cost associatedwith distribution of their supply, as well as the added cost of small volume purchases. The EIA defines effective productive capacity as the maximum production available fromnatural gas wells, allowing for limitations in the production, gathering, and transportation systems. (3) The effective capacity utilization rate (ECUR) is the ratio of actual production to effective productivecapacity. Surplus capacity is the difference between effective productive capacity and actualproduction. Figure 1 shows, for monthly data over the period 1987 to 2001, that the average wellheadpricehas stayed below $3.00 per mcf whenever the ECUR was below 90%. The data also show howupwardly volatile natural gas prices can be as the ECUR rises above 90%. The correlation betweenhigh values of the ECUR and high prices suggests that when the ECUR is above 90%, conditionsare in place that are consistent with high, volatile natural gas prices. Figure 2 shows the history of the ECUR, capacity and production since 1985. Several trendsare noticeable in the data. Productive capacity has declined since the late 1980s, but appears to haveremained stable since 1993. Actual production has trended up from 1985 to 1995 and has beenrelatively stable since then. These two trends, taken together, drove the ECUR to 90% or higherlevels for almost all of the past eight years. An ECUR in excess of 90% indicates that available natural gas output is nearly fully allocated to meeting demand. Any further increase in demand, or disruption of supply, can only be metthrough extraordinary draws on existing gas wells, increased draws from storage, or increasedimports. All of these alternatives suggest that prices for the consumer are likely to rise. If thesesources are unavailable for expansion the price could rise dramatically, and supply disruption mightoccur. As part of the market adjustment to higher prices, increased development drilling could take place, but exploration and development does not immediately result in gas on the market. The EIAestimates that there is a lag of between 6 and 18 months between an increase in natural gas pricesand an increase in developmental drilling and ultimately higher production. (4) The decliningproductivity of U.S. fields is also a factor. According to one industry observer, "it takesapproximately 2.5 times more active rig capacity to produce the same amount of gas as just eightyears ago." (5) Alternatively, when the ECUR is below90%, any requirement for additional supply canbe quickly brought to the market by increasing production from existing wells. Source : U.S. Energy Information Administration, derived from data available at http://tonto.eia.doe.gov/dnav/ng/hist/n9190us3A.htm . Figure 3 shows the history of the wellhead price of natural gas from 1973 through 2003. Again, several trends are noticeable. The first run up in prices, from 1973 to the mid 1980s was theresult of price deregulation in a market where supply was not abundant, demand-after years ofregulated prices-was strong, and oil prices were high, as a result of the Arab oil embargo of theUnited States in 1973-74, and the Iranian political upheaval of the late 1970s. Prices declined after1985-as did demand-and the United States entered a decade long period of relatively low, stableprices. During this period, use of natural gas as an abundant, cheap, clean fuel was promoted. Increasing demand, in conjunction with the supply trends shown in Figure 2 ,has resulted in theECUR remaining at, or above, 90% since 1995. These conditions set the stage for the gas priceincreases and price volatility experienced since 2000. An interesting break in the pattern of the Figure 2 data is associated with the sharp price increases of the winter of 2000-01. As can be seen in Figure 2 , the ECUR achieved very highvaluesduring this period. When coupled with the low temperatures of that winter, the result was highprices that set off a boom in exploration and drilling. While only 496 rotary drilling rigs, on average,were drilling for natural gas in 1999, that number increased to 720 in 2000 and rose to 939 for 2001. As the resulting production entered the market in 2002 (6 to 18 months later) the ECUR fell below90% in 2002 and the price of natural gas fell. (6) Thelower price, however, resulted in lowerdevelopmental drilling and set the stage for sharp price increases in the winter of 2002-03. As pricesdeclined in 2002, as seen in Figure 3 , the drilling rig count also declined, to 691. The ECUR,reflecting the lower anticipated increments to production from reduced exploratory drilling, againrose above 90%, and price increases beginning during the winter of 2002-03 followed. Drilling activity may be responding to 2003's higher prices. The EIA reported that the average monthly drill rig count for 2003 was 872, with the count running over 900 per month from June toDecember. The nine month average drilling rig count for 2004 is 1009, and has been on a path ofsteady monthly increases since January 2004. (7) Whether the recent increase in drilling activity resultsin large enough supply increases to allow the price of natural gas to fall depends on the explorationsuccess rate, the size of the fields found, and the degree to which existing producing wells showoutput declines. Any factor that increases demand or decreases supply will increase the ECUR. When theECUR is below 90% extra pressure on the market is likely to result in higher production. Once theECUR rises to 90% or above, timely increases in production are less available and pressure on themarket manifests itself as higher prices. Higher prices create incentives that eventually could causeprice increases to moderate, although new sources may require higher prices to satisfy investmentcriteria. The demand for natural gas exhibits a seasonal pattern even when the weather is normal. Figure 4 shows the typical pattern, which is characterized by seasonal demand peaks. Sinceseasonal patterns are repetitive, suppliers, attempting to accommodate consumers, accumulatequantities of gas in storage facilities in the traditional off-peak season for release during the heatingseason. Source : U.S. Energy Information Administration available at http://www.eia.doe.gov/pub/oil_gas/natural_gas/presentations/2004/searuc/searuc_files/frame.htm If the seasonal demand pattern is accentuated by extreme weather conditions, the stored quantities of natural gas might not be sufficient, setting the stage for price increases if the ECUR ishigh. For example, as we approached the heating season of 2002-03, stored gas was at a normallevel of approximately 3 trillion cubic feet (tcf). Below average temperatures early in the winterquickly drove stored quantities down to low levels, which set the stage for the price increases thatfollowed. If the ECUR remains high, as is likely, and a cold winter weather pattern repeats, the limited amount of stored gas, as well as the unresponsiveness of both supply and demand to real time pricevariations at the consumer level, could well bring about another price spike in the winter of 2004-05. The seasonal pattern of natural gas demand is being altered by its growing use by electric power generators. Power generators expanded their demand for natural gas by 36% over the period1997-2002. The EIA expects that over the long term forecast period, 80% of new electricitygeneration will be fueled by natural gas, continuing the strong growth of the last several years. Notonly is electricity demand adding to total natural gas demand, but the pattern of peak demand mightinterfere with traditional gas demand cycles. The demand for natural gas for electricity generationpeaks in the months June through October when space heating demand from residential andcommercial customers is low, but when storage facilities replenish their stocks. As a result, it mightbe the case that the ECUR is pushed to higher levels, year round. Competition for summer suppliescould cause short falls in storage quantities, create price pressures that squeeze out price sensitiveindustrial customers, or force higher electricity rates or even shortages to the system. (8) As discussed earlier in this report, when the ECUR is 90% or above, the ability of the industry to respond to increased demand with expanded supply from existing wells is limited, causing priceto increase quickly. However, the higher prices do provide an incentive to begin the process ofdrilling new wells and exploring for new supplies. The resulting supply increase will tend to causeprice to fall as productive capacity is enhanced, reducing the ECUR. The nature of this relationship in the natural gas industry can, under some circumstances, lead to a cycle of unstable boom and bust feared by those investing in gas production. Taken to itsextreme, this could lead to chronic under-investment in gas production and stagnant supply. Higher prices for natural gas justify investment in exploratory drilling by increasing the value of the expected cash flow derived from the new production. In an efficiently operating market, asustained, marginal increase in price is supposed to elicit a marginal increase in production. Innatural gas, when the price rises, hundreds of extra rigs drill thousands of additional wells. Historical averages suggest that about 80% of these efforts will be successful and yield some newproduction. Once a well is brought into production, there is little economic rationale for notproducing at full capacity. As a result, the market moves to a condition of excess supply as newproduction begins, causing a fall in the price. The reduced price brings a disincentive to invest inexploratory drilling, which leads to a period of stable supply setting the stage for a rising ECUR atightening market balance and rising prices. A key factor in the ability of the rate of investment in exploration to affect the ECUR is the degree to which existing wells deplete, or yield declining output levels. For example, the EIAexpected that in 2003 the estimated effective productive capacity of the U.S. natural gas industrywould be approximately 57 billion cubic feet per day (bcf/d). For 2003, production was expectedto be approximately 51.4 bcf/d, leaving a surplus of 5.6 bcf/d, or about 10%. To demonstrate howthis balance depends on new drilling and expansion of capacity, the EIA estimated that 25% ofeffective productive capacity comes from wells one year old or less. The two largest suppliers ofU.S. natural gas, Texas and the Gulf of Mexico, derive 30% of their production from wells one yearold or less. If drilling were to stop in the U.S., all surplus capacity would disappear in less than oneyear. In 2001, the incentive of high prices led to 22,800 well completions that resulted in increased productive capacity. Only 17,800 wells were completed in 2002 and productive capacity declined. If, as this recent data suggests, the potential for a boom/bust investment cycle may be developing inthe natural gas industry, the result will be brief periods of low prices and plentiful supply followedby periods of high prices and potential physical shortages. (9) The measures analyzed in the EIA study of effective productive capacity only refer to resources in the lower 48 states. As the U.S. natural gas market develops, this restriction will become lessappropriate. The U.S. natural gas market is well integrated with the Canadian market. Imports ofCanadian natural gas have long been an important supply source when U.S. consumption exceededU.S. production and available stock draw down. Imports of natural gas from Canada, all viapipeline, reached over 3.7 tcf per year in 2001 and 2002, but declined to less than 3.5 tcf in 2003. Canadian gas fields, like those in the United States, may be unable to easily expand output withoutthe development of new fields. An additional source of imports might be liquefied natural gas (LNG). (10) The U.S. has fouroperational (or near operational) LNG receiving facilities with an annual operational send-outcapacity of 1.4 tcf per year after all planned expansions are completed. (11) The critical issueconcerning LNG is cost. Although the cost of a complete LNG facility has fallen substantially(30%) due to economies of scale and enhanced technology over the last decade, LNG cost is greaterthan most conventional gas from wells in the lower 48 states. (12) As a result, dependence on LNG maysafeguard the nation from physical shortage by building a new, higher, baseline price into the market. The volume of gas held in storage is a critical element in evaluating the possibility of price volatility. If storage volumes are below normal as the winter heating season begins, and the ECURis above 90%, the potential for elevated prices must be considered to be high. Notes: A weekly record for March 8, 2002, was linearly interpolated between the derived weeklyestimates that end March 1 and the initial estimate from the EIA-912 on March 15. The shaded areaindicates the range between the historical minimum and maximum values for the weekly series from1999 through 2003. Source: Weekly storage values from March 15, 2002, to the present are from Form EIA-912, "Weekly Underground Natural Gas Storage Report." Values for earlier weeks are from theHistorical Weekly Storage Estimates Database, with the exception of March 8, 2002. Figure 5 shows the variability of storage volumes of working gas. Stored volumes totaled 2.7tcf at the end of the 2000 refill season. The severe temperatures during the heating season of2000-01 drew this down to a low of 742 billion cubic feet (bcf) in March of 2001. In contrast, at theend of the 2001 refill season, the stored volume was 3.1 tcf, but the heating season was characterizedby more moderate temperatures and the stored volume did not fall below 1.5 tcf, double the As shown in Figure 5 , in November 2004 working gas storage levels were above their five yearaverage, suggesting that adequate supplies were available. The EIA reported that by November 26,2004 stocks in the lower 48 states totaled about 3.3 tcf, about 0.2 tcf more than at the same time in2003. (13) Given this storage report, it would seemunlikely that the current high futures pricesobserved on the NYMEX could be supported by uncertainties related to available stocks. The potential effects of high, volatile natural gas prices on both the national economy as wellas individual consumers is not insignificant. High, sustained levels of natural gas prices can act asa drag on economic growth. As with oil price shocks in the past, high natural gas prices canconstitute a classic supply side shock which reduces output and productivity growth. If severeenough, a shock of this type can increase unemployment and cause inflation in the short term. On the level of individual consuming sectors, high natural gas prices negatively affect specific industrial users who make heavy use of natural gas in their production process, which makes themuncompetitive. Residential users might have difficulty paying their winter heating bills, forcing themto choose between adequate home heating and other necessities. In the very near term little can be done to affect natural gas prices, except through market intervention in the form of price controls, mandatory conservation, and prioritized rationing. Theconditions that will determine market balance for 2004 and 2005 are largely in place, with the majorexception of the weather. To help mitigate the effects of possible price spikes this winter, aid to lowincome gas consumers through the Low Income Home Energy Assistance Program (LIHEAP) couldbe increased. (14) Much can be done to alter the demand and supply characteristics of the natural gas market in the long term. Conservation, expansion of LNG use, access to areas not currently available forexploration, and new pipeline construction, among others can be debated. Any of these options willtake significant time to implement and must be considered in a long term context. None of themare likely to have significant influence on prices over the next six months to one year.

Intermittently high, volatile natural gas prices since 2000 have raised concern among all types of consumers. Residential customers have seen gas bills increase dramatically during the heatingseason. Industrial consumers have seen costs increase, which reduces their competitiveness. Because the price of natural gas at the consumer level is a mixture of market forces and regulation,explaining the behavior of price can be difficult. Debate in the 108th Congress concerning the energy bill ( H.R. 6 ), considered provisions which are intended to improve long term natural gas supplies in the United States. Otherissues are likely to be brought before the 109th Congress for consideration. This paper analyzes theshort term forces which influence the natural gas market. The Energy Information Administration has developed a metric called the effective capacity utilization rate as a framework for analyzing the economics of the natural gas market. This measurehas been shown to be correlated with the price of natural gas. When as the effective capacityutilization rate attains high levels (90% and above) it becomes increasingly likely that tight marketconditions will yield high prices. As a result of the Natural Gas Policy Act of 1978 ( P.L. 95-621 ) and subsequent legislation in 1989 and 1992 ( P.L. 101-60 and P.L. 102-486 ) the wellhead price of natural gas is marketdetermined. Pipeline rates are federally monitored and distribution charges are regulated at the statelevel. Price variability centers on the wellhead price as well as the price determined in futuresmarkets. Price spikes have occurred in two of the past three heating seasons. Whether severe weather causes price increases depends on the tightness of the market as measured by the effective capacityutilization rate. The same level of demand could lead to very different price results if the effectivecapacity utilization rate is high or low. A variety of factors can affect the effective capacity utilization rate. Since short run supply adjusts to meet demand, the weather will be an important determinant. The relationship betweennatural gas prices and investment in exploration, development and production is an important factorin determining productive capacity. The availability of stored gas and imported gas become vitalto price stability as the effective productive capacity exceeds 90%. In the very short term there appears to be little that can be done from a policy perspective to alter the fundamental economics of the natural gas market. In the longer term, policies that slowdemand growth and/or encourage the growth of supply, either from domestic or foreign sourcescould be effective. This report will be updated as events warrant.

97-736 -- Victims' Rights Amendment in the 106th Congress: Overview of Suggestions to Amend the Constitution Updated January 12, 2001 Arguments put forward in support of an amendment include assertions that: The criminal justice system is badly tilted in favor of criminal defendants and against victims' interests and a more appropriate balance should be restored; The shabby treatment afforded victims has chilled their participation in the criminal justice system to the detriment of all; Society has an obligation to compensate victims; Existing statutory and state constitutional provisions are wildly disparate in their coverage, resulting in uneven treatment and harmful confusion throughout thecriminal justice system; and Existing state and federal law is inadequate and likely to remain inadequate Critics argue to the contrary that: The criminal justice system is not out of balance. The purpose of a criminal trial is to determine the guilt ofan accused by allowing an impartial jury to weighthe government's evidence that a crime has been committed and that the accused committed it, against any evidenceoffered by the defendant; the interests ofvictims do not fit in the equation; their interests are protected by the right to bring a civil suit against the accused,by court-order restitution if the accused isconvicted, and by victim compensation provisions. If efficacious, a victims rights amendment would generate considerable uncertainty in the law and flood the federal courts with litigation, could be very costly,and would either jeopardize the rights of the accused (probably in a discriminatory manner) or undermine thegovernment's ability to prosecute. If the mischief possible through a victims rights amendment is avoided, the proposal becomes purely hortatory; the Constitution is no place for commemorativedecorations. It is inconsistent with the basic notions of federalism. Each of the states, through its legislatures and electorate, has decided how victims rights should beaccommodated within its criminal justice system. These decisions would be made subservient to a uniform standardthat in all likelihood no jurisdiction wouldhave chosen. S.J.Res. 3 and H.J.Res. 64 would have followed the general format favored in the state constitutions. They would have guaranteedvictims a right to notice, to attend, and/or to be heard at various stages of the criminal justice process. The impact of any victims rights amendment depends upon who is considered a victim for purposes of the amendment. S.J.Res. 3 would havecovered "victim[s] of a crime of violence, as these terms may be defined by law." H.J.Res. 64 would haveapplied to "[e]ach individual who is avictim of a crime for which the defendant can be imprisoned for a period of longer than one year or any other crimethat involves violence." The obviousdifference between the two was that the House Resolution would have covered nonviolent felonies, while the Senateproposal would not. Bail At least in theory, a victim's rights might attach upon commission of the offense. Under the proposals in the 106th and most of the state provisions, the rightsattach upon commencement of "proceedings" involving the crime of which the individual is the victim. The mostsignificant of these early proceedings for thevictim would likely be the bail hearing for the accused. Only a few states grant the victim the right to be heard atthe defendant's bail hearing; a few more permitconsultation with the prosecutor prior to the bail hearing. Most allow victims to attend. And virtually all provideeither that victims should be notified of bailhearings or that victims should be notified of the defendant's release on bail. Under existing federal law, victims of alleged acts of interstate domestic violence or interstate violations of a protective order have a right to be heard at federalbail proceedings concerning any danger posed by the defendant. In other federal cases, victims' prerogatives seemto be limited to the right to confer with theprosecutor and notification of and attendance at all public court proceedings. The proposals in the106th would have given victims the right "to be heard, ifpresent, and to submit a written statement at all such proceedings to determine a conditional release from custody.. . ." and to consideration for their safety "indetermination any conditional release from custody." Plea Bargains Negotiated guilty pleas account for over 90% of the criminal convictions obtained. For the victim, a plea bargain may come as an unpleasant surprise, one thatmay jeopardize the victim's prospects for restitution, one that may result in a sentence the victim finds insufficient,and/or one that changes the legal playing fieldso that the victim has become the principal target of prosecution. Some states' victims rights provisions are limitedto notification of the court's acceptance of aplea bargain. More often, however, the states permit the victim to address the court prior to the acceptance of anegotiated guilty plea or to confer with theprosecutor concerning a plea bargain. S.J.Res. 3 and H.J.Res. 64 would have required that victims beallowed to address the courtbefore a plea bargain could be accepted in any state or federal criminal or juvenile proceeding. Speedy Trial The United States Constitution guarantees those accused of a federal crime a speedy trial; the due process clause of the Fourteenth Amendment makes the rightbinding upon the states, whose constitutions often have a companion provision. The constitutional right isreenforced by statute and rule in the form of speedytrial laws in both the state and federal realms. Until recently, victims had no comparable rights, although theiradvocates contended they had a very real interest inprompt disposition. Most of the states have enacted statutory or constitutional provisions establishing a victim's rightto "prompt" or "timely" disposition of thecase in one form or another. Many have also made efforts to minimize the adverse impact of the delays that dooccur by either providing for employerintercession services and/or by prohibiting employers from penalizing victim/witnesses for attending courtproceedings. And most call for the prompt return of avictim's property, taken for evidentiary purposes, as soon as it is no longer needed. S.J.Res. 3 and H.J.Res. 64 would have entitled victims to consideration of their interests "that any trial be free from unreasonable delay." Courts might well have used the same test for this standard that they have used when testing for unacceptable delayunder the speedy trial and due process clauses:"length of delay, reasons for the delay, defendant's assertion of his right, and prejudice to the defendant." Trial The Sixth Amendment promises the accused a public trial by an impartial jury. It promises victims little. Their status is, at best, no better than that of any othermember of the general public for Sixth Amendment purposes and, in fact, the Constitution screens the accused'sright to an impartial jury trial from the overexuberance of members of the public. Moreover, victims who are also witnesses are even more likely to be barredfrom the courtroom during trial than membersof the general public. About a third of the states now permit victims to attend all court proceedings regardless ofwhether the victim is scheduled to testify;another group allows witnesses who are victims to attend subject to a showing as to why they should be excluded;a few leave the matter in the discretion of thetrial court; and some have maintained the traditional rule -- witnesses are sequestered whether they are victims ornot. S.J.Res. 3 and H.Res. 64 would have invested victims with the right "to notice of, and not to be excluded from, all public proceedingsrelating to the crime," state and federal, juvenile and adult. They made no explicit provision for instances wherethe victim is also a witness. Nor did they indicatehow unavoidable conflicts between the rights they conveyed and the constitutional rights of the accused (at leastas they exist until ratification) were to beresolved. Sentencing The most prevalent of victims' rights among the states is the right to have victim impact information presented to sentencing authorities. There is, however,tremendous diversity of method among the states. Many call for inclusion in a presentencing report prepared forthe court in one way or another, oftensupplemented by a right to make some form of subsequent presentation as federal law permits. Some are specificas to the information that may be included;some permit the victim to address the court directly; others do not. S.J.Res. 3 and H.J.Res. 6 would have afforded victims the right "to be heard . . . and to submit a written statement at all suchproceedings to determine . . . a sentence." They proposal did not address the question of whether relevancy,repetition, or any other limitation might have beenimposed upon exercise of the right. Experience among the states suggests that enforcement may be the stumbling block for any proposed amendment, since there seem to be few palatablealternatives. It is possible to draft the amendment to the United States Constitution so that victims' rightsenforcement is paramount. Legal proceedingsconducted without honoring victims rights would be rendered null; sentencing hearings rescheduled and conductedanew; plea bargains rejected; trials begunagain; unfaithful public servants exposed to civil and criminal liability; inattentive governmental entities madesubject to claims and court orders. A fewproponents suggest that enforcement should be limited to the equitable powers of the courts. This would appear tohave been the intent with respect to S.J.Res. 3 and H.J.Res. 64 which would have denied victims a cause of action or grounds to interrupta criminal trial and otherwiseleaves crafting of enforcement mechanisms to Congress and the state legislatures. S.J.Res. 3 and H.J.Res. 64 would have conferred legislative authority in two ways. First, they would have empowered Congress todefine the class of victims entitled to claim rights under the amendment. Second, they would have vested Congresswith the authority enforce their provisions"through legislation" but subject to the caveat that in doing so Congress craft exceptions to the rights created by theamendment "only when necessary to achieve acompelling interest." Earlier proposals explicitly recognized a greater state legislative role. The question of the states' legislative powers to implement the victims' rights amendment suggests another question. How much, if any, of existing victims rightslaw would survive an amendment? Under the present state of the law, statutory and state constitutional provisions are confined by the United States Constitution, U.S.Const. Art. VI, cl.2. Whentheir advocates have said nothing in them imperils defendant's rights under the United States Constitution, they areright; nothing could. But an amendment to theUnited States Constitution stands on different footing. It amends the Constitution. Its very purpose is to makeconstitutional that which would otherwise not havebeen constitutionally permissible. It may uniformly subordinate defendants' rights to victims' rights. It may requireany conflicting law or constitution precipe,state or federal, to yield. Even in the absence of a conflict, it may preempt the field, sweeping away all laws,ordinances, precedents, and decisions -- compatibleand incompatible alike -- on any matter touching upon the same subject. It may have none or some of theseconsequences depending upon its language and theintent behind its language. Few advocates have explicitly called for a "king-of-the-hill" victims rights amendment, but the thought seems imbedded in the complaint that existing law lacksuniformity. How else can universal symmetry be accomplished but by implementation of a single standard that fillsin where pre-existing law comes up short andshaves off where its generosity exceeds the standard? Proponents of S.J.Res. 3 and H.J.Res. 64 spokeof both the need to establish aminimum victims' rights standard and the need for uniformity. The principles of construction called into play in the case of a conflict between a victims' rights amendment and rights established elsewhere in the Constitutionare similar those used to resolve federal-state conflicts. Intent of the drafters is paramount. The courts will make every effort to reconcile apparent conflicts between constitutional provisions, but in the face of anunavoidable conflict between a right granted by an adopted victims rights amendment and some other portion ofthe Constitution, the most recently adoptedprovision will prevail. The proposals in the 106th Congress were designed to eliminate the unfair treatment that results because the criminal justice "system . . . permits the defendant'sconstitutional rights always to trump the protections given to victims," yet to do so in a manner that would "not denyor infringe any constitutional right of anyperson accused or convicted of a crime." In instances of unavoidable conflict between victim and defendant rights,this seemed to mean the prosecution mustyield. The text of the two hardly defeated this interpretation with the assurance that the "only the victim or thevictim's lawful representative shall have standingto assert the rights" created by the amendment, since the rights of the accused come not from the victims' rightsamendment but from the Sixth Amendment orsome other source within the Constitution.

Thirty-three states have added a victims rights amendment to their state constitutions. Both the House and SenateJudiciary Committees held hearings on similar proposals in the 106th Congress to amend the UnitedStates Constitution (S.J.Res. 3 introduced bySenator Kyl for himself and Senator Feinstein and H.J.Res. 64 introduced by Representative Chabot). TheSenate Committee initially reported outan amended version of S.J.Res. 3 without a written report, but issued a report prior to floor consideration ofthe reported proposal, S.Rept. 106-254. Neither S.J.Res. 3 nor H.J.Res. 64 were ever brought to a vote on the floor. This is an overview ofthose proposals and is an abbreviatedform of Victims' Rights Amendment: Proposals to Amend the United States Constitution in the 106thCongress, CRS Report RL30525(pdf). Authorities identifiedthere have been omitted here in the interests of brevity

Relatively high default and foreclosure rates in the housing market have led some to question whether borrowers were fully informed about the terms of their mortgage loans. There has been concern that mortgage disclosure forms are confusing and not easily understood by borrowers. It has been argued that transparent mortgage terms could enhance consumer shopping and discourage predatory, discriminatory, and fraudulent lending practices. Lending practices that involve hidden costs may result in a payment shock to a borrower, possibly leading to financial distress or even foreclosure. The issue of adequate disclosure of mortgage terms is longstanding. The Truth in Lending Act (TILA) of 1968, which was previously implemented by the Federal Reserve Board via Regulation Z, requires lenders to disclose the cost of credit and repayment terms of mortgage loans before borrowers enter into any transactions. The TILA Disclosure Statement conveys information about the credit costs and terms of the transaction. The TILA Disclosure Statement lists the annual percentage rate (APR), an interest rate calculation that incorporates both the loan rate and fees. The statement also discloses finance charges, the amount financed, the total number of the payments, whether the interest rate on the mortgage loan can change, and whether the borrower has the option to refinance the loan. The Real Estate Settlement Procedures Act (RESPA) of 1974 is another element of the consumer disclosure regime. RESPA requires standardized disclosures about the settlement or closing costs, which are costs associated with the acquisition of residential mortgages. Examples of such costs include loan origination fees or points, credit report fees, property appraisal fees, mortgage insurance fees, title insurance fees, home and flood insurance fees, recording fees, attorney fees, and escrow account deposits. In other words, the mortgage loan rate and fees are disclosed in separate calculations rather than in one calculation. In addition, RESPA, which was implemented by the Department of Housing and Urban Development (HUD), includes the following provisions: (1) providers of settlement services are required to provide a good faith estimate (GFE) of the settlement service costs borrowers should expect at the closing of their mortgage loans; (2) a list of the actual closing costs must be provided to borrowers at the time of closing, which are typically listed on the HUD-1 settlement statement; and (3) RESPA prohibits "referral fees" or "kickbacks" among settlement service providers to prevent settlement fees from increasing unnecessarily. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203 ) transferred general rulemaking authority for various provisions of TILA and RESPA to a new Consumer Financial Protection Bureau (CFPB) effective July 21, 2011. Lenders currently present borrowers with both TILA and RESPA disclosures, but the Dodd-Frank Act has directed the CFPB to create a single disclosure form that satisfies both disclosure requirements. The CFPB must issue a proposed rule of the new Loan Estimate form within one year of its July 21, 2011 transfer date. The CFPB released two initial Loan Estimate prototypes in May 2011 and has proposed several rounds of updated prototypes since then. This report reviews current efforts to regulate the reporting of pertinent loan information to consumers, including actions taken by the CFPB. As previously stated, TILA requires mortgage lenders to present borrowers with a disclosure statement that conveys information about the credit costs and terms of the transaction in one APR calculation expressed as a percentage. TILA was amended in 1980 to require the Federal Reserve to publish APR disclosure forms. On November 17, 2008, HUD made changes to the RESPA component of the mortgage disclosure process that it supervises. Key modifications are discussed below. HUD's final rule developed a standardized good faith estimate form for use in the initial stages of obtaining mortgages. The GFE included changes intended to help consumers better understand and locate relevant information about their mortgage products. For example, the GFE conveys information about the mortgage terms, whether the interest rate can rise, whether the overall loan balance can rise, whether the loan has a prepayment penalty, whether the loan has a balloon payment, and whether the quoted monthly payment includes a monthly escrow payment for taxes. All of this information about the loan appears on the first page of the GFE. In addition to facilitating comparison shopping, the HUD GFE form also results in reliable GFEs in the sense that some of the estimated costs are required to not change substantially by the time consumers are ready to close on their loans. Shopping for the best deal or the most affordable loan would be pointless if the costs were to change when borrowers arrived at closing. Consequently, page three of the GFE lists charges that cannot increase, charges that are allowed to increase up to 10%, and charges that may change at settlement. For specific charges that should not change or exceed the 10% limit, a borrower has the option to withdraw the application. This makes it difficult for lenders to generate "costs" or fees that could not be easily justified. A separate GFE is required for each loan product offered to the borrower. For example, a borrower may wish to compare a traditional fixed rate mortgage (FRM) loan with an adjustable rate mortgage (ARM) loan. Both mortgage products must have separate GFEs to ensure that the information provided is unique to each product. HUD argued that these changes to the GFE would reduce confusion about loan and settlement costs, help the borrower better determine product affordability, and facilitate comparison shopping. HUD distinguished two stages in the overall mortgage seeking process. The consumer receives a GFE in stage 1, which occurs prior to proceeding with the official mortgage application in stage 2. In the first stage, the lender is not expected to have performed any underwriting, and the GFE need only consist of information obtained from the borrower without any verification of borrower statements. Final underwriting is expected to begin in stage 2 after the borrower has expressed a willingness to proceed with an official mortgage application. The GFE becomes binding only if the underwriting process confirms borrower statements and loan qualifications. If the underwriting process reveals that the borrower is unable to qualify for the specific loan product, then the lender may reject the borrower or propose a new GFE for another loan product in which the borrower is more likely to qualify. The TILA Disclosure Statement also has a two-stage process similar to the GFE. If the initial APR on the disclosure changes by more than a certain amount after the loan underwriting is performed, the lender must provide a corrected Disclosure Statement at least three days before the loan can be finalized. If a term other than the APR changes after underwriting, then the corrected disclosure must be presented to the borrower at the time the loan is finalized. For a majority of prime or high-credit quality borrowers, the final loan rates initially stated on the GFE forms are likely to become the actual ones after underwriting. Lenders typically advertise the interest rates that prime borrowers are likely to be charged, and high-credit quality borrowers are arguably already able to shop for loans. Subprime or high-risk borrowers, however, encounter difficulties shopping for loan rates and may continue to do so under this system. Lenders typically charge higher rates to riskier borrowers to compensate for the additional risk, and such rates are typically determined after underwriting has occurred. Hence, low-credit quality borrowers may be less likely to obtain estimates of loan rates prior to final underwriting that would not change afterwards. Assuming no substantial shifts in the current proportion of prime relative to subprime borrowers, or that the share of prime borrowers diminishes as a result of further borrower risk gradations, underwriting at the GFE stage might not be necessary for the vast majority of consumers to obtain fairly reliable pricing information of mortgage products. A standardized HUD-1 settlement statement is required at all settlements or closings involving mortgage loans. The HUD-1 lists all settlement charges paid at closing, the seller's net proceeds, and the buyer's net payment. HUD modified the HUD-1 form to make it easier for borrowers to trace the estimated costs on the GFE to the actual charges listed on the HUD-1 form. The itemized charges listed on the HUD-1 form include references to the same charges originally listed on the GFE. With these references, it may become more apparent to borrowers what charges remained the same or changed from the estimation stage to the closing stage. Prior to implementation of the standardized GFE, a Federal Trade Commission (FTC) study tested 819 consumers to document their understanding of mortgage cost disclosures and loan terms, as well as their ability to avoid deceptive lending practices. The authors found that both prime and subprime borrowers had difficulty understanding important mortgage costs after viewing mortgage cost disclosures. Some borrowers had difficulty identifying the APR of the loan and loan amounts. Many borrowers did not understand why the interest rate and APR of a loan would differ. In addition, borrowers had trouble understanding loan terms for the more complicated mortgage products, such as those with optional credit insurance, interest-only payments, balloon payments, and prepayment penalties. Many borrowers were unable to determine whether balloon payments, prepayment penalties, or up-front loan charges were part of the loan. The inability to understand a loan offer makes a borrower more vulnerable to predatory lending. Predatory loans are often characterized by high fees or interest rates and other provisions that may not benefit the borrower. Given that one area particularly susceptible to predatory action is the calculation of lender compensation, HUD's revised GFE form includes new disclosure methods so borrowers can understand the fees they are charged to obtain their mortgage loans. Loan charges may be collected either through points (up-front fees), or via the interest rate mechanism, which is referred to as the yield spread premium (YSP), or some combination of these two pricing mechanisms. Page two of the revised standardized GFE form discloses the computation of the total origination costs. In addition, if borrowers realize that mortgage loan origination costs may be collected by some combination of up-front fees and YSP, then they may also realize that it is possible to choose between paying higher up-front fees for a lower interest rate or lower up-front fees for a higher interest rate. Recognition of this trade-off may help borrowers avoid being charged both higher rates and higher fees. The GFE includes a trade-off table on page three to facilitate the understanding of the trade-off between interest rates and points. The trade-off table discloses how a loan with the same principal face value and a lower interest rate results in higher up-front settlement costs; it also discloses how the same loan with a higher interest rate results in lower up-front settlement costs. Although the trade-off table was found to benefit consumers, HUD's final rule required only the leftmost column of the table to be filled out. The decision to allow loan originators the option to fill out the remaining columns was related to concerns regarding the cost burden and time to calculate comparable loan costs information. In addition, the trade-off table may still be difficult to interpret for loans with adjustable interest rates, which are likely to change over the life of the loan and distort the inverse relationship between the interest rate and up-front fees. Some borrowers, however, may be inclined to request that loan originators fill out the table completely, which would facilitate HUD's policy objectives to achieve transparency. As required by the Dodd-Frank Act, the CFPB has proposed various prototypes of a standardized Loan Estimate form to combine the TILA Disclosure Statement and HUD's GFE into a single document. The Dodd-Frank Act directed the CFPB to issue a proposed rule of the new Loan Estimate form within one year of its July 21, 2011 transfer date. The CFPB stated its plans to perform five rounds of testing in six different cities before the final rule is proposed. In addition to consumer testing, the CFPB convened a Small Business Review Panel to solicit feedback on its prototype. The current prototype, Tupelo, is the most recent form available on the CFPB website and has been developed after at least five rounds of testing. Tupelo has three pages with the first page containing three sections. The first section presents the loan amount; the interest rate and whether it can change; the monthly loan payment; and whether a prepayment penalty or a balloon payment exists. The second section discloses the projected monthly payments over various time periods of the loan. Estimates of the borrower's monthly payment also includes estimated property taxes, insurance, and assessments. This section also shows whether an escrow account exists and how much the borrower should expect to pay each month. The last section on page one provides the estimated amount needed to close. The second page of the Tupelo prototype uses the example of a loan for $211,000 with $6,151 in closing costs for the sake of illustrating a completed form. The prototype has five sections. The first two sections itemize the various expenses associated with closing. The third section calculates the cash needed to close by summing the settlement fees, settlement costs, down payment, and other costs. Next, a table provides the potential borrower with information on the monthly payments, such as whether there are any interest-only payments and what the maximum payment could be. Finally, a second table describes whether the mortgage interest rate is adjustable and how it could potentially change. The third page of the Tupelo prototype contains three additional sections. The first section allows borrowers to compare the terms of other loans offered by other loan originators. The section lists the amount that a borrower will have paid in total over the first five years of the loan and how much would go to paying down principal. It also lists the APR as well as the total amount of interest paid over the loan term as a percentage of the loan. The next section provides brief information about other aspects (e.g., appraisal, homeowner's insurance, late payments, and servicing). Should the borrower decide to proceed with the mortgage origination process, the final section provides a space for the applicant to sign to confirm that the form was received. The CFPB has also developed a prototype settlement disclosure, which consolidates the HUD-1 Settlement Statement and the final TILA disclosure.

High default and foreclosure rates in the housing market have resulted in questions as to whether borrowers were fully informed about the terms of their mortgage loans. A lack of transparency with respect to loan terms and settlement costs can make it difficult for consumers to make well-informed decisions when choosing mortgage products. In addition, inadequate disclosures can make some borrowers more vulnerable to predatory lending or discriminatory practices. The adequate disclosure of mortgage terms is a longstanding issue that has prompted several congressional actions. For example, the Truth in Lending Act (TILA) of 1968 and the Real Estate Settlement Procedures Act (RESPA) of 1974 were enacted to require disclosures of credit costs and terms to borrowers. The Economic Growth and Regulatory Paperwork Reduction Act of 1996 (P.L. 104-208) directed the Federal Reserve Board and the Department of Housing and Urban Development (HUD) to propose a single form that satisfied the requirements of RESPA and TILA. However, the Federal Reserve Board and HUD concluded that regulatory changes would not be sufficient and that further statutory changes would be required for the forms to be consolidated. More recently, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203), which established the Consumer Financial Protection Bureau (CFPB), mandated the new agency revisit disclosure stipulations for mortgage loans. In addition, the Dodd-Frank Act requires the CFPB to consolidate mandatory TILA and RESPA disclosures into one Loan Estimate form. The 112th Congress has been closely monitoring the subsequent rulemaking associated with the Dodd-Frank Act, as well as the performance and effectiveness of the CFPB. Consequently, this report examines one of the first major actions undertaken by the new agency. Specifically, efforts by the CFPB to create an effective mortgage disclosure form for borrowers are discussed. This report will be updated as warranted.

In the past several decades the practice of torture by public officials has been condemned by the international community through a number of international treaties and declarations, leading many commentators to conclude that customary international law now prohibits the use of torture by government entities. Perhaps the most notable international agreement prohibiting the use of torture is the United Nations Convention against Torture and Other Cruel, Inhuman, or Degrading Treatment or Punishment (Convention or CAT), which obligates parties to prohibit the use of torture and to require the punishment or extradition of torturers found within their territorial jurisdiction. Since opening for signature in December 1984, over 140 states, including the United States, have become parties to the Convention. CAT defines torture as "any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person ... by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity." This definition does not include "pain or suffering arising only from, inherent in or incidental to lawful sanctions." According to the State Department's analysis of CAT, which was included in President Reagan's transmittal of the Convention to the Senate for its advice and consent, this definition was intended to be interpreted in a "relatively limited fashion, corresponding to the common understanding of torture as an extreme practice which is universally condemned." Indeed, CAT Article 16 further obligates signatory parties to take action to prevent "other acts of cruel, inhuman, or degrading punishment which do not amount to acts of torture.... " According to the State Department, this distinction reflected the belief by the drafters of CAT that torture must be "severe" and that rough treatment, such as police brutality, "while deplorable, does not amount to 'torture'" for purposes of the Convention. Further, CAT provides that offenses of torture require actual intent to cause severe pain and suffering; an act that results in unanticipated and unintended severity of pain and suffering is not torture for purposes of the Convention. In accordance with CAT Article 2, parties agree to take effective legislative, administrative, judicial, and other measures to prevent acts of torture from occurring within their territorial jurisdiction. Further, parties are required to ensure that all acts of torture, as well as attempts to commit torture and complicity or participation in torture, are criminal offenses subject to penalty. CAT Article 2 makes clear that "no exceptional circumstances whatsoever," including a state of war or any other public emergency, may be invoked to justify torture. The State Department has claimed that this explicit prohibition of all torture, regardless of the circumstances, was viewed by the drafters of CAT as "necessary if the Convention is to have significant effect, as public emergencies are commonly invoked as a source of extraordinary powers or as a justification for limiting fundamental rights and freedoms." CAT also imposes specific obligations upon signatory parties with respect to their transfer of individuals to other countries. CAT Article 3 requires that no state party expel, return, or extradite a person to another country where "there are substantial grounds for believing that he would be in danger of being subjected to torture." In determining whether grounds exist to believe an individual would be in danger of being subjected to torture, state parties are required to take into account "all relevant considerations including, where applicable, the existence in the state concerned of a consistent pattern of gross, flagrant or mass violations of human rights." The State Department has interpreted the words "where applicable" to indicate that competent authorities must decide whether and to what extent these considerations are a relevant factor in a particular case. CAT Article 3 does not expressly prohibit persons from being removed to countries where they would face cruel, inhuman, or degrading treatment not rising to the level of torture. The Committee Against Torture, the monitoring body created by the parties to the Convention, has interpreted the obligations of Article 3 as placing the burden of proof on an applicant for non-removal to demonstrate that there are substantial grounds to believe that he would be subjected to torture if removed to the proposed country. Further, the Committee has interpreted the non-removal provisions of Article 3 to refer to both direct and indirect removal to a state where the individual concerned would likely be tortured, meaning that a state cannot remove a person to a third country when it knows he would subsequently be removed to a country where he would likely face torture. The United States signed CAT on April 18, 1988, and ratified the Convention on October 21, 1994, subject to certain declarations, reservations, and understandings, including a declaration that CAT Articles 1 through 16 were not self-executing, and therefore required domestic implementing legislation. This section will discuss relevant declarations, reservations, and understandings made by the United States to CAT, and U.S. laws and regulations implementing the Convention. The Senate's advice and consent to CAT ratification was subject to the declaration that the Convention was not self-executing. With respect to Article 16 of the Convention, which requires states to prevent lesser forms of cruel and unusual punishment that do not constitute torture, the Senate's advice and consent was based on the reservation that the United States considered itself bound to Article 16 to the extent that such cruel, unusual, and inhumane treatment or punishment was prohibited by the Fifth, Eighth, and/or Fourteenth Amendments to the U.S. Constitution. The United States also opted out of the dispute-settlement provisions of CAT Article 30, though it reserved the right to specifically agree to follow its provisions or any other arbitration procedure in resolving a particular dispute as to the Convention's application. In providing its advice and consent to CAT, the Senate also provided a detailed list of understandings concerning the scope of the Convention's definition of torture. These understandings are generally reflected via the specific U.S. laws and regulations implementing the Convention. Importantly, under U.S. implementing legislation and regulations, CAT requirements are understood to apply to acts of torture committed by or at the acquiescence of a public official or other person acting in an official capacity. Thus, persons operating under the color of law do not necessarily need to directly engage in acts of torture to be culpable for them. For a public official to acquiesce to an act of torture, that official must, "prior to the activity constituting torture, have awareness of such activity and thereafter breach his or her legal responsibility to intervene to prevent such activity." Subsequent jurisprudence and administrative decisions have recognized that "willful blindness" by officials to torture may constitute "acquiescence" warranting protection under CAT. However, acquiescence does not occur when a government is aware of third-party torture but is unable to stop it, unless the government also breached its legal responsibility to intervene to prevent such activity. In addition, mere noncompliance with applicable legal procedural standards does not per se constitute torture. The Senate's advice and consent to CAT was also subject to particular understandings concerning "mental torture," a term that is not specifically defined by the Convention. The United States understands mental torture to refer to prolonged mental harm caused or resulting from (1) the intentional infliction or threatened infliction of severe physical pain and suffering; (2) the administration of mind-altering substances or procedures to disrupt the victim's senses; (3) the threat of imminent death; or (4) the threat of imminent death, severe physical suffering, or application of mind-altering substances to another. With respect to the provisions of CAT Article 3 prohibiting expulsion or refoulement of persons to states where substantial grounds exist for believing the person would be subjected to torture, the United States declared its understanding that this requirement refers to situations where it would be "more likely than not" that an alien would be tortured, a standard commonly used by the United States in determining whether to withhold removal of an alien for fear of persecution. The Foreign Affairs Reform and Restructuring Act of 1998 (FARRA) announced the policy of the United States not to expel, extradite, or otherwise effect the involuntary removal of any person to a country where there are substantial grounds for believing that the person would be in danger of being subjected to torture. FARRA also required relevant agencies to promulgate and enforce regulations to implement CAT, subject to the understandings, declarations, and reservations made by the Senate resolution of ratification. In doing so, however, Congress required that, "to the maximum extent consistent" with Convention obligations, these regulations exclude from their protection those aliens described in SS 241(b)(3)(B) of the Immigration and Nationality Act (INA). INA SS 241(b)(3)(B) acts as an exception to the general U.S. prohibition on the removal of otherwise removable aliens to countries where they would face persecution. An alien may be removed despite the prospect of likely persecution if the alien: participated in genocide, Nazi persecution, or any act of torture or extrajudicial killing; ordered, incited, assisted, or otherwise participated in the persecution of an individual because of the individual's race, religion, nationality, membership in a particular social group, or political opinion; having been convicted of a particularly serious crime, is a danger to the community of the United States; is strongly suspected to have committed a serious nonpolitical crime outside the United States prior to arrival; or is believed, on the basis of serious grounds, to be a danger to the security of the United States. Aliens who are described in the terrorism-related grounds for deportation, including those who have provided material support to terrorist organizations or have espoused terrorist activity, are considered a security threat covered under INA SS 241(b)(3)(B), and are thus removable and excludable from entry into the United States despite facing prospective persecution abroad. FARRA generally specifies that no judicial appeal or review is available for any action, decision or claim raised under CAT, except as part of a review of a final order of alien removal pursuant to SS 242 of the INA. The ability of a person to raise a CAT-based claim in non-removal proceedings (e.g., in the case of extradition), is the subject of debate and conflicting jurisprudence. The Ninth Circuit Court of Appeals held in one case that an individual subject to an extradition order may appeal under the Administrative Procedures Act (APA), when his surrender would be contrary to U.S. laws and regulations implementing CAT. The precedential value of this decision, however, is unclear. The Fourth Circuit Court of Appeals, in contrast, has held that judicial review (including habeas review) is unavailable with respect to CAT-based challenges to an extradition order and interpreted FARRA as barring judicial review of CAT-based actions in non-immigration proceedings. The requirements of CAT Article 3 take the form of a two-track system requiring the withholding or deferral of an alien's removal to a proposed receiving state if it is more likely than not that he would be tortured there. Reliance on these protections by aliens in removal proceedings has been frequent, though usually unsuccessful. In 2007, for example, immigration courts considered 28,130 claims for CAT-based relief, and granted such relief in 541 cases. DHS has estimated that in the first four years following the implementation of regulations implementing CAT Article 3, approximately 1,700 aliens were granted deferral or withholding of removal based on CAT protections. In 2007, deferral of removal was granted in 92 cases, compared to 173 cases in 2006 and 70 cases in 2005. CAT-implementing regulations concerning the removal of aliens from the United States are primarily covered under SSSS 208.16-208.18 and 1208.16-1208.18 of title 8 of the Code of Federal Regulations (C.F.R.), and prohibit the removal of aliens to countries where they would more likely than not be subjected to torture. DHS has primary day-to-day authority to implement and enforce these regulations, with the DOJ, through the Executive Office of Immigration Review (EOIR), having adjudicative authority over detention and removal. For purposes of these regulations, "torture" is understood to have the meaning prescribed in CAT Article 1, subject to the reservations and understandings, declarations, and provisos contained in the Senate's resolution of ratification of the Convention. In accordance with this definition, indefinite detention in substandard prison conditions has been recognized as not constituting torture when there is no evidence that such conditions are intentional and deliberate. In at least certain circumstances, however, EOIR or courts reviewing EOIR rulings have found that rape, domestic violence permitted by local law enforcement, and intentional and repeated cigarette burns coupled with severe beatings, may constitute torture under the Convention and prevent an alien's removal to a particular country. Generally, an applicant for non-removal under CAT Article 3 has the burden of proving that it is more likely than not that he would be tortured if removed to the proposed country. If credible, the applicant's testimony may be sufficient to sustain this burden without additional corroboration. In assessing whether it is "more likely than not" that an applicant would be tortured if removed to the proposed country, all evidence relevant to the possibility of future torture is required to be considered, including, inter alia , (1) evidence of past torture inflicted upon the applicant; (2) a pattern or practice of gross human rights violations within the proposed country of removal; and (3) other relevant information regarding conditions in the country of removal. The Board of Immigration Appeals (BIA), the appellate administrative body within EOIR, has recognized that evidence concerning the likelihood of torture must be particularized; evidence of the torture of similarly-situated individuals is insufficient alone to demonstrate that it is more likely than not that an applicant would be tortured if removed to a proposed country. If the immigration judge considering a CAT application determines that an alien is more likely than not to be tortured in the country of removal, the alien is entitled to protection under the Convention. Protection will either be granted through the withholding of removal or deferral of removal. Unless the alien is of a class subject to mandatory denial of withholding of removal on security, criminal, or related grounds, as provided by INA SS 241(b)(3)(B), CAT-based relief is granted in the form of withholding of removal. However, aliens falling under a category listed under INA SS 241(b)(3)(B) cannot have their removal withheld, but only deferred. A number of courts has recognized that an alien's inability to establish a more general claim for asylum, which is based on a well-founded fear of persecution on account of belonging to one of five designated types of groups, does not necessarily preclude a separate claim of relief under CAT. Deferral of removal is a lesser protection than withholding of removal, and arguably reflects Congress's intent that aliens falling under a category established by INA SS 241(b)(3)(B), "to the maximum extent possible," be excluded from protections afforded to other classes of aliens under regulations implementing CAT requirements. Aliens granted deferral of removal to a country where they would likely face torture may instead be removed at any time to another country where they would not likely face torture. Further, such aliens are subject to post-removal order detention for such periods as prescribed by regulation. Deferral may be terminated either (1) at the request of the alien; (2) following a determination by an immigration judge that the alien would no longer likely be tortured in the country to which removal had been deferred; or (3) following a determination by the Attorney General that deferral should be terminated on the basis of diplomatic assurances forwarded by the Secretary of State that indicate that the alien would not be tortured in the receiving country. U.S. law designates certain arriving aliens as inadmissible on security-related grounds, including for having engaged in terrorist activities. The regulatory framework for proceedings to remove such aliens, outlined in 8 C.F.R. SS 235.8, is more streamlined than the general regulatory framework for alien removal, providing more discretion to the Attorney General or DHS Secretary with respect to the method in which CAT obligations are assessed. When a DHS Bureau of Customs and Border Protection (CBP) officer suspects that an arriving alien is inadmissible on security or related grounds, the officer is required to temporarily order the alien removed and report such action promptly to the CBP district director with administrative jurisdiction over the place where the alien has arrived or is being held. If possible, the relevant officer must take a brief statement from the alien, and the alien must be notified of the actions being taken against him and of his right to submit a written statement and additional information for consideration by the Attorney General, who has authority to assess whether grounds exist to remove the alien. The CBP district director's report is forwarded to the regional director for further action. Essentially, this process ensures that final decisions to remove aliens on security or related grounds are made at the highest levels. If the alien's designation as inadmissible is based on non-confidential information, however, the regional director has discretion to either conduct a further examination of the alien concerning his admissibility or refer the alien's case to an immigration judge for a hearing prior to ordering removal. The regional director's written, signed decision must be served to the alien unless it contains confidential information prejudicial to U.S. security, in which case the alien shall be served a separate written order indicating disposition of the case, but with confidential information deleted. The regional director has broad discretion in determining application of CAT Article 3 to removal decisions made under 8 C.F.R. SS 235.8. The regulatory provisions concerning consideration or review of normal removal orders are explicitly deemed inapplicable in the cases described above. Instead, the regional director is generally required "not to execute a removal order under this section under circumstances that violate ... Article 3 of the Convention Against Torture." No further guidance is provided with respect to determining whether or not an alien is more likely than not to be tortured in the proposed country of removal. Unlike in cases involving CAT applications of non-arriving aliens, the regional director's decision for arriving aliens deemed inadmissible on security or related grounds is final when it is served upon the alien, with no further administrative right to appeal. U.S. immigration regulations implementing CAT include a provision concerning "diplomatic assurances," which may terminate deliberation of an alien's claim for non-removal. Pursuant to this provision, the Secretary of State is permitted to "forward ... assurances that the Secretary has obtained from the government of a specific country that an alien would not be tortured there if the alien were removed to that country." If such assurances are forwarded for consideration to the Attorney General or DHS Secretary, the official to whom this information is forwarded shall then determine, in consultation with the Secretary of State, whether such assurances are "sufficiently reliable" to permit the alien's removal to that country without violating U.S. obligations under CAT Article 3. If such assurances are provided, an alien's claims for protection under Article 3 "shall not be considered further by an immigration judge, the Board of Immigration Appeals, or an asylum officer" and the alien may be removed. In 2008, the Third Circuit Court of Appeals held that aliens who have shown a likelihood of facing torture have a right under the Due Process Clause of the Fifth Amendment to challenge the sufficiency of diplomatic assurances obtained by immigration authorities to effectuate their removal. It should be noted that CAT Article 3 provides little guidance as to the application of diplomatic assurances to decisions as to whether to remove an alien to a designated country. While Article 3 obligates signatory parties to take into account the proposed receiving state's human rights record, it requires the proposed sending state take into account "all relevant considerations" when assessing whether to remove an individual to the proposed receiving state. Further, Article 3 does not provide guidelines for how these considerations should be weighed in determining whether substantial grounds exist to believe an alien would be tortured in the proposed receiving state. Accordingly, it does not necessarily appear that the use of diplomatic assurances by the U.S. conflicts with its obligations under CAT. However, the United States has an obligation under customary international law to execute its Convention obligations in good faith, and is therefore required under international law to exercise appropriate discretion in its use of diplomatic assurances. It could be argued, for example, that if a country demonstrated a consistent pattern of acting in a manner contrary to its diplomatic assurances to the United States, the United States would need to look beyond the face of these assurances before permitting transfer to that country. For its part, the CAT Committee has opined that diplomatic assurances that provide no mechanism for enforcement do not adequately protect against the risk of torture, and therefore do not absolve the sending country of its responsibility under CAT Article 3. In 2006, the Committee recommended that the United States "establish and implement clear procedures for obtaining such assurances, with adequate judicial mechanisms for review, and effective post-return monitoring arrangements." CAT Article 3 also has implications upon the extradition policy of the United States. Pursuant to 18 U.S.C. chapter 209, the Secretary of State is responsible for determining whether to surrender a fugitive to a foreign country by means of extradition. Decisions on extradition are presented to the Secretary of State following a fugitive being found extraditable by a United States judicial officer. In cases where torture allegations are made or otherwise brought to the State Department's attention, appropriate Department officers are required to review relevant information and prepare for the Secretary a recommendation as to whether or not to extradite and whether to surrender the fugitive subject to certain conditions. As with U.S. regulations concerning the deportation of aliens, regulations concerning the extradition of fugitives reflect CAT requirements. Before permitting the extradition of a person to another country, the State Department must determine whether the person facing extradition is more likely than not to be tortured in the requesting state if extradited. For the purpose of determining whether such grounds exist, the State Department must take into account "all relevant considerations including, where applicable, the existence in the State concerned of a consistent pattern of gross, flagrant or mass violations of human rights." One consideration presumably taken into account is any diplomatic assurances obtained from the state requesting extradition. Extraditions are prohibited in cases where the State Department concludes that it is more likely than not that the person facing extradition would be tortured. However, courts have split on the availability of judicial review (including habeas review) of extradition decisions by the Secretary of State that allegedly violate CAT-implementing legislation. Articles 4 and 5 of CAT obligate each state party to criminalize torture and establish jurisdiction over offenses when such offenses are (1) committed within their territory or aboard a registered vessel or aircraft of the state; (2) committed by a national of the state; or (3) committed by a person within its territory and the state chooses not to extradite him. Following ratification of the Convention, the United States enacted chapter 113C of the United States Criminal Code to criminalize acts of torture occurring outside its territorial jurisdiction. Pursuant to 18 U.S.C. SS 2340A, any person who commits or attempts to commit an act of torture outside the United States is subject to a fine and/or imprisonment for up to 20 years, except in circumstances where death results from the prohibited conduct, in which case the offender faces imprisonment for any term of years up to life or the death penalty. Persons who conspire to commit an act of torture outside the United States are generally subject to the same penalties faced by those who commit or attempt to commit acts of torture, except that they cannot receive the death penalty. The United States claims jurisdiction over these prohibited actions when (1) the alleged offender is a national of the United States or (2) the alleged offender is present in the United States, irrespective of the nationality of the victim or offender. The provisions of CAT Article 3 appear to protect all individuals from removal to a state where they are likely to be tortured, regardless of whether these individuals engaged in criminal practices themselves. However, while CAT obligates the United States not to remove aliens to countries where they are likely to be tortured, the Convention does not require the United States to permit such aliens' open presence in its territory. The question thus occurs as to what happens in the case of an otherwise inadmissible or deportable alien whose removal is effectively barred by CAT. In Zadvydas v. Davis , the Supreme Court concluded that the indefinite detention of deportable aliens (e.g., aliens who were admitted into the U.S., and thereafter committed an immigration violation that caused them to become removable) would raise significant due process concerns. The Court interpreted the applicable immigration statute governing the removal of deportable aliens as only permitting the detention of aliens following an order of removal for so long as is "reasonably necessary to bring about that alien's removal from the United States. It does not permit indefinite detention." The Court found that the presumptively reasonable limit for the post-removal-period detention is six months, but indicated that continued detention may be warranted when the policy is limited to specially dangerous individuals and strong procedural protections are in place. Subsequently, the Supreme Court ruled that aliens who have been deemed inadmissible (i.e., arriving aliens who have not been granted legal entry, as well as those aliens who have been "paroled" into the country by immigration authorities) also could not be indefinitely detained, but the Court's holding was based on statutory construction of the applicable immigration law, and it did not consider whether such aliens were owed the same due process protections as aliens who had been legally admitted into the United States. It is important to note, however, that despite generally rejecting the practice of indefinite detention, the Zadvydas Court nevertheless suggested that the continued detention of particular aliens past the statutory period for removal might be warranted in limited cases where the alien was "specially dangerous." Though the Court only specifically mentioned mental illness as a special circumstance perhaps warranting indefinite detention, it appears that aliens detained on security or related grounds, such as terrorists, might also be considered "specially dangerous" and warrant indefinite detention as well. Following the Court's ruling in Zadvydas , new regulations were issued to comply with the Court's holding. After a six-month detention period, which the Zadvydas Court found to be presumptively reasonable, an alien's request for release from detention, accompanied by evidence that his removal would not otherwise be effected in the reasonably foreseeable future, may be reviewed by the DHS's Bureau of Immigration and Customs Enforcement (ICE). Following consideration of this evidence, the ICE is required to issue a written decision either ordering the alien released or continuing his detention. DHS regulations permit the continued detention of certain classes of aliens on account of special circumstances, including, inter alia , any alien who is detained on account of (1) serious adverse foreign policy consequences of release; (2) security or terrorism concerns; or (3) being considered specially dangerous due to having committed one or more crimes of violence and having a mental condition making it likely that the alien will commit acts of violence in the future. As a result of the Zadvydas decision, some criminal aliens afforded non-refoulement protection under CAT may be required to be eventually released from detention, even though such aliens would otherwise be subject to removal from the United States. According to the DHS, "in all but the most serious cases, a criminal alien who cannot be returned--regardless of the reason--may be subject to release after six months." In 2003, the DHS stated that in practice less than one percent of criminal aliens who have received CAT protection have been released from custody following a final order of removal. However, given the Court's ruling in Zadvydas and subsequent jurisprudence suggesting that the use of indefinite detention may be severely limited, as well as the growing number of aliens who have been granted deferral of removal under CAT, the magnitude of this potential obstacle to alien removal may increase over time. It is important to note that CAT only prohibits signatory parties from expelling persons to states where they would likely to be tortured--it does not provide aliens with protection from removal to states where they would not be tortured, even if such aliens would face cruel, inhuman, or degrading treatment not rising to the level of torture. Reaching agreements with countries to permit the removal of criminal aliens to these countries (possibly for the purpose of prosecuting them), subject to the condition that they will not be tortured or perhaps face other harsh forms of treatment, could be one possible method for handling this potential problem, although it is unclear whether other states would be receptive to such agreements. When immigration officials identify a suspected foreign terrorist or similar security threat at a port of entry, the government's interest in the alien likely extends beyond simply assuring that the suspect does not enter the United States. Security and criminal law enforcement interests may also come into play. Controversy over how CAT applies in reconciling these diverse interests is illustrated by the case of Maher Arar. In September 2002, U.S. authorities arrested Mr. Arar, a Canadian citizen born in Syria, at John F. Kennedy Airport in New York while he was waiting for a connecting flight to Canada. According to news reports, U.S. officials allege that Arar was on a terrorist watch list after "multiple international intelligence agencies" linked him to terrorist groups, though Arar has denied any knowing connection to terrorism. Though the particulars remain unclear, Arar alleges that he was detained for several days of interrogation in the United States and asked to voluntarily agree to be transferred to Syria. Arar claims he refused to approve such transfer, but was nevertheless transferred to Jordan and then to Syria, where he was reportedly imprisoned for ten months. At the time of Arar's transfer, Syria was listed by the State Department as a regular practitioner of torture. Syria is not a party to CAT. Upon release and his subsequent return to Canada, Arar claims that he was tortured by Syrian officials in an effort to compel him to confess to terrorist activities. Canada subsequently ordered a public inquiry as to what role, if any, Canada played in Arar's transfer to Syria, and Arar filed civil suit in a U.S. federal court against various current and former U.S. officials for their role in his transfer and alleged subsequent torture. In late 2003, then-Attorney General John Ashcroft was quoted as stating, "In removing Mr. Arar from the U.S., we acted fully within the law and applicable treaties and conventions." The United States reportedly received assurances from Syria that Arar would not be tortured prior to removing him there, and Syria has reportedly stated that Arar was not tortured. It is unclear whether Arar's rendition complied with any legal procedures governing covert renditions that are not handled through either extradition or the general process for alien removal. Further, there appears to be no public information concerning what assurances, if any, were given by Syria to the United States prior to Arar's transfer. Arar's lawsuit claimed in part that his removal was in violation of regulations concerning the removal of arriving aliens, and U.S. officials have claimed that his removal was conducted pursuant to expedited removal procedures outlined in INA SS 235(c). On the other hand, it is possible that Arar's rendition was conducted at least in part pursuant to a law-enforcement action relating to the war on terror rather than pursuant to U.S. immigration laws. Whether Arar's removal to Syria constituted a violation of U.S. obligations under CAT and CAT-implementing laws and regulations may require a finding of fact as to the particular nature of the assurances provided to the United States and the role they played in the decision to remove Arar. Whether such a finding will be made in the foreseeable future remains to be seen. On February 16, 2006, the U.S. District Court for the Eastern District of New York dismissed Arar's civil case on a number of grounds, including that certain claims raised against U.S. officials implicated national security and foreign policy considerations, and the propriety of those considerations was most appropriately reserved to Congress and the executive branch. The district court's dismissal was upheld by a three-judge panel of the Court of Appeals for the Second Circuit on June 30, 2008. A rehearing en banc was granted on August 12, 2008, but a ruling has yet to be issued. The final report of the commission established by the Canadian government to investigate Canada's role in Arar's transfer was released in September 2006. It concluded that Arar had not been a security threat to Canada, but Canadian officials provided U.S. authorities with inaccurate information regarding Arar that may have led to his transfer. For a detailed discussion concerning the legality of renditions under the laws on torture, including CAT, see CRS Report RL32890, Renditions: Constraints Imposed by Laws on Torture , by [author name scrubbed].

The United Nations Convention Against Torture and Other Cruel, Inhuman, or Degrading Treatment or Punishment (CAT) requires signatory parties to take measures to end torture within their territorial jurisdictions. For purposes of the Convention, torture is defined as an extreme form of cruel and inhuman punishment committed under the color of law. The Convention allows for no circumstances or emergencies where torture could be permitted. Additionally, CAT Article 3 requires that no state party expel, return, or extradite a person to another country where there are substantial grounds to believe he would be subjected to torture. CAT Article 3 does not expressly prohibit persons from being removed to countries where they would face cruel, inhuman, or degrading treatment not rising to the level of torture. The United States ratified CAT subject to certain declarations, reservations, and understandings, including that the Convention was not self-executing, and therefore required domestic implementing legislation to take effect. In accordance with CAT Article 3, the United States enacted statutes and regulations to prohibit the transfer of aliens to countries where they would be tortured, including the Foreign Affairs Reform and Restructuring Act of 1998, and certain regulations implemented and enforced by the Department of Homeland Security (DHS), the Department of Justice (DOJ), and the Department of State. These authorities, which require the withholding or deferral of the removal of an alien to a country where he is more likely than not to be tortured, generally provide aliens already residing within the United States a greater degree of protection than aliens arriving to the United States who are deemed inadmissible on security- or terrorism-related grounds. Further, in deciding whether or not to remove an alien to a particular country, these rules permit the consideration of diplomatic assurances that an alien will not be tortured there. Nevertheless, under U.S. law, the removal or extradition of all aliens from the United States must be consistent with U.S. obligations under CAT. CAT obligations concerning alien removal have additional implications in cases of criminal and other deportable aliens. The Supreme Court's ruling in Zadvydas v. Davis suggests that certain aliens receiving protection under CAT cannot be indefinitely detained, raising the possibility that certain otherwise-deportable aliens could be released into the United States if CAT protections make their removal impossible. CAT obligations also have implications for the practice of "extraordinary renditions," by which the U.S. purportedly has transferred aliens suspected of terrorist activity to countries that possibly employ torture as a means of interrogation. For additional background on renditions and other CAT-related issues, see CRS Report RL32890, Renditions: Constraints Imposed by Laws on Torture, and CRS Report RL32438, U.N. Convention Against Torture (CAT): Overview and Application to Interrogation Techniques, both by [author name scrubbed].

Programs under the Agricultural Trade Development and Assistance Act of 1954, referred to as P.L. 480, historically have been the main vehicles of U.S. international food aid. Title II of P.L. 480, administered by the U.S. Agency for International Development (USAID), is the largest U.S. international food aid program. Title II provides humanitarian donations of U.S. agricultural commodities to respond to emergency food needs or to be used in development projects. Funds available to Title II of P.L. 480 from both regular and supplemental appropriations have averaged $2 billion annually since enactment of the 2002 farm bill (2002-2007). Over time, however, other, smaller food aid programs, administered by the U.S. Department of Agriculture (USDA), have been authorized by Congress--Food for Progress in 1985, the Bill Emerson Humanitarian Trust in 1998, and the McGovern-Dole International School Feeding and Child Nutrition Program in 2003. For USDA-administered programs, the annual average funding over the 2002 farm bill period has been $356 million. Most of the farm bill food aid debate focused on P.L. 480 Title II commodity donations. The 2008 farm bill changes the name of the underlying P.L. 480 legislation from Agricultural Trade Development and Assistance Act to Food for Peace Act and deletes export market development as one of the objectives of the programs. This modification of objectives is intended to reflect the approach--de-emphasis of export market development for U.S. agricultural commodities and more emphasis on promoting food security--taken in operating the program in recent years. Issues addressed included policy objectives, funding levels, availability of food aid resources for non-emergency (development) projects, and using local/regional commodity purchases to respond more efficiently and effectively to food crises, among others. The 2008 farm bill amends the purposes of the Title II program to clarify that food deficits to be addressed include those resulting from manmade and natural disasters. Recognition that food deficits can be manmade brings the U.S. definition of disaster more in line with the definition used by United Nations agencies such as the World Food Program. The new farm bill adds promotion of food security and support of sound environmental practices to the objectives of Title II commodity donations, and requests that the administrator of USAID brief relevant congressional committees before responding to disasters that result mostly from poorly devised or discriminatory governmental policies. The new farm law also includes a Sense of Congress declaration that in international negotiations the President shall seek commitments of higher levels of food aid from other donors; ensure that food aid implementing organizations be eligible to receive food aid resources based on their own needs assessments; and ensure that options for providing food aid shall not be subject to limitation, on condition that the provision of the food aid is based on needs assessments, avoids disincentive effects to local production and marketing, and is provided in a manner that avoids disincentives to local production and marketing and with minimal potential to disrupt commercial markets. This declaration reflects a concern in Congress with the issue of how Doha Round multilateral trade negotiations on food aid could affect U.S. food aid policy and programs. The 2008 farm bill extends authorization of P.L. 480 programs through FY2012 and sets the annual authorization level for Title II at $2.5 billion. This level of funding would be $500 million more annually than has been provided for Title II under the 2002 farm bill each fiscal year through a combination of regular and supplemental appropriations. But as this authorization is discretionary, it will be up to appropriations bills to set the amount of annual Title II funding. With a view to providing more cash assistance to organizations--private voluntary organizations (PVOs), cooperatives, intergovernmental organizations--that implement Title II food aid programs, the farm bill increases the range of funds available for administrative and distributional expenses to between 7.5% and 13% of funds available each year to the program (appropriations, carry-over, and reimbursements) . (The range of available Title II funds for these purposes under the 2002 farm bill was 5% to 10%). Additionally, the 2008 farm bill provides $4.5 million for FY2009-FY2011 to study and improve food aid quality (e.g., eliminate spoilage). The new farm bill extends the requirement that the Administrator of USAID make a minimum level of 2.5 million metric tons (MMT) of commodities available each fiscal year through 2012 for distribution via Title II. Of that minimum, not less than 1.875 MMT is to be made available for non-emergency (development) projects. This mandated volume of commodities for development food aid has rarely been met. The requirement can be waived, and frequently has been, if the Administrator of USAID determines that such quantities of commodities cannot be used effectively or in order to meet an emergency food security crisis. In recent years, more Title II funds have been allocated to emergency relief than to non-emergency (development) projects. In FY2007, for example, USAID allocated $866.3 million to emergency food aid and $348.4 million to development food aid. The Administration has expressed concerns about the adequacy of food aid resources to respond to emergencies, while food aid organizations indicate concerns about the availability of food aid for use in development projects. The 2008 farm bill provides for a "safe box" for funding of non-emergency, development assistance projects under Title II. The argument in favor of the safe box is that it would provide assurances to the implementing organizations (PVOs, coops, intergovernmental organizations) of a given level of funds with which to carry out development projects. The Administration's principal objection to the safe box is that it will deprive the USAID Administrator of the flexibility needed to respond to emergency food needs. The new farm bill provides a safe box funding level beginning at $375 million in FY2009, ending in FY2012 at $450 million. The mandated funding level can be waived if three criteria are satisfied: (1) the President determines that an extraordinary food emergency exists; (2) resources from the Bill Emerson Humanitarian Trust (see below) have been exhausted, and (3) the President has submitted a request for additional appropriations to Congress equal to the reduction in safe box and Emerson Trust levels. The 2008 farm bill includes a scaled-down version of the Administration's only international food aid proposal for legislative authority to use up to $300 million of appropriated P.L. 480 Title II funds for local or regional purchase and distribution of food to assist people threatened by a food security crisis. The farm bill provides that the pilot project be conducted by the Secretary of Agriculture with a total of $60 million in mandatory funding (not P.L. 480 appropriations) during FY2009 and FY2012. The pilot project would entail a study of experiences with local/regional purchase followed by field-based projects that would purchase food commodities locally or regionally. The field-based projects would be funded with grants to PVOs, cooperatives, and intergovernmental organizations, such as the World Food Program. All of the field-based projects would be evaluated by an independent third party beginning in 2011; the Secretary of Agriculture would submit a report to Congress on the pilot project four years after the enactment of the bill. The new farm bill extends to 2012 the authority for the Food Aid Consultative Group (FACG), which advises the USAID Administrator on food aid policy and regulations. It requires that a representative of the maritime transportation sector be included in the Group. The 2008 farm bill reauthorizes the Micronutrient Fortification Program in which grains and other food aid commodities may be fortified with such micronutrients as vitamin A, iodine, iron, and folic acid. It adds new legislative authority to assess and apply technologies and systems to improve food aid. The farm bill also eliminates limitations on the number of countries in which this program can be implemented. The farm bill authorizes the use of up to $22 million annually to be used for the monitoring and assessment of non-emergency (development) food aid programs. No more than $8 million of these funds may be used for the Famine Early Warning System Network (FEWS-NET), but only if at least $8 million is provided for FEWS-NET from accounts appropriated under the Foreign Assistance Act of 1961. Up to $2.5 million of the funds can be used to upgrade the information technology systems used to monitor and assess the effectiveness of food aid programs. This provision is a response to criticism that monitoring of such programs by USAID has been inadequate due to such factors as limited staff, competitive priorities, and legal restrictions. The USAID Administrator can use these funds to employ contractors as non-emergency food aid monitors. The farm bill increases funding available annually (from Title II funds) from $3 million to $8 million for stockpiling and rapid transportation, delivery, and distribution of shelf-stable, prepackaged foods. Shelf-stable foods are developed under a cost-sharing arrangement that gives preference to organizations that provide additional funds for developing these products. The new bill also reauthorizes prepositioning of commodities overseas and increases the funding for prepositioning to $10 million annually from $2 million annually. USAID maintains that prepositioning (currently at two sites, New Orleans and Dubai, United Arab Emirates) enables it to respond more rapidly to emergency food needs. Critics say, however, that the cost effectiveness of prepositioning has not been evaluated. The 2008 farm bill reauthorizes the Farmer-to-Farmer program of voluntary technical assistance in agriculture funded with a portion of P.L. 480 funds. The bill provides an annual floor level of funding for the program of $10 million and extends it through 2012. It also increases the authorization of annual appropriations for specific regions (sub-Saharan Africa and the Caribbean Basin) from $10 million to $15 million. This title of P.L. 480 authorizes provision of long-term, low interest loans to developing countries for the purchase of U.S. agricultural commodities. The new farm bill makes some changes in the program, which has not received an appropriation since 2006 to reflect a food security rather than a market development emphasis of U.S. food aid. Thus the bill strikes references in Title I to recipient countries becoming commercial markets for U.S. agricultural products and the requirement that organizations seeking funding under this title prepare and submit agricultural market development plans. The bill gives Title I of P.L. 480, previously referred to as Trade and Development Assistance, a new name, Economic Assistance and Food Security. The Food for Progress Program (FFP) provides commodities to developing countries that have made commitments to expand free enterprise in their agricultural economies. The 2002 farm bill required that a minimum of 400,000 MT be provided under the FFP program. However, not more than $40 million of Commodity Credit Corporation (CCC) funds may be used to finance transportation of the commodities. This amount effectively caps the volume of commodities that can be shipped under the program. (In FY2007, for example, 342,000 MT were shipped under FFP.) The 2008 farm bill conference agreement extends the program without change through 2012, with the requirement that the Secretary of Agriculture establish a project in Malawi under the FFP. The McGovern-Dole food aid program provides commodities and financial and technical assistance to carry out preschool and school food for education programs in developing countries. The program is widely viewed as a model food aid program because of the flexibility with which it provides program components. By executive order of the President, the McGovern-Dole program is administered by the Secretary of Agriculture. The main issues in congressional debate about the future of the program were the manner and level of funding. Some argued for changing the funding from discretionary (as in current law) to mandatory and for ramping up funding to $300 million by 2012. Others proposed maintaining discretionary funding for the program with a substantial increase. The 2008 farm bill reauthorizes the program through 2012 and establishes the U.S. Department of Agriculture as the permanent home for the program. The new law maintains funding for McGovern-Dole on a discretionary basis without an increase, but does authorize $84 million in mandatory money for the program in FY2009, to be available until expended. The Bill Emerson Humanitarian Trust (BEHT) is a reserve of commodities and cash that is used to meet unanticipated food aid needs or to meet food aid commitments when U.S. domestic supplies are short. The BEHT can hold up to 4 MMT of grains (wheat, rice, corn, sorghum) in any combination, but the only commodity ever held has been wheat. USDA has recently sold the remaining wheat in the trust (about 915,000 MT) so that currently the BEHT holds only cash--about $294 million. The cash would be used, according to USDA, when USAID determines it is needed for emergency food aid. The 2008 farm bill reauthorizes the BEHT through FY2012. It removes the 4 million ton cap on commodities that can be held in the trust, and allows the Secretary to invest the funds from the trust in low-risk, short-term securities or instruments so as to maximize its value. The new law replaces the word "replenish" with the word "reimburse" throughout the language to reinforce the notion that resources of the BEHT may be held in cash as well as commodities.

Provision of U.S. agricultural commodities for emergency relief and economic development is the United States' major response to food security problems in developing countries. Title III in the omnibus farm bill enacted in June 2008, the Food, Conservation, and Energy Act of 2008 (P.L. 110-246, H.R. 6124), reauthorizes and makes a number of changes in U.S. international food aid programs. Farm bill debate over U.S. food aid programs focused generally on how to make delivery of food aid more efficient and more effective. While most of the debate focused on P.L. 480 Title II, the largest food aid program, the farm bill trade title also reauthorizes and modifies other, smaller U.S. food aid programs. One of the most contentious issues was that of using appropriated P.L. 480 funds to purchase commodities overseas, rather than U.S. commodities, to respond to emergency food needs. The Bush Administration had asked for this authority in its farm bill proposals, but many, though not all, of the private voluntary organizations and cooperatives that use U.S. commodities for development projects instead argued for a pilot project for local or regional purchases of commodities.

Chapter 9 of the U.S. Bankruptcy Code provides a legal mechanism through which municipalities may be protected from their creditors as they attempt to develop and negotiate a plan to adjust their debts. Although chapter 9 was enacted as part of the Bankruptcy Code pursuant to Congress's power under Article I, SS 8, clause 4, municipal bankruptcies are different from the bankruptcies of individuals and businesses. There is no provision for liquidation of a municipality's assets to satisfy creditors, there is no "bankruptcy estate," and the bankruptcy court has limited authority over the conduct of the municipality during the pendency of the case. Furthermore, creditors do not have the ability to file a petition for the municipality--an "involuntary case." Many of these limitations are in the code to preserve the states' autonomy under the Tenth Amendment to the U.S. Constitution. The recent recession has caused fiscal distress for states and municipalities as well as for individuals and businesses. In 2009, there were more filings by municipalities under chapter 9 of the Bankruptcy Code than in 2007 and 2008 combined. Despite this seemingly dramatic increase in chapter 9 filings, chapter 9 is, and has been, a relatively seldom used provision of the Bankruptcy Code, generally averaging fewer than 10 filings per year. Many of those filings have been by small government agencies such as municipal utilities, school districts, or single-purpose entities (e.g., a hospital or convention center). Reports of significantly decreased revenues and increased expenses in both cities and states as well as predictions of a significant number of municipal bond defaults in the coming years have sparked interest in municipal bankruptcy, as well as calls for allowing states to use the Bankruptcy Code as a means of adjusting their own debts. Under the current Bankruptcy Code, there is no provision that would allow states to file for bankruptcy protection; however, less than 100 years ago, municipalities were not eligible to file for bankruptcy protection. A brief legislative history is provided in the Appendix . Only municipalities may file under chapter 9 of the Bankruptcy Code, and it is the only chapter under which a municipality may file even if that municipality is incorporated. Not all municipalities can file. A municipality must be specifically authorized by its state to file under chapter 9. The municipality must be insolvent and must be willing to negotiate a plan to adjust its debts. It generally must also show that it has negotiated in good faith with its creditors. Challenges to an entity's eligibility to file under chapter 9 are a prime area for litigation by creditors following a chapter 9 filing. The municipality carries the burden of proving that it is eligible to file under chapter 9. If it is not, then the case will be dismissed. Litigation of challenges to chapter 9 eligibility can be a time-consuming process. Most people, hearing the term "municipality," probably think of cities and towns. However, under the Bankruptcy Code, the term encompasses a broader variety of entities. Section 101(40) of the Bankruptcy Code states that the term "means political subdivision or public agency or instrumentality of a State." Thus, although states are not included in the definition, counties are, since counties, like cities, towns, villages, etc., are political subdivisions of a state. Public agencies or instrumentalities of a state include such entities as school districts, water districts, and highway authorities. Since 1994, municipalities have only been eligible to file under chapter 9 if they were specifically authorized to do so by their states. Not all states authorize their municipalities to file under chapter 9. Georgia law explicitly prohibits the state's municipalities from filing. Iowa restricts chapter 9 authorization to those municipalities that become insolvent as a result of an involuntarily incurred debt. In 14 states, municipalities must get approval from a state authority before filing a chapter 9 petition. Twenty-three states have no law addressing authorization to file under chapter 9; therefore, unless a specific law were passed by the state explicitly authorizing their filing, municipalities in those states would be unable seek protection under chapter 9. Simply being a municipality that is authorized by its state to file under chapter 9 is not sufficient for being an eligible chapter 9 debtor. The municipality must also be insolvent. Insolvency in a municipal bankruptcy is determined on a cash flow basis rather than being defined as the condition where liabilities exceed assets; Section 101(32)(C) defines "insolvent" as the financial condition of either generally not paying undisputed debts as they become due or the inability to pay debts as they become due. However, fiscal distress is not sufficient if the municipality has the means of either increasing revenue or reducing costs. To be eligible for chapter 9 protection, an insolvent municipality must be filing for such protection in good faith. Although a municipality is no longer required to submit a plan of adjustment with its bankruptcy petition, it must evidence a desire to implement a plan of adjustment rather than filing under chapter 9 in an attempt to either evade or delay payments to its creditors. Unless it has reason to believe that a creditor may attempt to get an avoidable transfer, the municipality generally must show that it has negotiated with its creditors in good faith or that it is impractical to do so prior to filing the petition. The automatic stay goes into effect when the chapter 9 petition is filed. The stay generally prevents both the initiation and continuation of collection actions by creditors against the municipality. A creditor may, however, ask the bankruptcy court to provide relief from the stay, which the court shall grant in certain circumstances. Chapter 9 provides that the stay does not apply to application of pledged special revenues to the debt secured by those special revenues. Additionally, the stay will not prevent creditors from challenging the municipality's eligibility to file for chapter 9 protection. Filing for chapter 9 does not automatically eliminate the financial stress a municipality is experiencing. The municipality may need additional funds to provide services or to pay for expenses incurred in the administration of the chapter 9 case. By its incorporation of Section 364(c), chapter 9 provides the municipality with the ability to acquire debt that either has priority over administrative expenses or is secured by a lien on the municipality's property. However, some states will not allow their municipalities to borrow to cover operating expenses. Furthermore, unless the lender were to agree otherwise, the entire debt would need to be repaid by the effective date of the plan of adjustment, otherwise the plan could not be confirmed. There are several ways in which the municipal debtor retains control in a chapter 9 case. Generally, there is no trustee in a chapter 9 case. In this way it is similar to a chapter 11. However, in a chapter 9 case, if a creditor so requests, the court may appoint a trustee for the limited purpose of pursuing a cause of action using certain avoidance powers, such as fraudulent or preferential transfers, when a debtor has refused to do so. In a chapter 11, if a trustee is appointed, the trustee takes the place of the debtor in possession, with the same powers and duties. Generally, a trustee is appointed in a chapter 11 case only "for cause" such as fraud, dishonesty, incompetence, or gross mismanagement. Municipal property, including income other than special revenues, remains under the control of the municipality to use as it chooses. It does not become part of an estate that cannot be disposed of without the consent of the bankruptcy court. In a municipal bankruptcy, the municipality retains autonomy in most things. The bankruptcy court cannot interfere with the municipality's political or governmental powers, its property or revenues, or its use or enjoyment of its income-producing property. The municipality in chapter 9 remains subject to control by the state. The bankruptcy court's involvement is generally limited to a few areas. It may determine whether the municipality is eligible to file under chapter 9 and may dismiss cases when appropriate. Approval of assumptions or rejections of executory contracts and confirmation of the municipality's plan of adjustment are also within the purview of the bankruptcy court. Chapter 9 includes SS 365 among the sections of the Bankruptcy Code that are applicable in a municipal case. As a result, the municipality, with the approval of the court, may assume executory contracts that are beneficial to the municipality and reject those that are too burdensome. Generally, the standard bankruptcy courts use in approving a debtor's assumption or rejection of an executory contract is the business judgment rule, a standard that generally defers to the debtor's judgment as to what is best for its operations. However, in evaluating assumption or rejection of a collective bargaining agreement (CBA), the courts use a higher standard. In a chapter 11 bankruptcy, rejection of a CBA is subject to the requirements of SS 1113 of the Bankruptcy Code. This section requires that three conditions be met before a court can grant a motion to reject a CBA: (1) the debtor must meet the requirements of 11 U.S.C. SS 1113(b)(1) by (a) presenting a proposal that both treats all parties equitably and proposes changes necessary for reorganization, and (b) providing the bargaining unit's representative with information needed to evaluate the proposal; (2) the representative must have refused to accept the debtor's proposal without good cause; and (3) "the balance of equities [must] clearly favor[] rejection." Section 1113, which is not among the Bankruptcy Code sections named in SS 901(a) as applicable in chapter 9, was added to the Bankruptcy Code following the U.S. Supreme Court's 1984 holding in National Labor Relations Board v. Bildisco and Bildisco . Bildisco held that rejection of a CBA required a higher standard than the business judgment rule, but its requirements were not as stringent as those of SS 1113. Under the Bildisco standard, a CBA may be rejected only if the court finds that the agreement is burdensome to the debtor and that, after balancing the equities, rejection is favored. This is the standard generally used for rejecting a CBA in chapter 9. In 1995, the bankruptcy court overseeing the Orange County, CA, chapter 9 case found that the standards established by the Bildisco decision were applicable when a municipality wanted to reject a CBA, but that those standards had not been met nor had the county established the necessity for unilateral abrogation of its employee CBAs. Recently the city of Vallejo, CA, was successful in rejecting CBAs in its chapter 9 case, with both the bankruptcy court and the district court finding that the Bildisco standard was applicable in the case. The district court, ruling in an appeal by the International Brotherhood of Electrical Workers, Local 2376, found that the Bildisco standard had been met. Sections 547 and 548 of the Bankruptcy Code are applicable in chapter 9 cases; therefore, the municipality can avoid (or "clawback") fraudulent transfers and preferential transfers. One exception to the latter is transfers to bondholders. In a chapter 9 case, only the debtor has the right to file a plan of adjustment. This is in contrast to chapter 11 reorganizations, in which the debtor initially has the exclusive right to file a plan of reorganization, but with the passage of time, may lose that exclusivity. In a chapter 9 case, if the plan is not filed with the petition, the court may determine a date by which the plan must be filed. To be confirmed, a plan generally must be accepted by each class of impaired creditors. However, chapter 9 incorporates the "cramdown" provision in chapter 11, thereby allowing confirmation if at least one class of impaired creditors accepts the plan and the plan "does not discriminate unfairly, and is fair and equitable, with respect to each class of claims or interests that is impaired under, and has not accepted the plan." Special revenue bonds are generally protected from adjustment in chapter 9. General obligation bonds do not enjoy such protection under bankruptcy law; however, a municipality's ability to adjust those debts may be limited by state law. To be confirmed, a plan cannot require the municipality to take an action that is prohibited by law. This provision may also limit a municipality's ability to adjust its existing pension obligations through chapter 9. Many states have either constitutional or statutory constraints regarding both general obligation debts and pensions. Section 943 directs the court to confirm a plan if it complies with the requirements of the Bankruptcy Code; the expenses incurred in connection with the case and the plan of adjustment are disclosed and are reasonable; the debtor is not legally prohibited from taking actions necessary to carry out the plan; holders of administrative claims receive cash equaling their claims, unless they agree otherwise; the debtor has, or will, obtain any regulatory or electoral approval required under nonbankruptcy law for carrying out the plan; and the plan is both feasible and in the best interest of creditors. As stated before, municipalities rarely file for bankruptcy protection. Although New York City experienced significant financial difficulty in 1975, it did not file for bankruptcy. Instead, the state created a financial watchdog: the New York City Emergency Financial Control Board, which held veto power over the city's budget until 1986. In 1991, the city of Bridgeport, CT, filed under chapter 9, but its case was dismissed after its eligibility to file was challenged by creditors. The court found that state law authorized the city to file, but found that it was not insolvent. In recent years, there have been two notable chapter 9 filings: Orange County, CA; and the city of Vallejo, CA. On December 6, 1994, Orange County, CA, filed under chapter 9. Its debt adjustment represents the largest municipal bankruptcy filing to date. The county was overseer of the Orange County Investment Pool (OCIP), comprising its funds and those belonging to a wide variety of additional municipal entities, such as school and irrigation districts. The county treasurer engaged in a high-risk investment strategy involving reverse repurchase agreements or "repos." The OCIP's $7.5 billion in investment equity was leveraged into $20 billion. The success of the investment strategy depended upon declining interest rates. When interest rates began to rise and creditors demanded increased collateral, the county's financial liquidity plummeted. It filed under chapter 9 and instituted many lawsuits against its investment bankers and others. A plan of adjustment became effective in June 1996. In February 2000, the presiding bankruptcy judge closed the case by approving the distribution of $816 million in litigation proceeds. Prior to filing under chapter 9 on May 23, 2008, the city of Vallejo attempted to resolve its financial issues by "reducing the number of its employees, cutting funding and services not controlled by contract, and severely reducing or completely cutting off funding for various community services ... as well as infrastructure." It also "retained a consultant to identify potential sources of new and additional revenue, and implemented these recommendations where possible." However, its ability to generate new revenues was limited by California law. Through negotiations, the city was able to temporarily reduce employee costs, arriving at interim agreements to modify the collective bargaining agreements (CBAs) with its police and firefighters. The city was not successful in its attempts to negotiate long-term modifications to its CBAs with any of the four unions representing its employees. Prior to the expiration of the interim agreements, the city filed under chapter 9 and froze all employee compensation at its pre-petition level. This enabled the city to benefit from the interim agreements beyond their stated expiration dates as well as avoid upcoming salary increases provided for in the CBAs. It also filed a motion to reject its CBAs. Ultimately, the city was able to renegotiate all but one of its CBAs. The court allowed the city to reject the remaining CBA, using the Bildisco standard. The city's plan of adjustment was filed January 18, 2011, along with its disclosure statement. In the plan the city proposes paying its unsecured creditors less than the full amount of their claims. Estimates are that the claims would be paid between 5% and 20%. The disclosure statement prepared by the city must be approved by the court before the creditors have the opportunity to vote on the city's plan of adjustment. On March 1, 2011, Boise County, ID, filed a chapter 9 petition. Reportedly the impetus for the filing was a judgment against the county for $4 million. The annual budget for the county, which does not include the city of Boise, is less than $9.5 million. The judgment came as the result of a suit by Alamar Ranch, LLC, which asserted that its efforts to obtain a conditional use permit had been improperly blocked. Taxpayers in the county had opposed the proposed development--a residential treatment facility for 72 boys. Ultimately, the county was found to have violated the Fair Housing Act. After the judgment, the county attempted to negotiate a lower amount that it could afford, but was unsuccessful. Harrisburg considered filing under chapter 9, but ultimately its mayor, who opposed bankruptcy, chose to pursue a state-offered program for distressed cities. December 15, 2010, Harrisburg, PA, was accepted into the state's "distressed cities" program, also known as Act 47. The program was started in 1987. Harrisburg is the 20 th municipality in the program. Many have remained in the program for more than a decade. The city qualified for the program after missing $10.5 million in payments for bonds related to an incinerator project. It also had a junk-bond credit rating and lawsuits to force it to postpone paying operating expenses (including payroll) in favor of meeting debt obligations as well as a more than $19 million projected deficit in 2015. Some believe that chapter 9 would be a better alternative for the city than the state program and are considering appealing the state's decision to admit the city into its program. Jefferson County, AL, is the most populous county in Alabama. Most of the city of Birmingham is within its boundaries. It has been experiencing financial difficulties for several years. While there has been speculation about its filing for bankruptcy, it has not done so. If it does, it is believed that it would be the largest municipal bankruptcy in history. Jefferson County's financial troubles are due in part to the recession, but also due to a $3.2 billion debt load attributable to sewer bonds with a floating interest rate and a downgrading of those bonds to junk status in 2008 by both Moody's Investors Service and Standard and Poor's due to the projected inability of the county to meet interest payments on the debt. Most recently, the county has lost a source of revenue after the Alabama Supreme Court found the county's occupational tax unconstitutional for lack of sufficient notice. In 1934, legislation was enacted as "emergency temporary aid" for insolvent municipalities whose revenues had dropped during the Great Depression. The provisions were modified slightly by legislation enacted in April 1936 and were extended to January 1, 1940. Two years and one day after the original legislation was enacted, the U.S. Supreme Court, in a 5 to 4 opinion, found it to be unconstitutional. The next year, 1937, new legislation was enacted that established a new chapter of the Bankruptcy Code. The legislation expanded the definition of "municipality," but continued to require the entity to have the power to tax. The constitutionality of the new law was challenged, but the U.S. Supreme Court found the provisions to be constitutional, noting that a federal provision for municipal bankruptcy was needed because adequate relief could not be provided by the states due to the constitutional prohibition on enacting any law that would impair contracts. This legislation was also enacted as a temporary provision and was due to expire on June 30, 1940. It was extended for two years in 1940 and for four more years in 1942. In 1946, the provisions were amended and made permanent. Among the changes made in 1946 was the removal of "taxing" as an adjective in the lengthy definition of "municipality." This change allowed the definition of "municipality" to include public agencies that were authorized to either construct or acquire revenue-producing utilities and that issued bonds to finance those public improvements--revenue bonds, whose source of repayment was revenue from the utility that had been constructed or acquired. In the wake of New York City's 1975 financial crisis, the provisions for municipal bankruptcy were again revised. The existing provisions were believed to contain procedural obstacles that made them inadequate for the reorganization of a major municipality. In 1976, chapter IX of the Bankruptcy Act of 1898 (as amended) was amended to revise sections 81 through 83 and add sections 84 through 98. The revisions eliminated the need to have a plan of adjustment approved by the majority of creditors before the petition could be filed. Filing of the petition then triggered the automatic stay, providing protection from litigation of creditors' claims against the debtor. The revisions also extended to municipal debtors some provisions available to other debtors and allowed them to reject executory contracts with the approval of the court. Two years later, when Congress enacted the Bankruptcy Reform Act of 1978, establishing the current Bankruptcy Code, the 1976 revisions were incorporated into chapter 9. Since 1978, Congress has amended chapter 9 several times. In 1988, Congress passed amendments generally concerned with the definition of municipal "insolvency"; the rights of creditors as general obligation bondholders and special revenue bondholders; and the status of municipal financing leases. Section 109(c)(2) of the Bankruptcy Code was amended in 1994 to require that municipalities be "specifically authorized" by state law to be a debtor under chapter 9. Previously, the authorization under state law needed only to be general. The primary way in which the Bankruptcy Prevention and Consumer Protection Act of 2005 changed chapter 9 directly was by amending SS 901 to make applicable in chapter 9 several additional sections from chapter 5 of the Bankruptcy Code, most of which involved exceptions to the automatic stay. An additional subsection from chapter 11 was also added to the sections of chapter 11 that are applicable in chapter 9.

As cities and states have experienced varying degrees of financial difficulties in recent years, "municipal bankruptcy" has been mentioned relatively often in the popular press. The term is somewhat misleading, both in the word "municipal" and in the word "bankruptcy." Many people think only of cities when they hear the word "municipal." Upon learning that in the context of the U.S. Bankruptcy Code the term means more than just cities, some think that states may use the provisions of the Bankruptcy Code for municipal debtors: chapter 9. However, states are currently not eligible to be debtors under the Bankruptcy Code. The Code's definition of "debtor" includes only persons and municipalities. Its definition of "municipality" includes cities and counties as well as other political subdivisions, public agencies, and instrumentalities of a state. However, a municipality may not file under chapter 9 unless specifically authorized to do so by its state. To be eligible for chapter 9, a municipality must be insolvent. Chapter 9 is titled "Adjustment of Debts of a Municipality." The Bankruptcy Code does not provide for the liquidation of a municipality's assets and distribution thereof to the creditors. Instead, it provides a legal mechanism through which municipalities may be protected from the claims of their creditors as they attempt to develop and negotiate a plan to adjust their debts. In this way, chapter 9 has similarities to chapter 11 reorganizations. However, a municipality retains more control in a chapter 9 case than does the debtor in a chapter 11. The oversight and involvement of the bankruptcy court is quite limited. The court cannot interfere with the municipality's political or governmental powers, its property or revenues, or its use or enjoyment of its income-producing property. There are only a few sections of the Bankruptcy Code that were specifically written in chapter 9; however, many other sections of the Code are explicitly made applicable to a chapter 9 case. Among these is SS 365, which allows executory contracts to be assumed or rejected in a bankruptcy proceeding. Collective bargaining agreements (CBAs) are executory contracts. The expense incurred in meeting the obligations of CBAs may be a substantial budget consideration for many municipalities. While chapter 11 includes a section that specifically addresses the standards that must be met before a court can allow rejection of a CBA, no such section exists in chapter 9. Instead, based on two chapter 9 cases (In re County of Orange, California and In re City of Vallejo, California) it appears that municipalities may reject CBAs if they meet the less stringent standards established in National Labor Relations Board v. Bildisco and Bildisco. Although of current interest, chapter 9 is a provision of the Bankruptcy Code that is rarely used. Since 1979, the number of chapter 9 filings per year has averaged less than 10. Most of those have been by small government agencies such as municipal utilities, school districts, or single-purpose entities. Although chapter 9 has provided significant relief in the two major cases named above, it is not a panacea for a municipality's financial problems. It can be a lengthy and expensive procedure. Additionally, the debtor's ability to adjust debts, particularly pension or general obligation debt, may be limited by the state's constitutional or statutory restrictions since a plan of adjustment cannot require the municipality to take an action that is not lawful.

Congressional interest in facilitating U.S. technological innovation led to the passage of P.L. 96-517 , Amendments to the Patent and Trademark Act. This legislation is commonly referred to as the "Bayh-Dole Act," after its two primary sponsors, former Senators Robert Dole and Birch Bayh. This 1980 legislation awards title to inventions that government contractors make with federal government support, if the contractor consists of a small business, a university, or other nonprofit institution. A subsequent presidential memorandum extended this policy to all federal government contractors. As a result, the contractor may obtain a patent on its invention, providing it with an exclusive right in the invention during the patent's term. The legislation is intended to use patent ownership as an incentive for private sector development and commercialization of federally funded research and development (R&D). The federal government retains certain rights in inventions produced with its financial assistance under the Bayh-Dole Act. The government retains a "nonexclusive, nontransferable, irrevocable, paid-up license" for its own benefit. The Bayh-Dole Act also provides federal agencies with "march-in rights." March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent to grant a "nonexclusive, partially exclusive, or exclusive license" to a "responsible applicant or applicants." If the patent owner refuses to do so, the government may grant the license itself. Members of Congress have recently taken note of the fact that march-in rights have never been exercised during the 35-year history of the Bayh-Dole Act. In particular, the National Institutes of Health (NIH) has received six march-in petitions and has denied each one. A 2016 exchange of correspondence between some Members of Congress and the Department of Health and Human Services has suggested a potential difference of views about the appropriate use of march-in rights. Some observers believe that march-in rights should be rarely, if ever invoked due to the significant investment the private sector investment may make to bring early-stage inventions into practical application. These commentators further assert that the use of march-in rights would discourage private enterprise from investing in the commercial development of any invention funded in part by the government. On the other hand, others believe that U.S. taxpayers should be protected from what they view as excessive profiteering on technologies developed with public funding. They consider march-in rights to constitute a long-available, but entirely unused mechanism for combatting the high and growing cost of health care. This report reviews the availability of march-in rights under the Bayh-Dole Act. It begins by providing a brief overview of the patent system and innovation policy. The report then introduces the Bayh-Dole Act. The specific details of the march-in authority provided to federal agencies are reviewed next. The report then considers past efforts to obtain march-in authorization from NIH. The report closes with an identification of potential issues for congressional consideration. The patent system is grounded in Article I, Section 8, Clause 8 of the U.S. Constitution, which states that "The Congress Shall Have Power ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries...." As mandated by the Patent Act of 1952, U.S. patent rights do not arise automatically. Inventors must prepare and submit applications to the U.S. Patent and Trademark Office (USPTO) if they wish to obtain patent protection. USPTO officials known as examiners then assess whether the application merits the award of a patent. The patent acquisition process is commonly known as "prosecution." In deciding whether to approve a patent application, a USPTO examiner will consider whether the submitted application fully discloses and distinctly claims the invention. The examiner will also determine whether the invention itself fulfills certain substantive standards set by the patent statute. To be patentable, an invention must be useful, novel, and nonobvious. The requirement of usefulness, or utility, is satisfied if the invention is operable and provides a tangible benefit. To be judged novel, the invention must not be fully anticipated by a prior patent, publication or other state-of-the-art knowledge that is collectively termed the "prior art." A nonobvious invention must not have been readily within the ordinary skills of a competent artisan at the time the invention was made. If the USPTO allows the patent to issue, the patent proprietor obtains the right to exclude others from making, using, selling, offering to sell, or importing into the United States the patented invention. Those who engage in these acts without the permission of the patentee during the term of the patent can be held liable for infringement. Adjudicated infringers may be enjoined from further infringing acts. The patent statute also provides for the award of damages "adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." The maximum term of patent protection is ordinarily set at 20 years from the date the application is filed. At the end of that period, others may employ that invention without regard to the expired patent. Patent rights are not self-enforcing. Patentees who wish to compel others to observe their rights must commence enforcement proceedings, which most commonly consist of litigation in the federal courts. Although issued patents enjoy a presumption of validity, accused infringers may assert that a patent is invalid or unenforceable on a number of grounds. The U.S. Court of Appeals for the Federal Circuit (Federal Circuit) possesses national jurisdiction over most patent appeals from the district courts. The U.S. Supreme Court enjoys discretionary authority to review cases decided by the Federal Circuit. The patent system is intended to promote innovation, which in turn leads to industry advancement and economic growth. The patent system in particular attempts to address "public goods problems" that may discourage individuals from innovating. Innovation commonly results in information that may be deemed a "public good," in that it is both nonrivalrous and nonexcludable. Stated differently, consumption of a public good by one individual does not limit the amount of the good available for use by others; and no one can be prevented from using that good. The lack of excludability in particular is believed to result in an environment where too little innovation would occur. Absent a patent system, "free riders" could easily duplicate and exploit the inventions of others. Further, because they incurred no cost to develop and perfect the technology involved, copyists could undersell the original inventor. Aware that they would be unable to capitalize upon their inventions, individuals might be discouraged from innovating in the first instance. The patent system corrects this market failure problem by providing innovators with an exclusive interest in their inventions, thereby allowing them to capture their marketplace value. The patent system potentially serves other goals as well. The patent law may promote the disclosure of new products and processes, as each issued patent must include a description sufficient to enable skilled artisans to practice the patented invention. In this manner the patent system ultimately contributes to the growth of information in the public domain. Issued patents may encourage others to "invent around" the patentee's proprietary interest. A patent proprietor may point the way to new products, markets, economies of production, and even entire industries. Others can build upon the disclosure of a patent instrument to produce their own technologies that fall outside the exclusive rights associated with the patent. The patent system also has been identified as a facilitator of markets. If inventors lack patent rights, they may have scant tangible assets to sell or license. In addition, an inventor might otherwise be unable to police the conduct of a contracting party. Any technology or know-how that has been disclosed to a prospective licensee might be appropriated without compensation to the inventor. The availability of patent protection decreases the ability of contracting parties to engage in opportunistic behavior. By lowering such transaction costs, the patent system may make transactions concerning information goods more feasible. Patent protection may also encourage enterprises to commercialize and market existing inventions. Even though a new technology has already been patented, a firm might have to make refinements, construct manufacturing facilities, establish distribution channels, comply with government safety and regulatory requirements, and educate consumers prior to marketing. Second entrants to the market may not have to bear all of the first mover's costs. As a result, the exclusive rights provided by a patent may encourage not just the invention of new technologies, but also their commercialization. Through these mechanisms, the patent system may act in a more socially desirable way than its chief legal alternative, trade secret protection. Trade secrecy guards against the improper appropriation of valuable, commercially useful, and secret information. In contrast to patenting, trade secret protection does not result in the disclosure of publicly available information. That is because an enterprise must take reasonable measures to keep secret the information for which trade secret protection is sought. Taking the steps necessary to maintain secrecy, such as implementing physical security measures, also imposes costs that may ultimately be unproductive for society. The patent system has long been subject to criticism, however. Some observers have asserted that the patent system is unnecessary due to market forces that already suffice to create an optimal level of innovation. The desire to obtain a lead time advantage over competitors may itself provide sufficient inducement to invent without the need for further incentives. Other commentators believe that the patent system encourages industry concentration and presents a barrier to entry in some markets. Additionally, while the patent incentive encourages the development of new medicines, some assert that it also contributes to the growing costs of healthcare. Each of these arguments for and against the patent system has some measure of intuitive appeal. However, they remain difficult to analyze on an empirical level. We lack rigorous analytical methods for studying the impact of the patent system upon the economy as a whole. As a result, current economic and policy tools do not allow us to calibrate the patent system precisely in order to produce an optimal level of investment in innovation at the lowest social costs. Even prior to the Bayh-Dole Act, the federal government considered the intellectual property implications of R&D projects financed by public funds. In 1963, the Kennedy Administration called for greater consistency in diverse agency practices regarding the disposition of rights to inventions made by government contractors. This early "Government Patent Policy" generally allowed the U.S. government to retain rights to inventions developed through government contracts. However, the contractor could obtain title in specified circumstances. For example: [W]here the purpose of the contract is to build upon existing knowledge or technology to develop information, products, processes, or methods for use by the government, and the work called for by the contract is in a field of technology in which the contractor has acquired technical competence (demonstrated by factors such as know-how, experience, and patent position) directly related to an area in which the contractor has an established nongovernmental commercial position, the contractor shall normally acquire the principal or exclusive rights throughout the world in and to any resulting inventions, subject to the government acquiring at least an irrevocable non-exclusive royalty free license throughout the world for governmental purposes. In those situations, the 1963 policy retained significant government rights in privately held patents that resulted from publicly funded projects. In a prelude to today's march-in rights, the 1963 policy further provided: Where the principal or exclusive (except as against the government) rights to an invention are acquired by the contractor, the government shall have the right to require the granting of a license to an applicant royalty free or on terms that are reasonable in the circumstances to the extent that the invention is required for public use by governmental regulations or as may be necessary to fulfill health needs, or for other public purposes stipulated in the contract. The 1980 enactment of the Bayh-Dole Act altered the intellectual property landscape with respect to patents and government-sponsored R&D. Congress instead accepted the proposition that the lack of patent title discouraged private enterprise from advancing early-stage technologies into the marketplace. For example, suppose that a university researcher identifies a promising chemical compound using funds provided by the National Institutes of Health (NIH). Some observers believed that under pre-Bayh-Dole Act practices, a brand-name pharmaceutical company would be unlikely to undertake costly and risky clinical trials in order to convert that early-stage research into a drug approved by the Food and Drug Administration. Absent patent protection, generic firms could quickly introduce competing products. This view accepts that patents provide incentives not just for individuals to invent, but also to commercialize completed inventions. Under the Bayh-Dole Act, each nonprofit organization (including universities) or small business is permitted to elect within a reasonable time to retain title to any "subject invention" made under federally funded R&D. The institution must commit to commercialization of the invention within a predetermined, agreed upon, timeframe. However, the government may keep title under "exceptional circumstances when it is determined by the agency that restriction or elimination of the right to retain title to any subject invention will better promote the policy and objectives of this chapter." Additionally, the government may withhold title if the contractor "is not located in the United States or does not have a place of business located in the United States or is subject to the control of a foreign government"; in situations associated with national security; or when the work is related to the naval nuclear propulsion or weapons programs of the Department of Energy. Certain other rights are reserved for the government. The government retains "a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world...." The government also retains "march-in rights" which enable the federal agency to require the contractor to license a third party to use the invention under certain circumstances. This report discusses march-in rights at greater length below. By its own terms, the Bayh-Dole Act applies only to nonprofit organizations (including universities) and small businesses. However, in a February 1983 memorandum concerning the vesting of title to inventions made under federal funding, then-President Ronald Reagan ordered all agencies to treat, as allowable by law, all contractors within the Bayh-Dole Act framework regardless of their size. This longstanding practice lacks a legislative basis, however. The Bayh-Dole Act authorizes the government to withhold public disclosure of information for a "reasonable time" until a patent application can be made. Licensing by any contractor retaining title under this act is restricted to companies that will manufacture substantially within the United States. This requirement may be waived if domestic manufacture is not commercially feasible, or if the contractor or its successors made reasonable but ultimately unsuccessful efforts to license domestic manufacturers. The Secretary of Commerce was provided the authority to issue regulations implementing the Bayh-Dole Act. The Bayh-Dole Act provides the government with the ability to "march in" and grant licenses for patents that resulted from publicly funded R&D. In particular, march-in rights allow the federal government, in specified circumstances, to require the contractor or successors in title to the patent to grant a "nonexclusive, partially exclusive, or exclusive license" to a "responsible applicant or applicants." If the patent owner refuses to do so, the government may grant the license itself. The terms of the license must be "reasonable under the circumstances." The Bayh-Dole Act specifies four circumstances under which march-in rights may be exercised. The federal agency that provided the funding arrangement under which the patented invention was made must reach one of the following determinations: (1) action is necessary because the contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee, or their licensees; (3) action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the contractor, assignee, or licensees; or (4) action is necessary because the agreement required by section 204 [generally requiring that patented products be manufactured substantially in the United States unless domestic manufacture is not commercially feasible] has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of its agreement obtained pursuant to section 204. With respect to the first of these conditions, the Bayh-Dole Act further defines the term "practical application" as "to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms." The Bayh-Dole Act states that any adversely affected "contractor, inventor, assignee, or exclusive licensee" may appeal a march-in rights petition to the United States Court of Federal Claims. The statute further explains that in cases described in paragraphs (1) and (3) above, march-in authority may not actually be exercised until all appeals or petitions are exhausted. The exercise of march-in rights does not invalidate or void the relevant patent. That patent remains extant and could presumably be enforced against entities that did not enjoy march-in rights. However, march-in rights grant a license--in other words, a permission--to the enterprise identified by the government. That entity may practice the patented invention without concern for infringement, so long as it satisfies the conditions stipulated in the march-in order, such as the payment of a royalty. March-in rights should be distinguished from the "nonexclusive, nontransferable, irrevocable, paid-up license" that the Bayh-Dole Act grants the U.S. government elsewhere. This license solely benefits the federal government. Should another entity--such as a generic drug company or other enterprise--wish to practice the patented invention, then march-in rights provide a possible legal mechanism. March-in rights are also distinct from the workings of another statute, 28 U.S.C. SS1498(a). That provision states: Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner's remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture. 28 U.S.C. SS1498(a) operates independently of the Bayh-Dole system. That statute applies to the use of a patented invention by the U.S. government, or one of its contractors with the authorization or consent of the U.S. government, without the permission of the patent proprietor. In such a case, the sole remedy for the patent owner is a suit in the U.S. Court of Federal Claims for monetary damages. An injunction is not available to the patent owner in such cases. Three significant distinctions exist between march-in rights under the Bayh-Dole Act and 28 U.S.C. SS1498(a). First, march-in rights apply only to patented inventions that were developed with the support of public funding. 28 U.S.C. SS1498(a) applies to every U.S. patent, no matter what the sources of funding were. Second, private enterprises may take the initiative in requesting march-in rights from the government. 28 U.S.C. SS1498(a) applies when the federal government practices the patented invention on its own behalf or requests a contractor to do so. Finally, recipients of march-in rights are awarded licenses "upon terms that are reasonable under the circumstances" and would presumably pay royalties to the patent proprietor. In contrast, under 28 U.S.C. SS1498(a) the patent proprietor commences litigation and may be awarded damages to compensate for the use of the government or its contractors. March-in rights have never been exercised during the 35-year history of the Bayh-Dole Act. Apparently the only federal agency that has even received a petition is the National Institutes of Health (NIH). In particular, six petitions have been filed requesting that the NIH "march in" with respect to a particular pharmaceutical. Each petition was denied. A common theme of each of the denials was the agency's views that concerns over drug pricing were not, by themselves, sufficient to provoke march-in rights. The six requests were: CellPro, Inc. (1997). CellPro requested that the government exercise march-in rights after being found to infringe patents held by the contractor. Although the NIH recognized that CellPro's device was the only FDA-approved product on the market, the agency observed that (1) the contractor and its licensees had not sought immediately to enjoin CellPro and (2) that they were making reasonable efforts to commercialize their own product. As a result, the agency declined to initiate march-in procedures. Norvir/ritonavir (2004). The petitioners, which included some Members of Congress, asked the NIH to exercise march-in rights due to perceived concerns over the high price of this HIV/AIDS treatment. The agency declined to initiate march-in proceedings because it deemed Abbott Laboratories, Inc., to have made the drug available to the public on a sufficient basis. Xalatan/latanoprost (2004). Petitioners asserted that the price of this glaucoma treatment was higher than that of other nations. The NIH declined to initiate march-in proceedings because the drug was readily available for use by the public. Fabrazyme/agalsidase beta (2010). This petition asked the NIH to grant an open license on certain patents relating to this treatment for Fabry disease. According to the petitioners, Genzyme Corporation was encountering difficulties in manufacturing sufficient quantities of the drug. The NIH did not initiate a march-in proceeding because (1) Genzyme was working diligently to resolve its manufacturing difficulties and (2) other enterprises were unlikely to obtain FDA marketing approval on agalsidase beta products before those problems were addressed. Norvir/ritonavir (2012). The second petition against this HIV/AIDS drug more specifically requested the NIH to invoke march-in rights when prices in the United States were greater than other high-income nations. The NIH did not initiate march-in right proceedings because, in the view of the agency, such pricing disparities did not trigger any of the four statutory criteria for marching in. Xtandi/enzalutamide (2016). The petitioner asserted both that the prostate cancer drug Xtandi had an average wholesale price of $129,269 per year; and that this price was much higher than in other high-income nations. The NIH declined to initiate a march-in investigation because sales of the product were increasing and no evidence suggested that the product was in short supply. The NIH has offered some observations about the role of march-in rights during these proceedings. In its response to the 1997 CellPro petition, the agency stated its reluctance to undermine the exclusivities offered by the patent system: We are wary, however, of forced attempts to influence the marketplace for the benefit of a single company, particularly when such actions may have far-reaching repercussions on many companies' and investors' future willingness to invest in federally funded medical technologies. The patent system, with its resultant predictability for investment and commercial development, is the means chosen by Congress for ensuring the development and dissemination of new and useful technologies. It has proven to be an effective means for the development of health care technologies. In exercising its authorities under the Bayh-Dole Act, NIH is mindful of the broader public health implications of a march-in proceeding, including the potential loss of new health care products yet to be developed from federally funded research. In the 2004 proceedings regarding Norvir/ritonavir, the agency spoke more specifically about drug pricing: Finally, the issue of the cost or pricing of drugs that include inventive technologies made using Federal funds is one which has attracted the attention of Congress in several contexts that are much broader than the one at hand. In addition, because the market dynamics for all products developed pursuant to licensing rights under the Bayh-Dole Act could be altered if prices on such products were directed in any way by NIH, the NIH agrees with the public testimony that suggested that the extraordinary remedy of march-in is not an appropriate means of controlling prices. The issue of drug pricing has global implications and, thus, is appropriately left for Congress to address legislatively. The NIH has also observed that another statute, the Drug Price Competition and Patent Term Restoration Act, P.L. 98-417 , plays a role in the public availability of medicines. Better known as the Hatch-Waxman Act, this legislation allows generic drug companies to develop their own products without incurring liability for patent infringement. It also allows generic drug companies to market their products prior to the expiration of relevant patents, although if they do so they may incur infringement liability at that time. Concerns over the lack of assertion of march-in rights have been expressed for the past two decades. In 2001, Peter S. Arno and Michael H. Davis published an article in the Tulane Law Review asserting that the Bayh-Dole Act "has had a powerful price-control clause since its enactment in 1980 that mandates that inventions resulting from federally funded research must be sold at reasonable prices." According to Arno and Davis, "the solution to high drug prices does not involve new legislation but already exists in the unused, unenforced march-in provision of the Bayh-Dole Act." Arno and Davis followed this article with a 2002 editorial published in the Washington Post , stating in part: Although Bayh-Dole has been in place for 20 years, the government has never enforced it--not even once. That, despite the AIDS crisis at home and abroad, despite the millions of elderly and chronically ill Americans in need of affordable prescription drugs and the 40 million others who have no health insurance coverage whatever--and despite the general hand-wringing over the skyrocketing costs of pharmaceuticals. Former Senators Birch Bayh and Robert Dole, as they were then, responded with an editorial published in the Washington Post less than a month later. The editorial states in part: Bayh-Dole did not intend that government set prices on resulting products. The law makes no reference to a reasonable price that should be dictated by the government.... The [Arno and Davis] article also mischaracterizes the rights retained by the government under Bayh-Dole. The ability of the government to revoke a license granted under the act is not contingent on the pricing of the resulting product or tied to the profitability of a company that has commercialized a product that results in part from government-funded research. The law instructs the government to revoke such licenses only when the private industry collaborator has not successfully commercialized the invention as a product. Dialogue over the use of march-in rights was renewed in 2016, resulting in several exchanges between some Members of Congress, on one hand, and the Department of Health and Human Services (HHS) on the other. In an undated letter that was reportedly sent on January 11, 2016, the Honorable Lloyd Doggett, joined by 51 Members of Congress, addressed a letter to Secretary Sylvia Matthews Burwell of HHS and NIH Director Francis S. Collins. The letter in part requested NIH to provide official guidance regarding the situations in which march-in rights should apply. Secretary Burwell responded by letter on March 2, 2016. Her letter states in part that the Bayh-Dole Act's march-in right was "strictly limited and can only be exercised if the agency conducts an investigation and determines that specific criteria are met, such as alleviating health or safety needs or when effective steps are not being taken to achieve practical application of the inventions." She also concluded that "the statutory criteria are sufficiently clear and additional guidance is not needed." Representative Lloyd Doggett sent an additional letter to Secretary Burwell and Director Collins on March 28, 2016. Signed by 11 other Members of Congress, the letter encourages the NIH to conduct a public hearing regarding the request of public interest groups to invoke march-in rights to the cancer drug Xtandi/enzalutamide. The letter explains: NIH was recently petitioned to exercise these march-in rights on Xtandi, a prostate cancer drug developed at the University of California, Los Angeles (UCLA) through taxpayer supported research grants from the U.S. Army and NIH grants. The petition states that a Japanese licensee, Astellas, is charging Americans $129,000 for this drug, which sells in Japan and Sweden for $39,000, and in Canada for $30,000. We do not think that charging U.S. residents more than anyone else in the world meets the obligation to make the invention available to U.S. residents on reasonable terms. As noted above, the NIH denied march-rights for Xtandi/enzalutamide on June 20, 2016. To date, no bills have been introduced in the 114 th Congress to address march-in rights under the Bayh-Dole Act. Therefore, if Congress deems the current situation to be acceptable, then no action need be taken. Other options include clarifications that further stipulate the circumstances under which march-in rights may be invoked, either by statutory amendment or the encouragement of regulatory refinements. Congress could, for example, define with greater clarity the precise circumstances under which a patented invention is deemed "available to the public on reasonable terms." Congress could also define with greater specificity when march-in rights are needed to "alleviate health or safety needs," particularly with respect to inventions that might be perceived as too costly for many consumers to afford. Other options include transfer of oversight of administering march-in rights. Currently the Bayh-Dole Act assigns the agency that provided funds that led to the patented invention responsibility for exercising these rights. Another entity might have distinct perspectives than the funding agency and might reach different conclusions on whether to exercise march-in rights. Transferring decisionmaking authority to a distinct entity might also eliminate any perceived conflicts of interest with respect to march-in rights. Former employees of federal agencies often wish to pursue careers within the private sector and may wish to maintain good relationships with those enterprises. In addition, agency officials may themselves be named inventors on patents to which march-in rights apply. These factors could conceivably lead to a perception of bias against the institution of march-in rights. Some commentators have also suggested that Congress should establish a centralized database of inventions subject to the Bayh-Dole Act. Such a record would potentially improve the ability of the public to track its R&D investments and observe the degree to which these investments have resulted in new products for the marketplace. If a further level of monitoring were desirable, one possibility would be to require licensees of patents subject to the Bayh-Dole Act to submit periodic reports disclosing both their efforts at introducing the patented inventions to the public and their pricing policies. Other commentators also have urged reconsideration of the statutory requirement that in certain cases all judicial appeals be exhausted before march-in authority may actually be exercised. Under current law, even though a federal agency has authorized march-in rights, they may at times not be used until the patent proprietor has taken his case as far as the Supreme Court of the United States. As Arti K. Rai and Rebecca S. Eisenberg assert, "the tolerance for protracted delays inherent in the current process is at odds with the time-sensitive nature of the interests reflected in the substantive standard, such as achieving practical application of the invention 'within a reasonable time' and 'alleviat[ing] health or safety needs.'" This possibility of delay could also possibly discourage march-in petitions in the first instance. Still other commentators have suggested that Congress should take further steps to ensure that the best candidate receives licenses for patents subject to the Bayh-Dole Act. Under current law, government contractors may choose to license their inventions to anyone. Such a system may not place these inventions in the most capable hands, either from the perspective of the contractor or of the public. Another option might be an open-bidding auction that might better ensure that patents on inventions developed through government funding are licensed to the most capable enterprise. Current dialogue over march-in rights involves a familiar policy debate in intellectual property law. On the one hand, the patent laws are intended to promote the labors that lead to innovation. Critics of the use of march-in rights believe that diluting the patent incentive will discourage private investment and ultimately work against the aims of the Bayh-Dole Act. But others say that the patent laws are also intended to distribute the fruits of those labors to the public. This goal is most visibly achieved when patents expire and previously proprietary technologies enter the public domain. However, some observers believe that march-in rights provide an unused mechanism for discouraging excessive profiteering and providing the public an appropriate return on its R&D investments during a patent's term. Striking a balance between these competing views regarding the commercialization of federally funded research remains a matter of congressional judgment.

Congress approved the Bayh-Dole Act, P.L. 96-517, in order to address concerns about the commercialization of technology developed with public funds. This 1980 legislation awards title to inventions made with federal government support if the contractor consists of a small business, a university, or other nonprofit institution. A subsequent presidential memorandum extended this policy to all federal government contractors. As a result, the contractor may obtain a patent on its invention, providing it an exclusive right in the invention during the patent's term. The Bayh-Dole Act endeavors to use patent ownership as an incentive for private sector development and commercialization of federally funded research and development (R&D). The federal government retains certain rights in inventions produced with its financial assistance under the Bayh-Dole Act. The government retains a "nonexclusive, nontransferable, irrevocable, paid-up license" for its own benefit. The Bayh-Dole Act also provides federal agencies with "march-in rights," codified at 35 U.S.C. SS203. March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent to grant a "nonexclusive, partially exclusive, or exclusive license" to a "responsible applicant or applicants." If the patent owner refuses to do so, the government may grant the license itself. No federal agency has ever exercised its power to march in and license patent rights to others. In particular, the National Institutes of Health (NIH) has received six march-in petitions and has denied each one. A 2016 exchange of correspondence between Members of Congress and the Department of Health and Human Services suggests a difference of views related to agency authority under the march-in provision. Supporters of the use of march-in rights assert that they provide an unused mechanism for combatting high drug prices and ensuring that U.S. citizens enjoy the benefits of public R&D funding. Others assert that march-in rights do not provide such a broad authority, but rather are limited to four circumstances identified in the statute. They are also concerned that use of march-in rights might discourage private investment in the often considerable effort needed to bring early-stage technologies to the marketplace. Congress possesses a number of options with respect to march-in rights. If the current situation is deemed acceptable, then no action need be taken. Congress could also consider amending the Bayh-Dole Act by specifying in greater detail the precise circumstances in which march-in rights should be exercised. Congress may also take such steps as transferring authority over the administration of march-in rights, requiring government contractors to submit periodic reports regarding the commercialization of inventions achieved through public funding, creating a centralized database of inventions subject to the Bayh-Dole Act, and taking steps to ensure that patents on inventions developed through government funding are licensed to the most capable enterprise.

Alternative fuel and advanced technology vehicles face significant barriers to wider acceptance as passenger and work vehicles. Alternative fuel vehicles include vehicles powered by nonpetroleum fuels such as natural gas, electricity, or alcohol fuels. Advanced technology vehicles include hybrid vehicles, which combine a gasoline engine with an electric motor system to boost efficiency. Often, these vehicles are more expensive than their conventional counterparts. Further, fueling the vehicles is often inconvenient because the number of refueling stations for alternative vehicles is negligible compared with the number of gasoline stations nationwide; in some regions, the infrastructure is nonexistent. However, many of these vehicles perform more efficiently and are better for the environment than conventional vehicles. There has been significant interest in promoting these vehicles as a response to environmental and energy security concerns. The Energy Policy Act of 1992 ( P.L. 102-486 , SS1913) established individual and business tax incentives for the purchase of alternative fuel and advanced technology vehicles and for the installation of alternative fuel infrastructure. The Energy Policy Act of 2005 ( P.L. 109-58 ) expands these existing tax incentives and creates new ones. Incentives existing prior to P.L. 109-58 include the Electric Vehicle Tax Credit; the Clean Fuel Vehicle Tax Deduction; and tax deduction for the installation of alternative fuel infrastructure. For 2005, a federal tax credit is available worth 10% of the purchase price of an electric vehicle, up to a maximum of $4,000 (26 U.S.C. 30). The credit, which was not extended by the Energy Policy Act of 2005, will be reduced to a maximum of $1,000 in 2006 and will be phased out completely after 2006. For the purchase of alternative fuel vehicles, as well as hybrid electric vehicles, a Clean Fuel Vehicle Tax Deduction (26 U.S.C. 179A) is available. The amount of the deduction is based on the weight of the vehicle. Vehicles under 10,000 pounds gross vehicle weight (i.e., cars and light trucks) qualify for a $2,000 deduction in 2005; those between 10,000 and 26,000 pounds qualify for a $5,000 deduction. Vehicles above 26,000 pounds qualify for a $50,000 deduction. The Energy Policy Act of 2005 terminates this deduction after December 31, 2005, and replaces it with a tax credit (see below). Prior to 2002, hybrid electric vehicles were not considered "clean-fuel vehicles" because the primary fuel for the vehicles is gasoline. However, in May 2002, the Internal Revenue Service (IRS) announced that taxpayers can claim the deduction for qualified hybrids. As of December 2005, eight hybrid models are eligible for the deduction. Businesses that install alternative fuel refueling infrastructure can claim a tax deduction of up to $100,000 (26 U.S.C. 179A). The Energy Policy Act of 2005 eliminates this deduction at the end of 2005 and replaces it with a tax credit (see below). The Energy Policy Act of 2005 expanded and extended the existing tax incentives for nonconventional vehicles. These new incentives are similar to those proposed in the Clean Efficient Automobiles Resulting from Advanced Car Technologies Act (CLEAR ACT, S. 971 ) and the Volume Enhancing Hardware Incentives for Consumer Lowered Expenses Technology Act (VEHICLE Technology Act, H.R. 626 ), as well as legislation discussed in the 108 th Congress. Among other provisions, Sections 1341 and 1342 of the Energy Policy Act of 2005 contain several tax incentives for alternative fuel and advanced technology vehicles. For example, the act replaces the existing clean-fuel vehicle tax deduction with a new tax credit for hybrid vehicles; creates a tax credit for the purchase of lean-burn passenger vehicles; creates a new tax credit for the purchase of fuel-cell vehicles; replaces the existing clean-fuel vehicle tax deduction with an alternative fuel vehicle tax credit; and replaces the existing deduction for the installation of refueling infrastructure with a tax credit. Each of these credits is discussed below; Table 4 summarizes each one. Under the Energy Policy Act of 2005, the existing clean-fuel vehicle deduction for hybrid electric vehicles is replaced with a tax credit after 2005. The amount of the credit is based on several factors. For passenger vehicles, these factors are the fuel economy increase and the expected lifetime fuel savings when compared with a conventional vehicle of comparable weight. To qualify for the credit, a hybrid vehicle must meet certain emissions standards and technical specifications. For heavy-duty vehicles (more than 8,500 pounds), the credit is based on the fuel economy relative to a comparable vehicle, as well as the incremental cost of the hybrid vehicle above the cost of the conventional vehicle. The range of potential credits for each vehicle weight are shown in Table 1 . The hybrid vehicle credit is scheduled to expire at the end of 2009. The American Council for an Energy-Efficient Economy estimates that 2006 tax credits for hybrid passenger vehicles will range from $0 (Honda Insight) to $3,150 (Toyota Prius). However, the IRS has not yet announced the value of the credits for 2006. The Energy Policy Act of 2005 established a tax credit for the purchase of passenger vehicles with "lean-burn" engines. For the most part, diesel-powered vehicles that meet certain emissions and fuel economy standards would qualify for the tax credit, which is structured like the hybrid tax credit and ranges from $400 to $3,400, based on fuel economy and fuel savings. The credit is scheduled to expire at the end of 2010. However, no lean-burn passenger vehicles are available that meet the emission standard. Consequently, no vehicles on the market qualify for the credit, although many observers expect automakers to look for ways to reduce the emissions of such vehicles in future years so that the vehicles can qualify. The Energy Policy Act of 2005 provides a tax credit for the purchase of fuel-cell vehicles. The credit increases with gross vehicle weight, as shown in Table 1 . Passenger vehicles that achieve at least 50% better fuel economy than a comparable conventional vehicle also qualify for an additional tax credit of between $1,000 and $4,000, depending on overall fuel economy. The credit expires at the end of calendar year 2014. However, because of technical and cost concerns, no fuel-cell vehicles are commercially available, and the development of a mass-market fuel-cell vehicle in the near future seems unlikely. The Energy Policy Act of 2005 replaces the existing clean-fuel vehicle tax deduction with a credit for the purchase of a new alternative fuel vehicle (AFV). The new credit is equal to a percentage of the incremental cost of the AFV, subject to certain maximum dollar amounts. The incremental cost is the difference between the higher cost of the AFV and its conventional counterpart. Under the act, the applicable percentage is 50% of the incremental cost plus an additional 30% if the vehicle meets certain emissions requirements. The maximum credit is based on the weight of the vehicle, as shown in Table 3 . The credit expires at the end of 2010. To qualify for the credit, the vehicle is required to be a "dedicated" AFV, meaning that it must not be capable of operating on conventional fuel. This provision is a response to criticisms of previous AFV policies that included "dual-fuel" vehicles. In many cases, dual-fuel vehicles operate solely on gasoline. Because some alternative fuels must be blended with a small amount of gasoline (e.g., ethanol, methanol), vehicles using these fuels qualify for a prorated tax credit. The Energy Policy Act of 2005 replaces the existing deduction for the installation of alternative fuel infrastructure with a tax credit. The credit is equal to 30% of the purchase or installation cost of the refueling property, subject to a maximum dollar amount. For retail property, the maximum credit is $30,000. For residential property, the maximum is $1,000. The credit expires after 2014 for hydrogen infrastructure; the credit for all other fuels expires after 2009.

Alternative fuel and advanced technology vehicles face significant market barriers, such as high purchase price and limited availability of refueling infrastructure. The Energy Policy Act of 2005 (P.L. 109-58) expands and establishes tax incentives that encourage the purchase of these vehicles and the development of infrastructure needed to support them. Among the new provisions are tax credits for the purchase of hybrid vehicles (replacing an existing tax deduction), tax credits for the purchase of advanced diesel vehicles (although it is unclear whether any current vehicles will qualify), and tax credits to expand refueling infrastructure. This report discusses current federal tax incentives for alternative fuel and advanced technology vehicles. It also outlines how the Energy Policy Act of 2005 changes those incentives. This report will be updated as events warrant.

The IGs' four principal responsibilities are (1) conducting and supervising audits and investigations relating to the programs and operations of the agency; (2) providing leadership and coordination and recommending policies to promote the economy, efficiency, and effectiveness of these; (3) preventing and detecting waste, fraud, and abuse in these; and (4) keeping the agency head and Congress fully and currently informed about problems, deficiencies, and recommended corrective action. To carry out these purposes, IGs have been granted broad authority to: conduct audits and investigations; access directly all records and information of the agency; request assistance from other federal, state, and local government agencies; subpoena information and documents; administer oaths when taking testimony; hire staff and manage their own resources; and receive and respond to complaints from agency employees, whose confidentiality is to be protected. In addition, the Homeland Security Act of 2002 gave law enforcement powers to criminal investigators in offices headed by presidential appointees. IGs, moreover, implement the cash incentive award program in their agencies for employee disclosures of waste, fraud, and abuse (5 U.S.C. 4511). IGs have reporting obligations regarding their findings, conclusions, and recommendations. These include reporting: (1) suspected violations of federal criminal law directly and expeditiously to the Attorney General; (2) semiannually to the agency head, who must submit the IG report (along with his or her comments) to Congress within 30 days; and (3) "particularly serious or flagrant problems" immediately to the agency head, who must submit the IG report (with comments) to Congress within seven days. The Central Intelligence Agency (CIA) IG must also report to the Intelligence Committees if the Director or Acting Director is the focus of an investigation or audit. By means of these reports and "otherwise" (e.g., testimony at hearings), IGs are to keep the agency head and Congress fully and currently informed. In addition to having their own powers (e.g., to hire staff and issue subpoenas), IG independence is reinforced through protection of their budgets (in the larger establishments), qualifications for their appointment, prohibitions on interference with their activities and operations (with a few exceptions), and fixing the priorities and projects for their offices without outside direction. An exception to the IGs' rule occurs when a review is ordered in statute, although inspectors general, at their own discretion, may conduct reviews requested by the President, agency heads, other IGs, or congressional offices. Other provisions are designed to protect the IGs' independence and ensure their neutrality. For instance, IGs are specifically prohibited from taking corrective action themselves. Along with this, the Inspector General Act prohibits the transfer of "program operating responsibilities" to an IG. The rationale for both is that it would be difficult, if not impossible, for IGs to audit or investigate programs and operations impartially and objectively if they were directly involved in making changes in them or carrying them out. IGs serve under the "general supervision" of the agency head, reporting exclusively to the head or to the officer next in rank if such authority is delegated. With but a few specified exceptions, neither the agency head nor the officer next in line "shall prevent or prohibit the Inspector General from initiating, carrying out, or completing any audit or investigation, or from issuing any subpoena...." Under the IG Act, the heads of only six agencies--the Departments of Defense, Homeland Security, Justice, and the Treasury, plus the U.S. Postal Service (USPS) and Federal Reserve Board--may prevent the IG from initiating, carrying out, or completing an audit or investigation, or issuing a subpoena, and then only for specified reasons: to protect national security interests or ongoing criminal investigations, among others. When exercising this power, the head must explain such action within 30 days to the House Government Oversight and Reform Committee, the Senate Homeland Security and Governmental Affairs Committee, and other appropriate panels. The CIA IG Act similarly allows the director to prohibit or halt an investigation or audit; but he or she must notify the House and Senate intelligence panels of the reasons, within seven days. Presidentially appointed IGs in the establishments--but not in designated federal entities (DFEs)--are granted a separate appropriations account (a separate budget account in the case of the CIA) for their offices. This restricts agency administrators from transferring or reducing IG funding once it has been specified in law. Under the Inspector General Act, IGs in the larger establishments are appointed by the President, subject to Senate confirmation, and are to be selected without regard to political affiliation and solely on the basis of integrity and demonstrated ability in relevant fields. Two other IGs appointed by the President operate under similar but distinct requirements. The CIA IG is to be selected under these criteria as well as experience in the field of foreign intelligence. And the Special Inspector General for Afghanistan Reconstruction (SIGAR) is the only IG appointed by the President alone. Presidentially nominated and Senate-confirmed IGs can be removed only by the President; when so doing, he must notify Congress of the reasons. By comparison, IGs in the DFEs are appointed by and can be removed by the agency head, who must notify Congress in writing when exercising this power. The USPS IG is the only IG with removal "for cause" and then with the written concurrence of at least seven of the nine governors, who also appoint the officer. Terms of office are set for three IGs, but with the possibility of reappointment: in the Postal Service (seven years), AOC (five years), and U.S. Capitol Police (five years), with selection by the Capitol Police Board. Indirectly, the Peace Corps IG faces an effective term limit, because all positions there are restricted to five to 8 1/2 years. With regard to Special Inspector General for Iraq Reconstruction (SIGIR) and SIGAR, each post is to end 180 days after its parent entity's reconstruction funds are less than $250 million. Several presidential orders govern coordination among the IGs and investigating charges of wrongdoing by high-echelon officers. Two councils, governed by E.O. 12805, issued in 1992, are the President's Council on Integrity and Efficiency (PCIE) and a parallel Executive Council on Integrity and Efficiency (ECIE). Chaired by the Deputy Director of the Office of Management and Budget (OMB), each is composed of the appropriate IGs plus officials from other agencies, such as the Federal Bureau of Investigation (FBI) and Special Counsel. Investigations of alleged wrongdoing by IGs or other top OIG officials (under the IG act) are governed by a special Integrity Committee, composed of PCIE and ECIE members and chaired by the FBI representative (E.O. 12993), with investigations referred to an appropriate executive agency or to an IG unit. Other coordinative devices have been created administratively. Statutory offices of inspector general have been authorized in 67 current federal establishments and entities, including all 15 cabinet departments; major executive branch agencies; independent regulatory commissions; various government corporations and boards; and five legislative branch agencies. All but nine of the OIGs are directly and explicitly under the 1978 Inspector General Act. Each office is headed by an inspector general, who is appointed in one of three ways: (1) 30 are nominated by the President and confirmed by the Senate in "establishments," including all departments and the larger agencies under the IG act, plus the CIA ( Table 1 ). (2) 36 are appointed by the head of the entity in 29 "designated federal entities"--usually smaller boards and commissions--and in seven other units, where the IGs operate under separate authority: SIGIR, ONDI, and five legislative agencies ( Table 2 ). (3) One (in SIGAR) is appointed by the President alone (Sec. 1229, P.L. 110-181 ). Initiatives in response to the 2005 Gulf Coast Hurricanes arose to increase OIG capacity and capabilities in overseeing the unprecedented recovery program. These include IGs or deputies from affected agencies on a Homeland Security Roundtable, chaired by the DHS IG; membership on a Hurricane Katrina Contract Fraud Task Force, headed by the Justice Department; an office in the DHS OIG to oversee disaster assistance activities nationwide; and additional funding for the OIG in Homeland Security. In the 110 th Congress, the IGs in DOD and in other relevant agencies have been charged with specific duties connected with combating waste, fraud, and abuse in wartime contracting ( P.L. 110-181 ). A new IG has been instituted in the AOC, in the GAO, and in the Afghanistan reconstruction effort, while other legislative action requires that full-agency websites link to the separate OIG "hotline" websites. Separate recommendations have arisen in the recent past, such as consolidating DFE OIGs under presidentially appointed IGs or under a related establishment office (GAO-02-575). Pending proposals in the 110 th Congress include the following: requiring IG annual reviews to report on program effectiveness and efficiency ( H.R. 6639 ); and establishing IGs for the Judicial Branch ( H.R. 785 and S. 461 ) and the Washington Metropolitan Area Transit Authority ( H.R. 401 ). The Intelligence Authorization Act for FY2009 ( H.R. 5959 and S. 2996 ) would create an inspector general for the entire Intelligence Community, a provision opposed by the Bush Administration; and would grant statutory recognition to specified OIGs in the Defense Department. Other bills-- H.R. 928 and 2324 , whose earlier versions incurred objections from OMB--have been reconciled and await chamber action. These proposals are designed to increase the IGs' independence and powers. Different versions have called for providing specifics on initial OIG budget estimates to Congress; removing an IG only for "cause"; setting a term of office for IGs; establishing a Council of Inspectors General for Integrity and Efficiency in statute; revising the pay structure for IGs; allowing for IG subpoena power in any medium; and granting law enforcement powers to qualified IGs in DFEs.

Statutory offices of inspector general (OIG) consolidate responsibility for audits and investigations within a federal agency. Established by public law as permanent, nonpartisan, independent offices, they now exist in more than 60 establishments and entities, including all departments and largest agencies, along with numerous boards and commissions. Under two major enactments--the Inspector General Act of 1978 and its amendments of 1988--inspectors general are granted substantial independence and powers to carry out their mandate to combat waste, fraud, and abuse. Recent initiatives have added offices in the Architect of the Capitol Office (AOC), Government Accountability Office (GAO), and for Afghanistan Reconstruction; funding and assignments for specific operations; and mechanisms to oversee the Gulf Recovery Program. Other proposals in the 110th Congress are designed to strengthen the IGs' independence, add to their reports, and create new posts in the Intelligence Community. [Note: 5 U.S.C. Appendix covers all but nine of the statutory OIGs. See CRS Report RL34176, Statutory Inspectors General: Legislative Developments and Legal Issues, by [author name scrubbed] and [author name scrubbed]; U.S. President's Council on Integrity and Efficiency, A Strategic Framework, 2005-2010 http://www.ignet.gov; Frederick Kaiser, "The Watchers' Watchdog: The CIA Inspector General," International Journal of Intelligence (1989); Paul Light, Monitoring Government: Inspectors General and the Search for Accountability (1993); U.S. Government Accountability Office, Inspectors General: Office Consolidation and Related Issues, GAO-02-575, Highlights of the Comptroller General's Panel on Federal Oversight and the Inspectors General, GAO-06-931SP, and Inspectors General: Opportunities to Enhance Independence and Accountability, GAO-07-1089T; U.S. House Subcommittee on Government Management and Organization, Inspectors General: Independence and Accountability, hearing (2007); U.S. Senate Committee on Homeland Security and Governmental Affairs, Strengthening the Unique Role of the Nation's Inspectors General, hearing (2007); Project on Government Oversight, Inspectors General: Many Lack Essential Tools for Independence (2008).]

In 2005, the most recent year for which data are available, approximately $2.0 trillion was spent on health care and health-related activities. This amount represents a 6.9% increase over 2004 spending. The majority of health spending (84%) went towards paying for health care goods and services provided directly to individuals. These goods and services are referred to as personal health care. The remaining amount covered administrative expenses, public health activities, health research, construction of health facilities and offices and medical capital equipment. Table 1 indicates how much was spent on various categories of health care goods and services in 2005 and how much these amounts increased over 2004 levels. This report focuses on expenditures for personal health care, since these goods and services constitute most spending on health-related activities. The latter half of the 1990s experienced historically low growth in personal health care spending. From the beginning of 1994 to the end of 1999, health spending increased at an average annual rate of 5.6%. This low growth is attributable to changes in both the private and public sectors. In the private sector, the increased use of managed care limited cost growth during the mid-1990s. Vigorous fraud-and-abuse investigation and the Balanced Budget Act of 1997 (which slowed growth in hospital, home health, and nursing home payments) constrained health expenditures in the late 1990s. The effect of these changes in public and private sector have subsided; in 2000, personal health expenditures grew at 6.7%, 1.1 percentage points higher than the average rate over the previous six years. Personal health expenditures grew at even higher rates in 2001 (8.7%) but have fallen steadily since then. Looking from a broader historical perspective, spending growth in recent years is still much lower than that in most years since 1960 (see Figure 1 ). In particular, the years 1979 through 1981 experienced growth rates between 13.8% and 15.9%. Figure 1. Growth in Nominal Personal Health ExpendituresSource: Congressional Research Service (CRS) calculations using data from the Centers for Medicare and Medicaid Services, Office of the Actuary. Figure 1 depicts growth in nominal personal health expenditures. Three factors contribute to growth in nominal health spending: higher population, higher prices, and higher real per capita expenditures, which some experts label the "intensity" of care. Real per capita expenditures indicate qualitative and quantitative increases in the amount of care received by individuals. Figure 2 depicts the role of population, prices, and real per capita expenditures in nominal health expenditure growth. Caution should be used when interpreting data on real health expenditures, however. Real expenditures are estimated using price indexes for medical care goods and services, but such price indexes are imperfect. As a result of these imperfections, it is difficult to isolate prices and real per capita health expenditures from nominal health spending. Spending on personal health care in 2005 increased relative to the overall economy. In 2005, personal health care expenditures accounted for 13.3% of gross domestic product (GDP), up from 13.2% of GDP in 2003 and 2004, 12.8% of GDP in 2002 and 12.2% of GDP in 2001. These increases mark a departure from the experience of the previous nine years, when health spending as a percent of GDP was relatively constant. Between 1992 and 2000, personal health care expenditures averaged 11.6% of GDP (see Figure 3 ). Four categories of medical goods and services compose more than 84% of personal health care expenditures: hospital care, physician and clinical services, prescription drugs, and long-term care (which includes nursing home and home health care). In 2005, home health care was the fastest growing category of health expenditures, increasing 11.1% above 2004 expenditures (see Table 1 ). However, growth rates of individual categories of services can be deceptive at indicating how much a particular category of medical care contributed to overall spending growth. As indicated in Table 1 , the category with the largest dollar increase was hospital care. In 2005, spending on hospital care was $44.7 billion higher than in 2004, an increase of 7.9%. Home health care expenditures were $4.7 billion higher in 2005 than they were in 2004, an increase of 11.1%. Thus, even though home health care increased more than hospital care in terms of percentage growth, hospital care grew more than home health care in dollar terms. That is, growth in hospital care contributed most to increased personal health care expenditures in 2005. The $44.7 billion increase in hospital expenditures in 2005 accounted for 41% of the $110.1 billion increase in overall personal health care spending. Figure 4 shows how much dollar growth in each category of personal health care contributed to total growth in personal health expenditures. Much attention has been directed at spending on prescription drugs. The share of personal health expenditures devoted to prescription drugs has more than doubled since 1981, when drugs accounted for only 5.4% of personal health expenditures. Yet, 1981 represented the trough of a 20-year decline in spending on prescription drugs, as a share of personal health expenditures. While the percent of personal health expenditures spent on prescription drugs has grown significantly over the past two decades, prescription drug spending represented only a slightly greater share of personal health expenditures in 2005 as it did in 1960. This trend is illustrated in Figure 5 . Long-term care, which includes nursing home and home health care, composes a larger share of health care than in the past. In 1960, about 4% of personal health care expenditures were spent on nursing home and home health care. In 2005, about 10% of personal health spending was directed towards providing nursing home and home health care. In 2005, 85% of personal health expenditures were in the form of third-party payments. Private health insurance was the largest payer of personal health care in 2005; it paid 36% of personal health expenditures. The federal government, the second largest payer, accounted for 34% of all personal health spending. The health care system underwent a shift over the last four decades from one financed primarily by out-of-pocket expenditures to one financed primarily by private insurance. Figure 6 shows how the funding of personal health care has changed from 1960 to 2005. Ultimately, all health care is funded by individuals through out-of-pocket expenditures (including insurance deductibles and co-payments), insurance premiums, taxes, and charitable contributions. Although private insurance and the federal government are the largest payers of overall personal health expenditures, their role in financing health care varies by type of medical care. Figure 7 illustrates how major categories of health care were funded in 2005 (detailed numbers for Figure 7 are provided in Table 2 ). The two largest categories of personal health care, hospital care and physician services, were financed primarily by private insurance and the federal government. A small share of these services were paid out-of-pocket. Conversely, almost all expenditures on non-durable medical goods (which includes mostly over-the-counter drugs) were paid out-of-pocket, although this category represents only a small share of all personal health care expenditures. Private insurance plays a relatively small role in financing nursing home and home health care. These services were funded mostly by the federal government and out-of-pocket expenditures. Dental services and prescription drugs are funded mostly by private insurance and out-of-pocket expenditures; the federal government plays a relatively small role in the financing of these services. State and local funds account for a small share of expenditures in all categories. The contribution of theses funds is largest in nursing home and home health care, and in hospital care.

In 2005, the most recent year for which data are available, just under $2 trillion was spent on health care and health-related activities. This amount represents a 6.9% increase over 2004 spending. The majority of health spending (84%) went towards paying for health care goods and services provided directly to individuals. These goods and services are referred to as personal health care. The remaining 16% of health spending covered research, public health activities, administrative costs, structures, and equipment. Personal health care expenditures grew 7.1% in 2005, continuing a downward trend in the growth of expenditures that peaked in recent times in 2001 at 8.7%. From the beginning of 1992 to the end of 2000, personal health expenditures grew at an average annual rate of 5.8%, historically low levels not seen since 1960. Compared with spending increases over the past 40 years, the 7.1% increase that occurred in 2005 is relatively moderate. In particular, the years 1979 through 1981 experienced growth rates between 13.8% and 15.9%. Relative to the overall economy, personal health expenditures increased in 2005. In 2005, personal health expenditures accounted for 13.3% of gross domestic product (GDP), up from 13.2% of GDP in 2004 and 2003, 12.8% of GDP in 2002, and 12.2% in 2001. For the nine years prior to 2001, health spending as a percentage of GDP was relatively constant. From 1992 to 2000, personal health expenditures, as a percentage of GDP, stayed between 11.5% and 11.7%. During the three decades prior to the 1990s, personal health expenditures, as a percentage of GDP, increased almost every year. Home health care spending was the fastest growing category of personal health care in 2005. Home health care spending in 2005 was 11.1% higher than the amount spent in 2004. Yet, because home health care represents about 3% of personal health expenditures, it was one of the smallest contributors to overall growth in personal health spending. Hospital care, which grew 7.9% in 2005 and accounts for more than one-third of personal health expenditures, contributed the most to overall growth in personal health spending. Spending on physician and clinical services, which grew at 7.0% in 2005 and accounts for one-fourth of personal health expenditures, was the second largest contributor to overall growth in personal health spending. Over 85% of personal health expenditures in 2005 were financed by third-party payers. The largest payer, private health insurance, financed 36% of all personal health expenditures. The second-largest payer, the federal government, accounted for 34% of all personal health spending. Certain categories of health care are funded primarily by third-party payers, whereas other categories are financed almost entirely out-of-pocket. The federal government is the largest payer of hospital care and nursing home and home health care. Private health insurance is the largest payer of dental services and prescription drugs. Out-of-pocket expenditures are the largest source of funding for non-durable medical goods (which include over-the-counter drugs) and durable medical goods (which include eyeglasses).

A long-standing challenge for aviation security is the need to reliably detect explosives and bomb-making components concealed under clothing. The Aviation and Transportation Security Act of 2001 (ATSA; P.L. 107-71 ) mandated 100% explosives detection screening of checked baggage. However, ATSA did not specifically address the threat posed by bombs carried in the aircraft cabin. Terrorist plots, including a December 2001 attempted shoe-bombing incident, the August 2004 downing of two Russian airliners, the August 2006 liquid explosives plot in the United Kingdom, the December 2009 attempted bombing of a Delta-Northwest flight from Amsterdam on approach to Detroit, and the May 2012 discovery of a similar plot orchestrated by terrorist operatives in Yemen, have served to focus policy attention on the threat to civil aviation posed by concealed improvised explosive devices. In 2004, the 9/11 Commission recommended that the Transportation Security Administration (TSA) and Congress give priority to improving the detection of explosives on passengers. The commission further recommended that, as a start, all individuals selected for secondary screening at airport checkpoints undergo explosives screening. Mirroring the 9/11 Commission recommendation, the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA; P.L. 108-458 ) directed TSA to give high priority to developing, testing, improving, and deploying airport checkpoint screening technologies to detect nonmetallic, chemical, biological, and radiological weapons, as well as explosives on passengers and in carry-on items. In 2004, initial field trials of walk-through explosives trace detection portals, or "puffer" machines, revealed reliability problems, leading TSA to suspend further deployment of and investment in these systems. TSA instead moved forward with the evaluation and eventual system-wide deployment of whole body imaging (WBI) technologies, which TSA also refers to as Advanced Imaging Technology (AIT) systems. In contrast to the "puffer" machines, AIT systems do not search for traces of explosive materials. Instead, they generate images that can reveal anomalies underneath passenger clothing, allowing detection of concealed items, such as explosives, detonators, and both metallic and nonmetallic weapons. In response to the failed December 25, 2009, attempted bombing of a Detroit-bound international flight using an improvised explosive device, TSA accelerated its investment in AIT. Currently, TSA uses AIT systems for primary screening of both randomly selected and targeted passengers in conjunction with walk-through metal detector screening. Passengers selected for AIT screening may elect to either submit to the AIT scan or alternatively undergo a pat-down by a trained same-sex TSA screener. Since 2007, TSA has been procuring and deploying two competing AIT technologies for screening airline passengers: X-ray backscatter and millimeter wave imaging systems. X-ray backscatter systems use a low-intensity X-ray beam that moves at high speed to scan the entire surface of the body. The first body scanners using low-intensity X-ray backscatter technology were developed in the early 1990s. The X-ray backscatter systems currently used by TSA have evolved from these early commercial versions, having significantly improved resolution as well as special privacy algorithms that generate front and back images similar to chalk outlines (see Figure 1 ). TSA implemented "chalk outline" filtering, known as a privacy algorithm, to allay privacy concerns, as raw, unfiltered X-ray backscatter images resemble high-resolution photographic negatives. Trained TSA screeners review these filtered images. Millimeter wave imaging systems emit non-ionizing electromagnetic radio waves in the millimeter wave (30-300 gigahertz) spectrum to render images of what lies directly underneath clothing and near the skin. Deployed systems generate images that look like photographic negatives (see Figure 2 ). Privacy filters are applied to these images to selectively blur faces. Millimeter wave systems are capable of generating a 3-D view by scanning the full 360 degrees around an individual. This 3-D scan renders front and back images that are viewed by trained TSA screeners. However, TSA is currently field testing automated target recognition (ATR) algorithms that are intended to eventually replace human image analysis of millimeter wave images (see Figure 3 ). TSA is currently retrofitting deployed units, and all future millimeter wave systems procured by TSA will come with ATR. ATR is described in further detail in the discussion of " Privacy Concerns ." As of August 2012, TSA had deployed about 700 AIT units at more than 180 of the roughly 450 commercial passenger airports. TSA currently plans to acquire and deploy a total of 1,800 units throughout the country by the end of FY2014. Once all FY2012 funds are expended, TSA projects that it will have acquired 1,250 units, about 69% of the planned total. The acquisition cost per unit is about $175,000. In addition, TSA incurs costs associated with installing and maintaining AIT systems, training personnel, and operating the deployed units. TSA hired and trained an additional 8,000 screeners through FY2011 to meet the anticipated workload increases associated with operational deployment of the first 1,000 AIT units. These additional operational costs can add substantially to the overall cost of deploying and operating AIT. Inferring from TSA statements, the annualized cost for purchasing, installing, staffing, operating, supporting, upgrading, and maintaining checkpoint AIT systems currently sums to about $455 million and will increase to about $1.17 billion once the planned 1,800 units are fully deployed. This equates to roughly $655,000 annually per deployed AIT unit. TSA argues that, at about 1,000 deployed AIT units, the operating cost translates to roughly $1 per traveling passenger. However, this figure does not reflect the cost per scan because only a small percentage of passengers undergo a whole body scan. As TSA does not divulge the percentage of passengers screened using AIT, the cost per scan cannot be accurately estimated. TSA selects passengers for AIT screening using both random and targeted selection techniques. TSA considers the specific selection methods to be sensitive security information, and this information is not made public. Initially, TSA procurements of X-ray backscatter units were greater, but more recently TSA has acquired larger numbers of millimeter wave systems. As of February 2012, roughly 44% of total AIT deployments were X-ray backscatter units, but that percentage had dropped to about 35% by August 2012. Public perceptions of possible health risks associated with X-ray backscatter systems, coupled with technological advances in second-generation millimeter wave systems that will replace human observers with automated threat detection capabilities, may have influenced TSA toward favoring millimeter wave systems over X-ray backscatter systems. TSA cites several independent polls indicating widespread public support and understanding of the need for and use of AIT. The polling data indicate that about 75% to 80% of Americans support the use of AIT at airport checkpoints. Nonetheless, AIT remains controversial. Among respondents expressing concerns regarding the use of full-body scanners in a 2010 Travel Leaders study, roughly 48% raised privacy issues, 27% worried about potential known or unknown health risks, and about 20% expressed concerns over delays in getting through security. Concerns have also been raised over screening individuals with special needs, the effectiveness of the technology, screener staffing requirements, and TSA's deployment strategy. TSA use of AIT has met with objections from privacy advocates, such as the American Civil Liberties Union (ACLU), that have urged Congress to ban the use of whole body imaging technologies as a method for primary screening on the basis that "[p]assengers expect privacy underneath their clothing and should not be required to display highly personal details of their bodies." Privacy arguments have been raised against other airport screening procedures in the past, but have not been accepted by the courts. Courts characterize a routine search conducted at an airport security checkpoint as a warrantless search, generally not subject to the constitutional prohibition against "unreasonable searches and seizures" by the federal government. In a 1973 ruling, the 9 th Circuit Court of Appeals found such a warrantless search, also known as an administrative search, to be acceptable if it is "no more intrusive or intensive than necessary, in light of current technology, to detect weapons or explosives," if it is confined to that purpose, and if individuals may avoid the search by electing not to fly. In more recent case law, the 9 th Circuit Court of Appeals ruled in 2007 that airport searches of passengers are reasonable and do not require consent, as "... requiring that a potential passenger be allowed to revoke consent to an ongoing airport security search makes little sense in a post-9/11 world. Such a rule would afford terrorists multiple opportunities to attempt to penetrate airport security by 'electing not to fly' on the cusp of detection until a vulnerable portal is found." The Supreme Court, however, has not specifically considered whether airport screening searches are a constitutionally reasonable form of administrative search. Moreover, the courts have not specifically considered whether the use of AIT, as either a routine or a risk-based screening method, warrants any special consideration under the law because of its capabilities and surrounding privacy concerns. More specific policy and legal analysis in the current context may be needed to address whether AIT screening and alternative screening procedures, such as pat down searches of individuals, are no more intrusive or intensive than necessary. Since deploying AIT, TSA has sought to allay privacy concerns by implementing policies affecting both technology and operational procedures. Specifically, TSA policy requires that image storage capabilities be disabled on all fielded AIT units. TSA also has set up remote imaging locations, so that TSA screeners viewing an image are not able to see the person being scanned. TSA policy forbids TSA employees from taking any image recording devices into these remote viewing areas. Finally, TSA installed privacy filters that, depending on the technology, either blur facial features or render a less detailed image similar to a "chalk outline" of the entire body. Despite these safeguards, reports of alleged abuses have surfaced. In February 2012 it was reported that several female passengers have levied complaints against TSA, claiming that they were told to go through the scanners, sometimes multiple times, apparently because they were attractive. TSA responded that it is not policy to scan passengers multiple times. Concerns have been raised regarding the selection of children for AIT screening, including concerns over the viewing of their images, potential health effects, and safety when the child is separated from parents or guardians during the screening process. While TSA has modified screening procedures for children (12 years of age and younger), it does not exclude them from possible selection to undergo either AIT screening or a pat-down search. If selected, the child and/or her or his parent(s) or accompanying guardian(s) may choose the method of screening. In FY2011, TSA began installing Automated Target Recognition (ATR) software in its deployed millimeter wave machines, both to allay continuing concerns regarding privacy and to improve screening efficiency. With the introduction of ATR, TSA is working toward the eventual elimination of human image viewers. In the future, TSA plans to rely primarily or exclusively on ATR for threat detection, which automatically reviews and analyzes images for concealed threats. In 2011, TSA upgraded all deployed millimeter wave scanners with ATR software. The ATR algorithms are currently undergoing operational evaluations in which they are being tested side-by-side with existing image review procedures. The ATR displays show only a generic body outline identifying locations of potential concealed threats rather than a full body image. If no threats are detected, the ATR monitor displays no image and an "OK" appears on screen against a green background (see Figure 3 ). TSA plans to include ATR capabilities in all future millimeter wave AIT procurements. TSA has not announced whether a similar system will be developed or implemented for X-ray backscatter imagers. The ionizing radiation generated by X-ray backscatter systems has led to policy debate and some public concern over possible human health impacts. Ionizing radiation has been linked to various forms of cancer. TSA contends that the levels of ionizing radiation emitted by certified X-ray backscatter systems are well below those considered unsafe for human exposure. According to the vendor, X-ray backscatter systems in use by TSA deliver a radiation dose that is less than 15% of the Federal Drug Administration (FDA) allowable single dose limit of 25 microrem. DHS claims that the radiation exposure from a single X-ray backscatter image is equivalent to exposure from naturally occurring radiation received during two minutes flying at altitude aboard a commercial airliner and notes that passengers may opt out of the screening. The X-ray aperture in certified backscatter units is very small, measuring roughly 1/28 th of a square inch. While the device emits continuously through this aperture for the duration of the scan, it moves rapidly horizontally and vertically to image the entire human body over a span of about 10 to 20 seconds. Safety measures including redundant monitors and automatic shutdown circuits turn off the X-ray generation if any abnormal conditions are detected--for example, if the X-ray beam is not moving properly. TSA-approved backscatter systems comply with American National Standards Institute (ANSI) radiation safety standards and have been evaluated by FDA's Center for Devices and Radiological Health, the National Institute of Standards and Technology, and the Johns Hopkins University Applied Physics Laboratory. These independent evaluations concluded that TSA-certified X-ray backscatter units meet national health and safety standards. Nonetheless, controversy over exposure to X-ray backscatter persists. In April 2010, faculty members from the University of California, San Francisco, including prominent researchers in biochemistry, biophysics, X-ray imaging, and cancer research, expressed their concerns in a letter to President Obama's assistant for science and technology, John P. Holdren. They suggested that while the radiation dose received from X-ray backscatter imaging would be safe if it were distributed throughout the body, it is instead concentrated only on the skin and underlying tissue, such that "the dose to the skin may be dangerously high." The letter stated that older travelers and those with compromised immune systems may be at particular risk; that some females may be at higher risk of developing breast cancer; that the potential health effects on children, adolescents, pregnant women, and fetuses have not been fully assessed; that the proximity of the testicles to the skin raises concerns over possible sperm mutation; and that the effects on the cornea and the thymus gland have not been determined. It also cautioned that a system malfunction could potentially cause a very high radiation dose to be concentrated on a single spot. TSA and FDA provided a lengthy response to the letter, asserting that the potential health risks from full-body screening using approved systems are minuscule, and that extensive independent data confirm that the systems do not present significant risk to public health. More recently, an independent scientific review of certified X-ray backscatter units by the European Union's Scientific Committee on Emerging and Newly Identified Health Risks concluded that while "[t]he expected health detriment will probably be very close to zero for any scanned person, ... at the population level the possible effect cannot be ignored." While the study could not meaningfully evaluate risk for special groups within the population, it raised concern over a higher risk related to exposure in childhood. The millimeter wave systems used by TSA do not emit ionizing radiation. Millimeter wave scanners therefore have not raised the same health concerns as X-ray backscatter systems. A recent statement by the International Commission on Non-Ionizing Radiation Protection found that, while it recommends limiting human exposure to non-ionizing radiation, human exposures from body scanners currently in use are about one-tenth of its recommended guidelines for the general public. TSA asserts that it makes accommodations for individuals with a variety of special needs, usually arising from medical conditions and the use of wearable or implanted medical devices. However, various incidents indicate that TSA does not always provide special accommodations and does not always follow these procedures for individuals with special needs. For example, in May 2012, a diabetic teenager reported that an AIT system damaged her insulin pump while she was being screened at the Salt Lake City International Airport, after a TSA screener reportedly told her that it would not be a problem to undergo AIT screening despite a doctor's note explaining that the sensitive medical device should not go through the body scanner. TSA informs passengers that individuals should ask for a pat down inspection if a medical doctor has advised them not to undergo AIT screening because it may affect the functioning or calibration of a wearable or implanted medical device. TSA has created an optional disability notification card that allows individuals to discreetly advise TSA screeners of a health condition, disability, or medical device that may affect screening. TSA has also established TSA Cares, a toll-free hotline (1-855-787-2227) for individuals with disabilities and medical conditions to discuss screening procedures and coordinate checkpoint support when necessary. Despite poll data indicating that roughly 20% of those concerned about AIT expressed specific concern over increased passenger delays, it does not appear that AIT screening has had any significant effect on delays. This is likely attributable in large part to the fact that TSA selects only a small percentage of passengers for AIT screening. In addition, TSA can choose to reduce the number of passengers selected for AIT screening when backlogs occur. Although passengers, if selected for additional screening, can opt for either an AIT scan or a pat down, the AIT is considerably faster, taking about 20 seconds to complete, compared to about 2 minutes for a physical pat down. TSA reports that more than 99% of passengers selected for additional screening choose to be screened by AIT technology over the alternative, suggesting that AIT is perceived as relatively quick and hassle-free. The effectiveness of screening technology can be measured in terms of its ability to accurately detect threats while minimizing false alarms. In operational settings there is a tradeoff between detection and false alarms. False alarm rates are easily measured in operational settings, but detection rates cannot be precisely known because of uncertainty over what may have gone undetected. AIT systems, like all other TSA-certified screening technologies, undergo certification testing performed by the Department of Homeland Security (DHS) Independent Test and Evaluation section of the Transportation Security Laboratory, a component of the DHS Science and Technology Directorate. TSA, in coordination with the Transportation Security Laboratory, sets certification criteria, which are not made public. Although the effectiveness criteria and parameters for AIT are not public information, outside experts are divided about the effectiveness of AIT systems. For example, it remains unclear whether a whole body scan would have detected the explosives used in the 2009 Christmas Day bombing attempt. Of particular concern is the possibility that terrorists could use concealment tactics to evade detection by AIT. Modeling by independent researchers, based on publicly available performance estimates, found that certain items--including types of explosives used in past terrorism attempts targeting aircraft--could be difficult, if not impossible, to detect using X-ray backscatter systems at current radiation exposure levels. The researchers concluded that "[e]ven if exposure were to be increased significantly, normal anatomy would make a dangerous amount of plastic explosives with tapered edges difficult if not impossible to detect." The researchers did not model the performance of millimeter wave systems, and CRS is not aware of similar evaluations of millimeter wave systems of the type deployed at airports. Additionally, the DHS Office of Inspector General has raised concerns over the adequacy of TSA's on-the-job training to operate AIT units and inconsistencies in the use of calibration procedures to ensure appropriate image quality. The adequacy of training and image quality can both have significant impacts on the overall effectiveness of AIT. TSA currently provides for eight hours of on-the-job training in addition to classroom instruction, and offers screeners additional time to achieve proficiency if needed. While TSA has issued standard procedures for the operation, testing, and maintenance of all AIT equipment, the DHS Office of Inspector General uncovered inconsistencies at various airports in the application and enforcement of these procedures. The DHS Office of Inspector General formally recommended that TSA conduct an assessment to determine appropriate on-the-job training requirements and develop controls to ensure that AIT systems calibrations, particularly for backscatter units, are conducted consistently and documented properly according to established standard operating procedures. Presently, TSA assigns three screeners per AIT unit for each shift. Through FY2011, TSA hired an additional 8,000 screeners to meet the anticipated workload demands associated with the deployment of the first 1,000 AIT units. TSA anticipates that the migration to ATR will relieve some screener staffing requirements. The anticipated use of ATR in place of human image viewers will eliminate the screener who views and analyzes images in a remotely located viewing room, in most cases. This could reduce system-wide operational staffing for AIT systems by as much as one-third. However, the effect of this on overall TSA staffing is uncertain, as TSA may need additional staff for secondary screening to resolve potential threat detections identified by the ATR software. The potential increased need for secondary screening to resolve ATR alarms will depend on both detection and false alarm rates for the ATR algorithms compared to those rates for human image viewers. This information is not publicly available. As noted previously, TSA seeks to acquire 1,800 AIT units by the end of FY2014. At present the U.S. aviation system includes about 2,300 screening lanes at roughly 450 commercial passenger airports. However, only about 180 of these airports currently have AIT machines. At some of these airports, AIT is not fully deployed to all terminals and all checkpoints. Even at full operating capacity, not all airports and not all screening lanes will be equipped with AIT under TSA's plan. TSA is deploying systems according to a risk-based prioritization strategy that gives highest priority to the largest airports, those that fall into security category X and category I. Even at full operating capacity, many smaller airports will not have AIT. This creates the possibility that terrorists could attempt to board planes at smaller airports to avoid body scanners they might expect to encounter at larger airports, just as some of the 9/11 terrorists originated their trips at the small airport in Portland, ME, and transferred to other flights in Boston without additional screening. Although TSA has put in place policies and procedures to address concerns regarding AIT scanning, these measures are not tied to specific statutory mandates and could be modified in the future without legislative action. A number of related bills have been introduced in the 112 th Congress. However, none of these bills has moved out of committee. The Aircraft Passenger Whole-Body Imaging Limitations Act of 2011 ( H.R. 1279 ) would require the National Academy of Sciences to determine that AIT does not pose a threat to public health, and would require the use of privacy filters or other privacy-protecting technology before AIT could be used for passenger screening. It would further restrict AIT or pat-down screening from being used as a primary screening method. The bill would also prohibit and establish penalties for storing, transferring, sharing, or copying AIT images. The Checkpoint Images Protection Act of 2011 ( H.R. 685 ) would establish penalties for the unauthorized recording or distribution of security screening images, while the Transportation Security Administration Authorization Act of 2011 ( H.R. 3011 ) would require TSA to certify that ATR software is installed on all deployed AIT machines, and that image retention capabilities on all such machines are disabled. Also, the Traveler Screening Act, or the "RIGHTS Act" ( S. 2207 ), would require the TSA Ombudsman's office to better track public complaints about screening, determine best practices to resolve frequent passenger complaints, resolve passenger complaints, and field advance notification calls from individuals with special needs to arrange for accommodation at screening checkpoints. This bill would also require the TSA Ombudsman to appoint TSA employees to serve as passenger advocates at all of the busiest (Category X) airports. Under the conditions specified in the bill, individuals selected as passenger advocates must not have been subject to disciplinary action by TSA and would be required to receive special training in conflict resolution as well as sufficient medical training to recognize legitimate complaints and concerns regarding medical conditions and disabilities.

Responding to the need to reliably detect explosives, bomb-making components, and other potential security threats concealed by airline passengers, the Transportation Security Administration (TSA) has focused on the deployment of whole body scanners as a core element of its strategy for airport checkpoint screening. TSA has deployed about 700 of these scanners, known as whole body imagers (WBI) or advanced imaging technology (AIT), at airports throughout the United States, and plans to have 1,800 in place by the end of FY2014. AIT systems include two technologies: millimeter wave systems and X-ray backscatter systems. AIT directly addresses specific recommendations and mandates to improve the detection of explosives on passengers. However, the deployment of these systems has generated a number of concerns. Although polling data indicate that the American public generally accepts the use of body scanners for passenger screening, various stakeholders have expressed concerns over privacy, potential health risks, and delays in getting through security. Concerns have also been raised regarding screening individuals with special needs, the overall effectiveness of current technology, screener staffing requirements, and TSA's deployment strategy. While TSA voluntarily applies a number of privacy measures (such as viewing AIT images remotely and providing alternative pat-down screenings on request), U.S. law does not specifically require these actions. Beyond these existing procedural measures to protect privacy, TSA is working toward the eventual elimination of human image viewers, replacing them with automated target recognition (ATR) technology to detect potential threats. If ATR eliminates the need for most image viewers, as expected, this could reduce TSA staffing requirements. However, this depends to an extent on the alarm rate for ATR, since TSA procedures require alarms to be resolved by labor-intensive pat-down searches. ATR is currently being deployed on all newly acquired millimeter wave systems and is being retrofitted into already deployed millimeter wave systems. It has not been announced whether a similar system will be implemented for X-ray backscatter imagers. The availability of ATR on millimeter wave units, coupled with continued public perceptions of potential health concerns associated with X-ray backscatter systems, appear to be key factors influencing TSA's approach to focus future acquisitions and deployments on millimeter wave systems. Bills under consideration in the 112th Congress, including the Aircraft Passenger Whole-Body Imaging Limitations Act of 2011 (H.R. 1279) and the Checkpoint Images Protection Act of 2011 (H.R. 685), address privacy and health safety concerns. Additionally, the Transportation Security Administration Authorization Act of 2011 (H.R. 3011) contains a provision that would require all deployed AIT systems to have ATR capabilities and any image retention capabilities to be disabled. Lastly, the Restoring Integrity and Good-Heartedness in Traveler Screening Act, or the "RIGHTS Act" (S. 2207), would address concerns over the processing of passenger complaints regarding TSA procedures and improve assistance to passengers needing special accommodations at screening checkpoints.

Recent years have witnessed a growing interest, in Congress, in the executive branch, and in the broader policy community, in re-examining how well the U.S. government conducts the business of national security--from decision-making, to strategy-making, to budgeting, to planning and execution, to accountability and oversight. That interest reflects concerns with effectiveness--how well the U.S. government accomplishes the mission--and with efficiency--how well the U.S. government stewards scarce resources--in the national security arena. Within the context of these debates, a number of practitioners and observers have called for the adoption of "unified"--or "consolidated" or "integrated"--approaches to national security budgeting. The primary concern of this unified national security budgeting school, loosely defined, is not to improve U.S. budgeting practices per se , but rather to use budgetary mechanisms to drive changes in the priorities and practice of national security. Members of the school broadly share the view that some U.S. national security concerns, such as counter-terrorism, or stabilization and reconstruction, are inherently cross-cutting: that is, they require the participation of multiple agencies, and their associated responsibilities could conceivably be divided up any number of ways among various agencies. In turn, members of the school argue that the current system allows little space for holistic consideration of such cross-cutting national security issues, and they propose an array of budgetary tools designed to promote cross-fertilization. They suggest that for such cross-cutting issues, more "unified" budgeting approaches could facilitate the identification of overlaps and gaps among agencies' efforts; enable more deliberate assignment of roles and responsibilities; catalyze closer collaboration; and provide greater transparency to help support congressional oversight. Such changes, they add, could improve effectiveness and save money. The school itself is far from unified--there is no single model for "unified national security budgeting." Various proponents have put forward quite different proposed remedies and are--apparently--aiming to solve quite different underlying problems. The fact that the debate itself is not cohesive has no logical bearing on the value of the various associated proposals, but it suggests a need to define terms, as a starting point. For Congress, constitutionally mandated to control the power of the purse, fundamental issues at stake include both oversight of the effectiveness and efficiency of U.S. government national security activities, and the integrity of the overall federal system of budgeting. Of particular interest may be the extent to which, if any, efforts to optimize the overall system, and efforts to optimize its national security "sub-system," constitute competing imperatives. This report describes and characterizes the unified national security budgeting school's broadly shared critique of the current system; describes and analyzes various proposed unified national security budgeting approaches; and offers a succinct list of considerations for Members and staff of Congress who may be interested in this issue. The U.S. government system of budgeting for national security activities is part of a much larger, highly complex system of federal budget development--based on the constitutional distribution of roles and responsibilities between Congress and the President, on statute, and on a wide array of established practices by key stakeholders. The system necessarily covers the full panoply of U.S. government responsibilities and activities, and therefore by definition--de facto if not explicitly--adjudicates among all competing concerns. In a sense, the federal budget system not only reflects the distribution of power among branches, but also refines and institutionalizes that power balance. So the stakes associated with any possible revision of the federal budget system are quite high. The current, extremely complex federal budgeting system includes at least three major processes directly germane to the consideration of national security. In the executive branch, the Office of Management and Budget (OMB), part of the Executive Office of the President (EOP), is responsible for administering budget development and execution. OMB typically assigns each federal Department and agency an informal topline--a total funding limit--early in the process. OMB may also provide additional funding level guidance for some specific activities. Agencies then typically work within their respective toplines, which can be negotiable, to craft their budget requests. The appropriate Resource Management Offices (RMO) within OMB consider the draft requests and work with agencies to refine them. OMB leadership considers the findings--a process in which National Security Staff (NSS) members, for national security-related matters, may participate. OMB "passes back" its decisions to agencies, revisions are made, any agency appeals are adjudicated, final EOP decisions are taken, and the results are put forward to Congress as the President's budget request. In Congress, appropriations committees allocate shares of the discretionary budget to their subcommittees, each of which has specified oversight responsibilities. Each subcommittee's remit corresponds to some broad mission area--such as "defense" or "homeland security." But those remits do not fully align with Departments and agencies--subcommittees may be responsible for some activities at multiple agencies, and agencies may answer to more than one subcommittee. Meanwhile, as an organizing construct, the entire federal government uses a hierarchy of categories--budget "functions" and "sub-functions," based on the purpose the funding is intended to serve--to organize compilation and consideration of budget requests. These functions do not fully align with Departments and agencies, nor do they correspond directly to appropriations subcommittees--for example, there is no single budget function for "homeland security," which is both an agency and a subcommittee title. According to a number of practitioners, budget function categories do not fully reflect the way that budget requests are developed or considered in either participating branch of government. The current system does not budget for national security in an explicit and bounded way. There is no legal definition stating how "national security" maps onto any of the sets of boundaries used in the current budget process--including executive branch agencies, appropriations subcommittees, or budget functions. It is worth noting that bounding "national security" for the purposes of budgeting would require more than organizational or administrative fixes; it would also require significant conceptual efforts to define the boundaries of the category. The broader policy community has no single, shared understanding of the arenas and activities that contribute to national security. In practice, the debates about boundaries tend to be shaped by real-world developments. For example, in the wake of the terrorist acts of September 11, 2001, many practitioners and observers urged closer integration between homeland security and traditional national security efforts. The Obama Administration, at the start of its first term, declared the two "indistinguishable" and institutionalized the concept organizationally with a merger of the previously separate National and Homeland Security Councils. Yet on one hand, it is not obvious that all national and homeland security concerns should be combined, for all purposes. And on the other hand, contributions to U.S. national security might be defined more broadly still--to include energy, the environment, and the economy, for example. In principle, incorporation of some activities that are not traditionally included under a national security umbrella might give them additional prominence and might even boost their chances of getting funded. Even more ambitiously, broadening the scope of "national security" in the budgeting process might encourage practitioners to think more creatively about how various instruments of national power contribute to U.S. national security, and to use resourcing decisions to re-balance the weight of those contributions. Yet inclusion of broader activities in the national security mix could conceivably have the opposite effect by sharpening the zero-sum contest for resources between traditional and less-traditional national security tools. Unified national security budget advocates typically characterize the current system in at least two important ways. First, they rightly point out that the current system does not treat "national security" in a distinct, bounded way. Second, they tend to argue that the various national security-related components of the budget are developed in striking isolation from one another. They suggest that the executive branch process would do well to undertake more ambitious cross-cutting consideration of national security issues; and they add that in practice it is better at ensuring the internal consistency of each agency's budget request than at reconciling the requests of various agencies. They suggest that appropriations committees would do well to adjudicate more actively how cross-cutting national security priorities are met by adjusting the mix of activities undertaken, or the division of labor among agencies, or both. But they argue that in practice, subcommittees tend to guard against perceived incursions into their respective jurisdictions, and full committee-level adjudication is relatively rare. Skeptics might raise concerns about any of several broadly shared facets of UNSB community thought. First, they might point to the relatively limited attention UNSB advocates tend to give to the integrity of the federal government budgeting system--to the damage that might be done to the overall system including, not least, congressional oversight, by changes to any of its basic modalities. Second, some might suggest that the UNSB community typically fails to consider what additional room there might be for holistic consideration of cross-cutting issues within the formal bounds of the current system through fuller utilization of existing tools. Third, skeptics might observe that "national security" is but one subset of overall U.S. concerns, and that optimizing for national security might well mean sub-optimizing in other arenas and at the level of U.S. government responsibilities. Finally, some suggest that unified budgeting advocates may be particularly eager to label national security activities as "cross-cutting," viewing holistic consideration as an additive good without associating any opportunity costs with the forfeiture of single-agency responsibility. In principle, single agency-based approaches may sometimes offer greater efficiency and greater effectiveness. Further, unified budgeting advocates may tend to believe that an activity either is cross-cutting or it is not. Yet in practice, activities may have some single-agency facets and some cross-cutting facets, so the art would be to weigh the benefits and opportunity costs of treating such activities either holistically or within single agencies. While a number of practitioners and outside experts have called for adopting more "unified" approaches toward budgeting for national security, those calls themselves have hardly been unified in the prescriptions they have put forward. They vary greatly in content and--more fundamentally--in intent. Perhaps the most ambitious approach to unified budgeting for national security would feature a single, shared pool of funding for all national security activities, with systemic-level decision-making and accountability from the White House, and with holistic congressional oversight of the entire pool. A key variant of such an approach would limit the scope of the shared pool and other associated modalities to those national security activities that are inherently "cross-cutting"--those, for example, that by definition require the participation of more than one agency such that integration of effort is required, or those that could conceivably be carried out by any of several different agencies such that decisions about roles and responsibilities are required. Other activities that contribute to national security, deemed to be self-contained within given agencies, might be excluded from such a cross-cutting pool. Either variant would require discrete choices regarding scope--of national security activities writ large, or of some cross-cutting subset. Potential benefits of such an approach, given its shared funding pool and its systemic-level adjudication, might include enabling trade-offs to be made--among activities, agencies, or both--across the full span of U.S. government national security efforts. Such an approach might not only make tradeoffs theoretically possible, but also catalyze deeper strategic thinking about the best balance of tools of national power for delivering "security." A list of potential costs of this approach might start with the possibility that such fundamental adjustments to the mechanisms of budgeting for national security could trigger shifts in the balance of power between the Legislative and executive branches--particularly if the new modalities entail a more proactive de facto exercise of authority over the budget process by the President. In addition, the scope of this approach--particularly in its maximal, comprehensive, version--could prove unwieldy and make it hard to manage a disciplined process. Further, a single comprehensive pool of such scope would likely require a more robust mechanism for systemic-level adjudication, and might also require a greater number of systemic-level adjudicators at the NSS and OMB, with the appropriate expertise, to carry it out. In turn, the use of a genuinely shared funding pool, with no a priori decisions about the division of responsibilities and resources among agencies, might also require new modalities for congressional oversight. Finally, while the process of determining the best use for a large, shared pool might conceivably help foster a strong, shared sense of purpose, it might also intensify zero-sum competitions among agencies for both resources and relevance. An alternative to comprehensive unified budgeting for national security is "mission-based budgeting," which typically refers to some form of unified budgeting across multiple agencies in a specific mission area. This approach is sometimes regarded as a "pilot" for a broader unified budgeting effort, and sometimes as an end in itself. Mission-based approaches might, in theory, take any of a wide variety of forms, with a correspondingly wide variety of potential costs and benefits. The Global Security Contingency Fund (GSCF) might be considered a leading example of mission-based budgeting. Regardless of how accurately it reflects that approach, however, its prominence in official rhetoric, congressional interest, and policy community attention make it an important touchstone for consideration. GSCF is a budgeting mechanism that allows State and DOD to transfer funds to a discrete Treasury account, to be used to provide assistance to foreign security forces to help them conduct counterterrorism or stability operations. GSCF is sometimes characterized as a bold step forward toward unified national security budgeting, away from past approaches designed merely to "work around" existing limitations. Yet in practice, GSCF's specific mechanisms and narrow scope raise questions about the kind of change it is intended to drive. GSCF's total funding stream is relatively limited. More importantly, not all U.S. government activities--or even all State and DOD activities--within the specified mission areas, are covered by GSCF, so the mechanism is limited in its ability to highlight the full range of gaps, unnecessary overlaps and potential tradeoffs in these areas. Further, GSCF is horizontally adjudicated--as a rule, State and DOD conduct programmatic decision-making between themselves, which may limit the Fund's ability to directly link national strategy and resourcing. In turn, the adjustments required in order for Congress to provide oversight are in this case relatively simple, compared to hypothetical, comprehensive unified budgeting approaches, because the Fund involves only two agencies. DOD's use of joint capability areas (JCAs) in its internal budgeting process may be a helpful agency-level analogue for the concept of mission-based budgeting. It is also a good counterpoint to GSCF, because the two approaches differ markedly in their business rules. In general, DOD budgeting might be viewed as a microcosm of broader executive branch budgeting, given the need to coordinate and reconcile budget requests among Military Services and agencies, each with its own mandate but all broadly supporting of a single defense strategy. JCAs are an organizing construct designed to give DOD leadership a single consolidated view of key mission areas--such as "Battlefield Awareness"--and to support analysis and decision-making over portfolios of related matters. Unlike GSCF, they are not based on shared funding pools. But also unlike GSCF, they are designed, in theory, to be comprehensive within a given mission area, and thus able to provide a full picture and enabling identification of gaps, overlaps, and potential tradeoffs. And unlike GSCF, JCA adjudication and decision-making are conducted at the systemic level--at the level of the Office of the Secretary of Defense and the Joint Staff--rather than horizontally among Services and agencies. The process typically generates displays that could be used to inform both internal decision-making and external review by the White House and/or Congress. The potential benefit, and also costs, of mission-based budgeting are likely to vary greatly based on the design of any specific initiative. One potential virtue of a focus on mission area, rather than on the entire field of national security, is its relative manageability, given both the narrower substantive scope and the smaller quantitative scale. In turn, if the mission area is defined inclusively--as JCAs are--it can provide focused analysis and tee up decision-making regarding gaps, overlaps and tradeoffs within that arena. While it cannot shed light on the appropriate balance among mission areas, it might help make decision-making--and execution--within single arenas more effective. Further, if the mission area is defined inclusively, the adjudication process could easily generate comprehensive displays of all the associated budgetary choices, which might facilitate oversight by illuminating the Administration's approaches and choices. Different levels of adjudication for mission-based budgets suggest different potential pay-offs. Systemic-level adjudication might help ensure that top national priorities, rather than agency equities, drive choices within that arena. Horizontal adjudication might, as some practical experience suggests, present greater difficulties in arriving at solutions. But if participants of horizontal processes persevere, their enforced collaboration on budgeting might conceivably open doors to broader collaboration in that mission area--for example in planning and execution. Costs, like benefits, would be likely to vary greatly depending on design. One consideration--a limitation more than a cost--concerns scope. Mission-based budgets may be less well-placed than a more comprehensive unified national security budget to consider genuinely alternative approaches, or to catalyze fundamental re-thinking about the provision of national security--for example, tradeoffs in the balance of prevention and preparedness efforts. In turn, different levels of adjudication might introduce different kinds of potential costs. Systemic-level adjudication of a mission area would require--as it would for a comprehensive unified budget--the time and attention of systemic-level adjudicators, as well as their ability to grasp the full spectrum of issues, activities, and agency equities at stake. That suggests the need for sufficient numbers of personnel with the appropriate expertise at the NSS and OMB, and for effective NSS/OMB collaboration mechanisms. Horizontal adjudication might hold more potential pitfalls; practical experience and organizational theory suggest that the instruction to "sort it out amongst yourselves" can be fraught with peril. Arguably, this variant might require sufficient strategic guidance from the systemic level to allow--or force--major stakeholders to work toward the same ends, and with a shared understanding of the basic division of labor. In addition--or instead--this approach might require interlocutors who are steeped in their own agencies' capabilities and equities, but who also fully appreciate other agencies' roles and contributions. To that end, many have argued that the best means for making sure that agencies can collaborate fluidly on national security matters--on planning and execution as well as on budgeting--is by building, across the federal government, a cadre of national security professionals, through shared education, training, and inter-agency exchange service. In theory, such cadre-building might foster a stronger sense of shared purpose and priorities, and the participants--fully cognizant of the roles and capabilities of other agencies as well as their own--might come to approach budgeting for cross-cutting national security issues more collaboratively--for example, more readily identifying, and agreeing to, tradeoffs. Finally, mission-based budgeting might require, or make desirable, some form of coordinated congressional oversight. For example, some activities designed to be carried out by multiple agencies might only be executable if each agency receives the necessary authorization and appropriations from its respective committees of jurisdiction. That is, it might make sense to decide "yes" or "no" across the board. And some requests by individual agencies for resources and authorities might only make logical sense in the context of the Administration's request for the entire mission area. Many proposals regarding national security budgeting focus not on the use of a shared funding pool, but rather on a variety of other measures, often in combination with each other. Of those, "crosscut displays" may be the most common. In general, a crosscut budget display refers to a comprehensive visual depiction of all activities by two or more agencies within a given policy arena. Crosscuts are not a new idea--they have long been used in a variety of fields, sometimes but not always congressionally mandated. The homeland security arena provides one of the most prominent crosscut display examples of recent years. In the wake of the terrorist attacks of September 11, 2001, Congress required that the President submit, with the annual budget request, a display of funding--by budget function, by agency, and by initiative area--contributing to homeland security. The requirement consolidated and expanded previous requirements for crosscut displays concerning counterterrorism, and domestic emergency preparedness. Today the results of that mandate are captured in an appendix to the Analytical Perspectives component of the President's budget submission, which is entitled "Homeland Security Funding by Agency and Budget Account." This display, which covers recently enacted budgets as well as the current budget request, highlights the remarkably broad spectrum of agencies considered to contribute to homeland security. Crosscut budget displays have many potential benefits. Their most obvious virtue might be transparency, providing both the executive branch and Congress a picture of overall U.S. effort in a given field, including all the facets of that effort and the respective contributions of all participating agencies. That picture might highlight gaps and unnecessary redundancies, and might help facilitate adjudication of the roles and missions of various actors. For Congress, even without any adjustments to current modalities for oversight, crosscuts might provide broader context for the activities within a given committee's jurisdiction, and might also facilitate cross-talk among committees as needed. One cost associated with the use of crosscuts is the discipline required in order for the results to be meaningful. In particular, all contributors have to share the same vocabulary and understanding of concepts. Enforcing such discipline might require additional systemic-level supervision. Under the heading of "costs" broadly defined, the use of crosscuts also carries certain limitations. Crosscuts do not, on their own, tee up decision-making--they merely reflect decisions made--so additional steps would be required in order for crosscuts to serve as tools for change of any kind. Crosscuts also do not inherently indicate accountability for the cross-cutting mission areas they depict. Instead, effective execution may require the additional step of assigning responsibility, whether to the systemic level, to a lead agency, or to a combination of agencies, for ensuring that all facets of a mission area are integrated and accomplished. And unlike pooled funding, crosscuts, even when they indicate gaps or unnecessary overlaps in effort, include no mechanism for the re-allocation of resources and/or authorities. Any such changes might require additional actions by Congress as well as the executive branch. In addition to costs and limitations, the use of crosscuts merit particular caution in several ways. First, regardless of how the scope of inclusion is defined, crosscuts might give the impression of being comprehensive and might therefore focus disproportionate attention on aggregate funding levels over time. That is, they might encourage particular scrutiny of whether the U.S. government is spending "too much" or "too little"--a consideration that would only be as meaningful as the defined scope of the crosscut, and the consistency of that definition over time. Second, crosscuts displays might tacitly encourage straight cost comparisons among activities that might not make sense: how, after all, should a timely, effective diplomatic intervention be weighed against the acquisition of a major weapons system as contributions to national security? Also commonly encountered in the unified national security budgeting debates--and in the national security reform debates more broadly--are calls for the White House to issue more specific strategic guidance that sets the terms for budgetary decisions. Some view such a step as a necessary precursor for any effective pooled funding approach. Others suggest that a very rigorous process designed to develop such strategic guidance might provide some of the same benefits that pooled funding mechanisms are designed to deliver. Currently the most prominent delivery system for national security guidance is the National Security Strategy. The law requires that Administrations deliver such a strategy annually, and Administrations have varied in their compliance with that timeline. Typically, the final products provide elegant descriptions of fundamental U.S. interests, U.S. security concerns around the world, and an array of U.S. objectives. But they typically do not articulate priorities, assign roles and responsibilities to specific Departments and agencies, or provide resource parameters. Responding to these perceived shortcomings, many practitioners and observers have recommended a more rigorous approach: the conduct of a systemic-level national security review, every four years, led by the NSS with strong support from OMB and full participation by all relevant agencies. Such a review would be designed to clarify core U.S. national security interests; identify and prioritize U.S. objectives; identify and prioritize the activities--the "ways and means"--to be used to achieve those objectives; assign roles and responsibilities to Departments and agencies; establish resource constraints; and elaborate a shared understanding of associated risks and opportunities to mitigate them. The review process would generate internal, classified guidance--national security planning guidance (NSPG)--that would serve as the basis for agencies to build their budget requests. In turn, the broad themes of the review would be released as a public document, the national security strategy, that is, as a by-product rather than as the primary goal of the review effort. For its part, Congress has shown some interest in the potential utility of such an approach, mandating that the President issue NSPG in one major mission area--countering al Qaeda and its affiliates. The potential benefits of the use of more explicit strategic guidance would likely depend on how rigorously and iteratively the associated reviews are conducted. In principle, a rigorous review process that links strategy and resourcing and delivers clear guidance has great potential to ensure that national priorities are met both effectively and efficiently. In particular, the approach includes the potential to make cross-cutting comparisons--for example, which approach should be chosen, when it would be possible to use any of several different instruments of national power to achieve an objective? And who should exercise those instruments? Also importantly, the hands-on direction by the Executive Office of the President gives this approach, unlike the use of crosscut displays alone, a built-in mechanism for decision-making as an integral part of the process. Strategically driven budgeting carries a number of potential costs in the sense of additional requirements. The approach relies on rigorous adjudication at the systemic level by both strategy and resource experts, working closely with each other and managing a complex dialogue with all contributing agencies. That implies a requirement for sufficient numbers of personnel with sufficient expertise, at the NSS and OMB, and for adequate collaboration mechanisms. While a key distinguishing quality of this approach is the strong role played by the EOP, it might also require sufficiently rigorous strategic, planning, and budgetary processes within participating agencies, so that they can contribute meaningfully to the interagency reviews. Crosscut displays might be considered an additional requirement of this approach, although their use might more appropriately be considered a likely inherent facet of the strategic review process itself. Finally, because this approach does not alter the basic modalities for submitting budget requests to Congress, it would not necessarily require changes in congressional oversight. However, to the extent that an Administration makes significant tradeoffs across mission areas, and/or across agencies in order to provide national security, Members of Congress might be interested in using cross-cutting modalities of their own--such as holding joint hearings among several committees, or considering the Administration's crosscut displays together--to better evaluate Administration decision-making. In evaluating proposals and options for possible refinements to budgeting for national security activities, Congress may wish to consider the following issues. The debates about unified budgeting for national security lack a shared sense of the basic problem that needs to be solved. Accordingly, they also lack a shared sense of the basic goal that needs to be achieved. For any given unified budgeting proposal, what problem is it designed to solve--for example, are current U.S. national security efforts perceived to be too expensive, too ineffective, or imbalanced in the distribution of labor across the executive branch? In reality, how if at all does the current system of budgeting for national security fall short? What advantages if any might it have over proposed alternative systems? To what extent might cross-cutting consideration of national security issues be expanded within the formal constraints of the current system? How do various proposals balance the magnitude of the perceived problem and the anticipated benefits of proposed changes, against the anticipated costs of change in terms of time, energy and resources, together with the risks of unanticipated damage to the rest of the system? In theory, many different choices could be made regarding the appropriate boundaries of national security writ large, or of explicitly "cross-cutting" issues within the field of national security, for use in unified budgeting approaches. In budgeting for national security activities, regardless of the mechanisms for doing so, what purchase might be gained by considering national security as a whole? What advantages might examination, instead, of explicitly cross-cutting national security activities, offer? If either cross-cutting national security issues, or national security issues writ large, deserve explicit attention in the budgeting process, what should those categories include? What are the broader stakes--for both agencies and issues--of exclusion from or inclusion under a national security umbrella? Regardless of the specific goals that any changes to national security budgeting might be designed to achieve, any number of different approaches, or combinations of approaches, might theoretically be selected to help achieve those goals. Which of the various possible "ways and means" put forward in different proposals would in principle be compatible with each other? For any given desired end, which ways and means would best achieve the desired results? For any proposed set of ends/ways/means, which of the ways and means are essential to making the approach work, and which are merely helpful additions? Almost any changes to current ways of doing business would be likely to carry some near-term financial costs as a reflection of adjustments to new practices. But some changes might introduce longer-term savings, either because the process itself becomes more efficient, or because new processes yield a more effective practice of national security writ large. For any given proposal, what would be the likely near-term associated resource requirements? What longer-term savings, if any, might it generate? How might the likelihood that refined budget processes would reduce future U.S. requirements through the more effective execution of national security activities--for example, through better-integrated or better-balanced instruments of national power--best be calculated? How might the likelihood that refined budget processes would increase future U.S. requirements--either through initial investments as changes are institutionalized, or through unanticipated consequences--best be calculated? Any analysis of unified budgeting proposals would sensibly include a consideration of risk. In taking apart various facets of the current system (together with the myriad behavior patterns that inevitably develop in any bureaucratic order to compensate for the inefficiencies of the formal system), what unanticipated ripple effects might be created? What steps if any do proposals offer for mitigating such risks? A particularly vexing problem for both national security practice and organizational theory concerns assessments--knowing in what ways, to what extent, and why introduced changes are generating desired results. One unsatisfying approach would be to consider immediate "outputs"--for example, does the system produce decisions? A much more sophisticated approach would consider effects--for example, what additional contributions, if any, does a modified system of budgeting for national security make to the protection of U.S. national security interests? What quickly becomes apparent is the great difficulty of distinguishing among the impacts of many different variables--budgeting, but also decision-making, strategy-making, planning, execution. For any unified budgeting proposal, how would the impact of its use on both effectiveness and efficiency be determined? How would its impact be distinguished from that of other facets of the national security process? How much time would it take for any results to manifest themselves? To what extent if any might the tools provided by the GPRA Modernization Act of 2010, P.L. 111-352 , be helpful for ascertaining the impact of any changes to modalities for budgeting for national security on the effectiveness and/or efficiency of results in that field? Some unified budgeting approaches suggest--while others would seem to require--changes in the modalities of congressional oversight. To what extent if any could Congress, in theory, without any formal changes, engage in more holistic consideration of national security matters? What benefits if any might that have? To what extent, if any, would any given unified national security budgeting proposal necessitate changes in the modalities of congressional oversight, of authorizations as well as appropriations? What impact if any might proposed changes in congressional oversight--for example, holding more frequent joint hearings concerning cross-cutting national security issues, or increasing the size of appropriations committee staffs--have on the effectiveness and/or efficiency of U.S. national security efforts, even without changes in the structure or organization of executive branch national security budgeting?

In recent years a number of observers and practitioners have identified various facets of U.S. government national security practice--decision-making, strategy-making, budgeting, planning and execution, and congressional oversight--as inherently "cross-cutting." They have in mind arenas--such as counterterrorism, and stabilization and reconstruction--that by definition involve multiple agencies, or for which responsibilities could be divided up in any number of ways among various agencies. For such facets of national security, they argue, the U.S. government is seldom able to conduct genuinely holistic consideration. The cost, they add, is a loss of effectiveness, or efficiency, or both. In order to encourage holistic consideration of national security issues, some members of this inchoate school have called for the use of "unified national security budgeting" (UNSB). To be clear, their goal is not to refine the U.S. federal system of budgeting, but rather to use budgetary mechanisms to drive changes in U.S. national security practices. Within this broad school of thought, various proponents call for the adoption of a number of different approaches, from a single shared funding pool for all national security activities, to mission-specific funding pools, to crosscut displays, to more strategically driven budgeting. In turn, various proponents apparently aim to achieve quite different kinds of change with their proposed remedies--from rebalancing the distribution of roles and responsibilities among executive branch agencies, to saving money, to revisiting fundamental understandings about how U.S. national security is best protected. For Congress, constitutionally mandated to control the power of the purse, the most fundamental issue at stake may be ensuring the integrity of the overall federal budgeting system--there may be no single best answer regarding how it should function, but that it function would seem to be of paramount importance. At the same time, while the current system does not adjudicate "national security" in an explicit, bounded way, and while no single, generally agreed definition of the boundaries of "national security" exists, Congress has oversight responsibility for any number of activities and executive branch agencies that could reasonably be considered to contribute to national security, and thus vested interests in both the effectiveness and the efficiency of U.S. national security practices. A basic challenge for Congress may be fundamental tensions between optimizing the overall federal budgeting system, and optimizing for its national security sub-system. For any set of "unified budgeting" proposals, it may be helpful to Congress to consider what problems the proposals are designed to address; the potential costs and benefits that implementing the proposals might introduce; the risks the proposals might pose to the functioning of the current overall U.S. federal budgeting system; and how the impact of the implementation of the proposals would best be gauged.

Section 319(a) of the Bipartisan Campaign Reform Act of 2002 (BCRA), also known as the McCain-Feingold law, establishes increased contribution limits for House candidates whose opponents significantly self-finance their campaigns. This provision, in tandem with Section 304, which applies a similar program to Senate candidates, is frequently referred to as the "Millionaire's Amendment." Generally, the complex statutory formula provides--using limits that were in effect at the time the case was considered--that if a candidate for the House of Representatives spends more than $350,000 of personal funds during an election cycle, individual contribution limits applicable to his or her opponent are increased from the usual current limit ($2,300 per election) to up to triple that amount (or $6,900 per election). Likewise for Senate candidates, a separate provision generally raises individual contribution limits for a candidate whose opponent exceeds a designated threshold level of personal campaign funding that is based on the number of eligible voters in the state. For both House and Senate candidates, the increased contribution limits are eliminated when parity in spending is reached between the two candidates. BCRA also requires self-financing candidates to file special disclosure reports regarding their campaign spending--as such expenditures are made--in addition to reporting in accordance with the regular periodic disclosure schedule. In 2004 and 2006, Jack Davis was a candidate for the House of Representatives from the 26 th Congressional District of New York. During the 2004 election cycle, he spent $1.2 million, which was principally from his own funds, and during the 2006 cycle, he spent $2.3 million, which (with the exception of $126,000) came from personal funds. In 2006, after the Federal Election Commission (FEC) informed Davis that it had reason to believe that he had violated BCRA's disclosure requirements for self-financing candidates by failing to report personal expenditures during the 2004 election cycle, Davis filed suit in the U.S. District Court for the District of Columbia seeking declaration that the Millionaire's Amendment was unconstitutional and an injunction preventing the FEC from enforcing the law during the 2006 cycle. A district court three-judge panel concluded sua sponte that Davis had standing to bring the suit, but rejected his claims on the merits and granted summary judgment to the FEC. Invoking BCRA's provision for direct appeal to the Supreme Court for actions brought on constitutional grounds, Davis appealed. Reversing the three-judge district court decision, in a 5-to-4 vote, the Supreme Court in FEC v. Davis invalidated the Millionaire's Amendment as lacking a compelling governmental interest in violation of the First Amendment. Justice Alito wrote the opinion for the majority and was joined by Chief Justice Roberts, and Justices Scalia, Kennedy, and Thomas. Justice Stevens wrote an opinion concurring in part and dissenting in part, and was joined, in part, by Justices Souter, Ginsburg, and Breyer. Justice Ginsburg also wrote an opinion, concurring in part and dissenting in part, which was joined by Justice Breyer. The Court remanded the case to the district court for proceedings consistent with its opinion. Citing prior decisions, the Court began its opinion by noting that it has long upheld the constitutionality of limits on individual contributions and coordinated party expenditures. While recognizing that contribution limits implicate First Amendment free speech interests, it has sustained such limits on the condition that they are "closely drawn" to serve a "sufficiently important interest" such as the prevention of corruption or the appearance of corruption. On the other hand, the Court observed that it has definitively rejected any limits on a candidate's expenditure of personal funds to finance campaign speech, finding that such limits impose a significant restraint on a candidate's right to advocate for his or her own election, which is not justified by the compelling governmental interest of preventing corruption. Instead of preventing corruption, use of personal funds lessens a candidate's reliance on outside contributions, thereby neutralizing the coercive pressures and risks of abuse that contribution limits seek to avoid. With regard to the Millionaire's Amendment, the Court observed that while it does not directly impose a limit on a candidate's expenditure of personal funds, it "imposes an unprecedented penalty on any candidate who robustly exercises that First Amendment right." Further, it requires a candidate to choose between the right of free political expression and being subjected to discriminatory contribution limits. If it simply increased the contribution limits for all candidates--both the self-financed candidate as well as the opponent--it would pass constitutional muster. Although many candidates who can afford significant personal expenditures in support of their own campaigns may choose to do so despite the Millionaire's Amendment, the Court determined that they would bear "a special and potentially significant burden if they make that choice." In fact, the Court concluded that if a candidate vigorously exercises the right to use personal funds, it creates a fundraising advantage for his or her opponents. In its 1976 landmark decision Buckley v. Valeo, the Supreme Court upheld a provision of the Federal Election Campaign Act (FECA) providing presidential candidates with the option to receive public funds on the condition that they comply with expenditure limits, even though it found overall expenditure limits to be unconstitutional. Distinguishing the Millionaire's Amendment from FECA's presidential public financing provision, the Davis Court observed that the choices presented by each of the statutes are "quite different." By forgoing public financing, a presidential candidate can still retain the unencumbered right to make unlimited personal expenditures. In contrast, the Millionaire's Amendment fails to provide any options for a candidate to exercise that right without limitation. Finding that the Millionaire's Amendment imposes a "substantial burden" on the First Amendment right to expend personal funds in support of one's own campaign, thereby triggering strict scrutiny, the Court announced that it is not sustainable unless it can be justified by a compelling governmental interest. As the Court held in Buckley, reliance on personal funds reduce s the threat of corruption, and therefore, the burden imposed by the Millionaire's Amendment cannot serve that governmental interest. Responding to the FEC's argument that the statute's "asymmetrical limits" are justified because they level the playing field for candidates of differing personal wealth, the Court pointed out that its jurisprudence offers no support for the proposition that this rationale constitutes a compelling governmental interest. According to the Court, preventing corruption or its appearance are the only legitimate compelling governmental interests--that have yet been identified--to justify restrictions on campaign financing. Moreover, "'the concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment.'" Specifically, the Court cautioned that restricting a candidate's speech in order to level opportunities for election among candidates presents "ominous implications" because it would permit Congress to "arrogate the voters' authority to evaluate the strengths of candidates competing for office." Voters are entrusted with the duty to judge candidates for public office and, according to the Court, Different candidates have different strengths. Some are wealthy; others have wealthy supporters who are willing to make large contributions. Some are celebrities; some have the benefit of a well-known family name. Leveling electoral opportunities means making and implementing judgments about which candidates should be permitted to contribute to the outcome of an election. The Constitution, however, confers upon voters, not Congress, the power to choose the Members of the House of Representatives, Article I, SS 2, and it is dangerous business for Congress to use the election laws to influence the voters' choices. In considering the constitutionality of the disclosure requirements contained within the Millionaire's Amendment, the Court emphasized that it has repeatedly held that compelled disclosure significantly infringes on privacy of association and belief, as guaranteed under the First Amendment. Therefore, it has subjected such requirements to exacting scrutiny in order to ascertain whether there is a "relevant correlation" or "substantial relation" between the governmental interest and the information required to be disclosed. In view of its holding that the Millionaire's Amendment is unconstitutional, the Court likewise reasoned that the burden imposed by its disclosure requirements cannot be justified, and accordingly, struck them down. In a dissent, Justice Stevens--joined, in part, by Justices Souter, Ginsburg, and Breyer--argued that the Millionaire's Amendment represents Congress's judgment that candidates who spend over $350,000 of their own money in a campaign for a House or Senate seat have an advantage over other candidates who must raise contributions. The statute imposes no burden on self-financing candidates and "quiets no speech." Instead, the dissent found that it does no more than merely "assist the opponent of a self-funding candidate" to make his or her voice heard and that "this amplification in no way mutes the voice of the millionaire, who remains able to speak as loud and as long as he likes in support of his campaign." As a result of finding no direct restriction on the speech of the self-financed candidate, the dissent would subject the Millionaire's Amendment to a less rigorous standard of review. Indeed, the dissent specifically criticized the Court's landmark Buckley ruling, which struck down limits on expenditures, arguing that "a number of purposes, both legitimate and substantial," can justify the imposition of reasonable spending limits. Maintaining that combating corruption and the appearance of corruption are not the only governmental interests justifying congressional regulation of campaign financing, the dissent remarked that the Court has also recognized the governmental interests of reducing both the influence of wealth and the appearance of wealth on the outcomes of elections. While conceding that such prior decisions have focused on the aggregations of wealth that are accumulated in the corporate form, it reasoned that the logic of such decisions--particularly concerns about the "corrosive and distorting effects of wealth" on the political process--could be extended to the context of individual wealth as well. In a separate dissent, Justice Ginsburg--joined by Justice Breyer--concluded that sustaining the constitutionality of the Millionaire's Amendment would be consistent with the Court's earlier holding in Buckley v. Valeo . She resisted, however, joining Justice Stevens's dissent to the extent that it addresses the Court's ruling in Buckley invalidating expenditure limits. Noting that the Court had not been asked to overrule Buckley --and that this issue had not been briefed--Justice Ginsburg preferred to leave reconsideration of that case "for a later day." The Court's decidedly antiregulatory opinion in Davis appears to reaffirm its finding in the landmark 1976 decision, Buckley v. Valeo, that Congress has no compelling interest in attempting to level the playing field among candidates. In fact, the Davis Court determined that Congressional attempts to do so would supplant the choices of the voters. Notably, the decision also seems to be a departure from its 2003 decision in McConnell v. FEC --upholding key portions of BCRA--where the Court expressed deference to Congress's expertise in regulating the system under which its Members are elected. While Justice Stevens still appeared to subscribe to this view, the majority of the Davis Court seemed less deferential.

The "Millionaire's Amendment" is a shorthand description for a provision of the Bipartisan Campaign Reform Act of 2002 (BCRA), also known as the McCain-Feingold law, which established increased contribution limits for congressional candidates whose opponents significantly self-finance their campaigns. In 2008, in a 5-to-4 decision, Davis v. Federal Election Commission , the Supreme Court invalidated this provision. The Court found that the burden imposed on expenditures of personal funds is not justified by the compelling governmental interest of lessening corruption or the appearance of corruption and therefore, held that the law is unconstitutional in violation of the First Amendment.

The collection and use of personal information by websites, Internet service providers, direct marketers, data brokers, network advertisers, law enforcement entities, and others has raised privacy concerns. Personal information is readily available because of the widespread usage of the Internet and of cloud computing, the availability of inexpensive computer storage, and increased disclosures of personal information by Internet users in participatory Web 2.0 technologies. The increased availability of online personal information has fueled the creation of a new tracking industry. Behavioral advertising, a form of online advertising, is delivered based on consumer preferences or interest as inferred from data about online activities. In 2010, over $22 billion was spent on online advertising. This revenue allows websites to offer content and services for free. What They Know , an in-depth investigative series by the Wall Street Journal, found that one of the fastest growing Internet business models is of data-gatherers engaged in "intensive surveillance of people [visiting websites] to sell data about, and predictions of, their interests and activities, in real time." Websites such as Spokeo, an online data aggregator and broker, give site visitors vast quantities of personal information. Congress is examining the use of new technologies (such as flash cookies), and the privacy practices of the 15 websites identified as installing the most tracking technology on their visitors' computers. Consumers and public interest groups are filing complaints to challenge the collection and use of consumer data without consumer consent or knowledge. Online privacy concerns are widespread. Stakeholders routinely acknowledge that the continued success of electronic commerce depends upon the resolution of issues related to the privacy and security of online personal information. The U.S. Department of Commerce recently reiterated that the large-scale collection, analysis, and storage of personal information is central to the Internet economy; and that regulation of online personal information must not impede commerce. The Commerce Department's report on Commercial Data Privacy calls on Congress to create a "privacy bill of rights," and concludes that privacy policies are now widely viewed as ineffective for the protection of personal information. A recent Federal Trade Commission (FTC) Staff Report recommended implementation, either through legislation or self-regulation, of a Do Not Track system to allow consumers to opt out of online tracking or advertising. Developers, organizations, and businesses are voluntarily working on ways to allow users to opt out of behavior advertising. The U.S. Congress continues to examine the federal legal framework that protects personal information. Historically, Congress has played a major role in protecting personal information online. Beginning in the late 1990s, Congress passed laws aimed at specific online harms and amended existing laws to reflect the ways in which technology was being used to collect, use, and share personal information. Beginning with the 109 th Congress, every Congress has held numerous privacy-related hearings. The current Congressional privacy agenda is broad and includes items that Congress has worked on for several years, new issues posed by advances in technology, and items related to efforts to update the electronic surveillance laws for advances in technology. Reportedly, several Members in the 112 th Congress plan to introduce or reintroduce substantive privacy legislation. Online consumer privacy is an issue that is at the forefront of the Senate Commerce Committee's agenda, and it is a top priority for Chairman Rockefeller. Senator Kerry, Chairman of the Commerce Subcommittee on Communications, Technology and the Internet, along with Senator McCain, intend to introduce a privacy bill similar to the Obama Administration's legislative framework. Representative Rush reintroduced a comprehensive privacy bill, H.R. 611 , to require businesses to disclose details about their data-collection practices and allow consumers to make choices about such activities. Representative Stearns announced that he had drafted a consumer privacy bill with a provision to establish an FTC-approved self-regulatory program. The House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade Chair Bono Mack said that the subcommittee will examine online privacy issues in hearings. Senate Judiciary Chairman Leahy has a long-standing interest in privacy, and his committee has several initiatives underway. A new Senate Committee on the Judiciary Subcommittee on Privacy, Technology and the Law was created in the 112 th Congress with jurisdiction covering oversight of laws and policies governing the collection, protection, use, and dissemination of commercial information by the private sector, including online behavioral advertising, privacy within social networking websites, and other online privacy issues. Senator Wyden has also announced plans to draft a bill to clarify what legal standards law enforcers and intelligence agents must satisfy before tracking an individual's physical movements using geolocation data generated by a mobile device. Important policy questions include whether Congress should draft legislation tailored to specific privacy threats (such as online behavioral advertising) or whether a broader, comprehensive federal privacy law is desirable. There is a growing consensus among stakeholders that basic privacy rules are necessary. However, consensus is lacking about the elements of a federal privacy law: what types of information it should cover (personal identifying information or more general information that is associated with a computer or device); how far it should reach; whether it should cover data collection or merely use; and who should be able to enforce it. One legal scholar posits that [i]t may be helpful to pull back the lens and see if it is possible to create a larger-scale outline of privacy. This broader perspective may help to illuminate the constituent elements of a privacy incursion, and the interrelationships between those elements. In this context, . . [there are] six discrete aspects of privacy relating to: (1) actors-relationships; (2) conduct; (3) motivations; (4) harms-remedies; (5) nature of information; and (6) format of information. Businesses view U.S. sector-by-sector regulation of personal information as an impediment to commerce and seek simplification. For example, Microsoft recommends a multi- pronged approach to the protection of individuals' privacy that includes legislation, industry self- regulation, technology tools, and consumer education. Three principles--transparency, control, and security--underpin Microsoft's approach to privacy. Under this approach, privacy protections would not be specific to any one technology, industry, or business model; would apply across sectors; would provide consistent baseline protections for consumers; and would simplify compliance. In addition, privacy legislation would preempt state laws that are inconsistent with federal policy. At the end of the 19 th century, a seminal law review article was published that developed the basic principle of American privacy law--the "right to be let alone." The article was written in response to invasions of personal privacy caused by the technological innovations of mass printing (newspapers) and the portable camera (photographs). Following this article, American common law jurisprudence developed four distinct tort remedies to protect personal privacy: false light, misappropriation, public disclosure of private facts, and intrusion upon seclusion. With the late 20 th century technological innovations of the Internet and the World Wide Web, the collection, use, and dissemination of electronic personal information is potentially much more invasive. As noted above, the right to privacy has long been characterized as the "the right to be let alone." And yet, today the more practical view may be that "[i]n the digital era, privacy is no longer about being 'let alone.' Privacy is about knowing what data is being collected and what is happening to it, having choices about how it is collected and used, and being confident that it is secure." Some advocate the expansion of this concept to include the right to "information privacy" for online transactions and personally identifiable information. The term "information privacy" refers to an individual's claim to control the terms under which "personal information"--information that can be linked to an individual or distinct group of individuals (e.g., a household)--is acquired, disclosed, and used. Others urge the construction of a market for personal information, to be viewed no differently than other commodities in the market. In the United States there is no comprehensive legal protection for personal information. The Constitution protects the privacy of personal information in a limited number of ways, and extends only to the protection of the individual against government intrusions. Constitutional guarantees are not applicable unless "state action" has taken place. Many of the threats to the privacy of personal information addressed in this report occur in the private sector, and are unlikely to meet the requirements of the "state action" doctrine. As a result, any limitations placed on the data collection activities of the private sector will be found not in the federal Constitution but in federal or state statutory law or common law. The federal Constitution makes no explicit mention of a "right of privacy," and the "zones of privacy" recognized by the Supreme Court are very limited. The Fourth Amendment search-and-seizure provision protects a right of privacy by requiring warrants before government may invade one's internal space or by requiring that warrantless invasions be reasonable. However, "the Fourth Amendment cannot be translated into a general constitutional 'right to privacy.' That Amendment protects individual privacy against certain kinds of governmental intrusion, but its protections go further, and often have nothing to do with privacy at all." Similarly, the Fifth Amendment's self-incrimination clause was once thought of as a source of protection from governmental compulsion to reveal one's private papers, but the Court has refused to interpret the self-incrimination clause as a source of privacy protection. In Whalen v. Roe , the Supreme Court recognized an implicit constitutional "right of informational privacy." Whalen concerned a New York law that created a centralized state computer file of the names and addresses of all persons who obtained medicines containing narcotics pursuant to a doctor's prescription. Although the Court upheld the state's authority, it found this gathering of information to affect two interests. The first was an "individual interest in avoiding disclosure of personal matters"; the other, "the interest in independence in making certain kinds of important decisions." These two interests rest on the substantive due process protections found in the Fifth and Fourteenth Amendments. More recently, the Court appeared to reiterate its recognition of a constitutional right to information privacy when it rejected 8-0 the National Aeronautics and Space Administration (NASA) contract workers' contentions that NASA violated their privacy rights under the U.S. Constitution by requiring them to answer questions about their drug treatment and asking their references whether they have any reason to question the individual's honesty or trustworthiness. Justice Samuel A. Alito, writing for the Court, said it was not necessary for the Court to decide whether NASA's questions about contract workers at the agency's Jet Propulsion Laboratory implicated privacy interests of "constitutional significance" because it was clear that any such constitutional interest, if it exists, did not prevent the government from taking reasonable steps that served legitimate government interests and gave the employees substantial protection against public disclosure of their personal information. Citing the Privacy Act's requirements that the government limit disclosure of information about the Jet Propulsion Lab (JPL) contract employees and the government's long-standing use of pre-employment investigations of federal job applicants, the court concluded "that the Government's inquiries do not violate a constitutional right to informational privacy." A patchwork of federal and state laws exists to protect the privacy of certain personal information. There is no comprehensive federal privacy statute that protects personal information held by both the public sector and the private sector. This report does not address state privacy laws. The private sector's collection and disclosure of personal information has been addressed by Congress on a sector-by-sector basis. Federal laws and regulations extend protection to consumer credit reports, electronic communications, federal agency records, education records, bank records, cable subscriber information, video rental records, motor vehicle records, health information, telecommunications subscriber information, children's online information, and customer financial information. Federal Trade Commission Act. The Federal Trade Commission Act (the FTC Act) prohibits unfair and deceptive practices in and affecting commerce. The FTC Act authorizes the Commission to seek injunctive and other equitable relief, including redress, for violations of the act, and provides a basis for government enforcement of certain fair information practices (e.g., failure to comply with stated information practices may constitute a deceptive practice or information practices maybe inherently deceptive or unfair). The first online behavioral advertising case was brought against an online network advertiser that acts as an intermediary between website publishers and advertisers. The Commission alleged that the online network advertiser violated the FTC Act by offering consumers the ability to opt out of the collection of information to be used for targeted advertising without telling them that the opt-out lasted only 10 days. The Commission's order prohibits the online network advertiser from making future privacy misrepresentations, requires the online network advertiser to provide consumers with an effective opt-out mechanism, and requires destruction of any data associated with a consumer collected during the time its opt-out was ineffective. The FTC recently approved a final consent order in a case involving the social networking service Twitter. The FTC charged that data security lapses allowed hackers to obtain unauthorized administrative control of Twitter. As a result, hackers had access to private "tweets" and non-public user information and took over user accounts. The order prohibits misrepresentations about the extent to which Twitter protects the privacy of communications, requires Twitter to maintain reasonable security, and mandates independent, comprehensive audits of Twitter's security practices. In December 2010, the FTC announced a case against a company selling a software program called Sentry Parental Controls that enables parents to monitor their children's activities online. The Commission alleged that the software company sold certain information that it collected from children via this software to third parties for marketing purposes, without parental consent. The Commission's order prohibits the company from sharing information gathered from its monitoring software and requires the company to destroy any such information in its database of marketing information. In September 2010, the Commission settled a case against a data broker that maintained an online service, which allowed consumers to search for information about others. The company allowed consumers to opt out of having their information appear in search results for a $10 fee. Four thousand consumers paid the fee and opted out, but their personal information still appeared in search results. The Commission's settlement requires the data broker to disclose limitations on its opt-out offer, and to provide refunds to consumers who had previously opted out. In March 2011, the FTC reached a settlement with Google over charges that it violated user privacy when it launched the Google Buzz social network. Google Buzz was offered to Google users through Gmail. Many who chose not to join the Google social network were enrolled anyway, and those who chose to join were not fully informed regarding the extent their personal information might be shared with, or exposed to, Google users outside of their own personal network. The Google privacy policy at the time stated, "When you sign up for a particular service that requires registration, we ask you to provide personal information. If we use this information in a manner different than the purpose for which it was collected, then we will ask for your consent prior to such use." The FTC alleged that the representations in Google's privacy policy were false or misleading, and despite its privacy policy that Google would ask for consumers' consent before using their information for another purpose, Google used it to populate its social network without getting user permission. The FTC charged that the policy was false or misleading and constituted a deceptive practice. The proposed settlement bars Google from future privacy misrepresentations, requires the company to implement a comprehensive privacy program, and requires independent privacy audits for the next 20 years. The Federal Trade Commission announced that it has accepted, subject to final approval, a consent agreement from Google that would resolve the Commission's allegations. This is the first time an FTC settlement order has required a company to implement a comprehensive privacy program to protect consumers' information. The FTC recently released a Staff Report on a Preliminary Framework on Protecting Consumer Privacy which includes three major elements: (1) companies should integrate privacy into their regular business operations and throughout product development; (2) provide meaningful privacy options while preserving beneficial uses of data, and provide choices to consumers in a simpler, more streamlined manner; and (3) improve the transparency of all data practices. The Framework's basic building blocks are scope, privacy by design, simplified choice, and greater transparency. The Framework applies to all commercial entities that collect or use consumer data that can be reasonably linked to a specific consumer, computer, or other device. The FTC recommends that companies provide consumers with reasonable access to data about themselves depending on the sensitivity of the data and the nature of its use, and provide prominent disclosures and obtain affirmative express consent before using consumer data in a materially different manner. The FTC Staff Report includes a recommendation to implement a universal choice Do Not Track mechanism for behavioral tracking or behavioral advertising. The Commerce Department's Internet Policy Taskforce (IPTF) is examining how commercial data privacy policy advances the goals of protecting consumer trust in the Internet economy and promotes innovation. The Taskforce released a "Green Paper" on consumer data privacy in the Internet economy on December 16, 2010, and made 10 separate recommendations about how to strengthen consumer data privacy protections. The IPTF concluded that the basic element of current consumer data privacy framework, the privacy policy, is ineffective because it is often a lengthy, dense, and legalistic document. The IPTF recommended updating the commercial data privacy framework because the notice-and-choice system does not provide adequately transparent descriptions of personal data use. The IPTF also concluded that the rules of the road are hard to discern for businesses and sometimes become clear only after FTC enforcement actions, and differing international legal frameworks and new technologies present privacy challenges and complicate commercial data flows across national borders. The IPTF's report recommends considering a clear set of principles concerning how online companies collect and use personal information for commercial purposes. These principles would build on existing Fair Information Practice Principles (FIPPs) of transparency, data use limitation, and accountability. The IPTF report also recommended that Congress authorize the FTC to enforce baseline privacy protections, and create incentives, such as safe harbors, for businesses to adopt self-regulatory privacy codes of conduct, and consider how to harmonize security breach notification rules. The IPTF report calls on Congress to review the Electronic Communications Privacy Act (ECPA) for the cloud computing environment. In light of calls for Congress to reform ECPA, a brief discussion of ECPA follows. In 1986, Congress enacted the Electronic Communications Privacy Act (ECPA) to strike a balance between the fundamental privacy rights of citizens and the legitimate needs of law enforcement with respect to data shared or stored in various types of electronic and telecommunications services. Since the ECPA was passed the Internet and associated technologies have expanded exponentially. ECPA consists of three parts: a revised Title III of the Omnibus Crime Control and Safe Streets Act of 1968 (also known as "Title III" or the "Wiretap Act"); the Stored Communications Act (SCA)); and provisions governing the installation and use of trap and trace devices and pen registers. ECPA prohibits the interception of wire, oral, or electronic communications unless an exception to the general rule applies. Unless otherwise provided, Title III prohibits wiretapping and electronic eavesdropping; possession of wiretapping or electronic eavesdropping equipment; use or disclosure of information obtained through illegal wiretapping or electronic eavesdropping; and disclosure of information secured through court-ordered wiretapping or electronic eavesdropping, in order to obstruct justice. The Stored Communications Act prohibits unlawful access to stored communications. The Pen Register and Trap and Trace statute proscribes unlawful use of a pen register or a trap and trace device. ECPA establishes rules that law enforcement must follow before they can access data stored by service providers. Depending on the type of customer information involved and the type of service being provided, the authorization law enforcement must obtain in order to require disclosure by a third party will range from a simple subpoena to a search warrant based on probable cause. ECPA reform efforts focus on crafting a legal structure that is up-to-date, can be effectively applied to modern technology, and that protects users' reasonable expectations of privacy. ECPA is viewed by many stakeholders as unwieldy, complex, and difficult for judges to apply. Cloud computing poses particular challenges to the ECPA framework. For example, when law enforcement officials seek data or files stored in the cloud, such as web-based e-mail applications or online word processing services, the privacy standard that is applied is often lower than the standard that applies when law enforcement officials seek the same data stored on an individual's personal or business hard drive.

There is no comprehensive federal privacy statute that protects personal information. Instead, a patchwork of federal laws and regulations govern the collection and disclosure of personal information and has been addressed by Congress on a sector-by-sector basis. Federal laws and regulations extend protection to consumer credit reports, electronic communications, federal agency records, education records, bank records, cable subscriber information, video rental records, motor vehicle records, health information, telecommunications subscriber information, children's online information, and customer financial information. Some contend that this patchwork of laws and regulations is insufficient to meet the demands of today's technology. Congress, the Obama Administration, businesses, public interest groups, and citizens are all involved in the discussion of privacy solutions. This report examines some of those efforts with respect to the protection of personal information. This report provides a brief overview of selected recent developments in the area of federal privacy law. This report does not cover workplace privacy laws or state privacy laws. For information on access to electronic communications, see CRS Report R41733, Privacy: An Overview of the Electronic Communications Privacy Act, by [author name scrubbed].

The renewal of military commission proceedings against Khalid Sheik Mohammad and four others for their alleged involvement in the 9/11 terrorist attacks has focused renewed attention on the differences between trials in federal court and those conducted by military commission. The decision to try the defendants in military court required a reversal in policy by the Obama Administration, which had publicly announced in November 2009 its plans to transfer the five detainees from the U.S. Naval Station in Guantanamo Bay, Cuba, into the United States to stand trial in the U.S. District Court for the Southern District of New York for criminal offenses related to the 9/11 attacks. The Administration's plans to try some Guantanamo detainees in federal civilian court proved controversial, and Congress responded by enacting funding restrictions which barred any non-citizen held at Guantanamo from being transferred into the United States for any purpose, including prosecution. These restrictions, which have been extended for the duration of FY2014, effectively make military commissions the only viable option for trying detainees held at Guantanamo for the foreseeable future, and have resulted in the Administration choosing to reintroduce charges against Mohammed and his co-defendants before a military commission. While military commission proceedings have been instituted against a number of suspected enemy belligerents held at Guantanamo, the Obama Administration has opted to bring charges in federal criminal court against many terrorist suspects held at locations other than Guantanamo. On July 5, 2011, Somali national Ahmed Abdulkadir Warsame was brought to the United States to face terrorism-related charges in a civilian court, after having reportedly been detained on a U.S. naval vessel for two months for interrogation by military and intelligence personnel. Some argued that Warsame should have remained in military custody abroad and face trial before a military commission, while others argued that he should have been transferred to civilian custody immediately. Similar controversy also arose regarding the arrest by U.S. civil authorities and subsequent prosecution of Umar Farouk Abdulmutallab and Faisal Shahzad, who some argued should have been detained and interrogated by military authorities and tried by military commission. This report provides a brief summary of legal issues raised by the choice of forum for trying accused terrorists and a chart comparing authorities and composition of the federal courts to those of military commissions. A second chart compares selected military commissions rules under the Military Commissions Act (MCA), as amended by the Military Commissions Act of 2009, to the corresponding rules that apply in federal court. This chart follows the same order and format used in CRS Report RL31262, Selected Procedural Safeguards in Federal, Military, and International Courts , to facilitate comparison with safeguards provided in international criminal tribunals. For similar charts comparing military commissions as envisioned under the MCA, as passed in 2006, to the rules that had been established by the Department of Defense (DOD) for military commissions and to general military courts-martial conducted under the Uniform Code of Military Justice (UCMJ), see CRS Report RL33688, The Military Commissions Act of 2006: Analysis of Procedural Rules and Comparison with Previous DOD Rules and the Uniform Code of Military Justice , by [author name scrubbed]. For a comparison of the rules established by the MCA 2006 with those found in the MCA 2009 and to the rules that apply to courts martial under the UCMJ, see CRS Report R41163, The Military Commissions Act of 2009 (MCA 2009): Overview and Legal Issues , by [author name scrubbed]. For additional analysis of issues related to the disposition of Guantanamo detainees, including possible trials in federal or military courts, see CRS Report R40139, Closing the Guantanamo Detention Center: Legal Issues , by [author name scrubbed] et al. On January 22, 2009, President Barack Obama issued an executive order requiring that the Guantanamo detention facility be closed no later than a year from the date of the order. The order established a task force ("Guantanamo Task Force") to review all Guantanamo detentions to assess whether each detainee should continue to be held by the United States, be transferred or released to another country, or be prosecuted by the United States for criminal offenses. Ongoing military commissions were essentially halted during this review period, although some pretrial proceedings continued to take place. One detainee, Ahmed Ghailani, was transferred in June 2009 to the Southern District of New York for trial in federal court on charges related to his alleged role in the 1998 East Africa Embassy bombings, and was subsequently convicted and sentenced to life imprisonment. President Obama's Detention Policy Task Force issued a preliminary report July 20, 2009, reaffirming that the White House considers military commissions to be an appropriate forum for trying some cases involving suspected violations of the laws of the war, although federal criminal court would be the preferred forum for any trials of detainees. The disposition of each case referred for criminal prosecution is to be assigned to a team comprised of DOJ and DOD personnel, including prosecutors from the Office of Military Commissions. The report also provided a set of criteria to govern the disposition of cases involving Guantanamo detainees. In addition to "traditional principles of federal prosecution," the protocol identifies three broad categories of factors to be taken into consideration: Strength of interest, namely, the nature and gravity of offenses or underlying conduct; identity of victims; location of offense; location and context in which individual was apprehended; and the conduct of the investigation. Efficiency, namely, protection of intelligence source and methods; venue; number of defendants; foreign policy concerns; legal or evidentiary problems; efficiency and resource concerns. Other prosecution considerations, namely, the extent to which the forum and offenses that can be tried there permit a full presentation of the wrongful conduct, and the available sentence upon conviction. On November 13, 2009, Attorney General Holder announced the decision to transfer five "9/11 conspirators" to the Southern District of New York to stand trial, and charges that had previously been brought against these individuals before military commissions were withdrawn without prejudice in January 2010. On January 22, 2010, the Guantanamo Task Force issued its final report concerning the appropriate disposition of each detainee held at Guantanamo. The Task Force concluded that 36 detainees remained subject to active criminal investigations or prosecutions; 48 detainees should remain in preventive detention without criminal trial, as they are "too dangerous to transfer but not feasible for prosecution"; and the remaining detainees may be transferred, either immediately or eventually, to a foreign country. The Administration's plans to bring Khalid Sheik Mohammed and other Guantanamo detainees into the United States proved controversial. Beginning in 2009, Congress began placing funding restrictions in annual appropriations and authorization measures to limit executive discretion to transfer or release Guantanamo detainees into the United States. Because no civilian court operates at Guantanamo, these limitations have effectively made military commissions the only viable option for trying Guantanamo detainees for criminal activity for the foreseeable future. In March 2011, Secretary of Defense Robert Gates announced that the government would resume the filing of charges before military commissions at Guantanamo. Shortly thereafter, Attorney General Eric Holder announced the Obama Administration's reversal of its decision to bring Khalid Sheik Mohammed and his alleged co-conspirators into the United States to face trial in federal court, and stated that they would instead be tried before a military commission at Guantanamo. In April 2012, charges were referred to a military commission against Khalid Sheikh Mohammed, Walid Bin Attash, Ramzi Bin Al Shibh, Ali Abdul-Aziz Ali, and Mustafa Ahmed Al Hawsawi for their alleged involvement in the 9/11 attacks. In October 2012, the U.S. Court of Appeals for the D.C. Circuit, in its first case of an appeal from a military commission conviction, reversed the conviction of Salim Hamdan after determining that Congress did not intend for the offenses it defined in the MCA to apply retroactively ( Hamdan II ). Because the court agreed that the crime of material support for terrorism did not exist as a war crime under the international law of war at the time the relevant conduct occurred (a requirement under the military commissions statute in effect at the time ), it vacated the decision below of the Court of Military Commissions Review (CMCR), which had unanimously affirmed Hamdan's conviction. Some have noted the prevalence of the charge of material support for terrorism in military commission cases to date and question the continued viability of the military commission system in light of this decision. The government did not appeal the decision to the Supreme Court. Instead, the government is appealing the second CMCR appeal of a final verdict, Al Bahlul v. United States. When that case reached the D.C. Circuit on appeal, the government essentially asked the appellate court to overturn Al Bahlul's conviction on the basis that Hamdan II provided binding precedent on the question presented, namely, the validity of convictions for conspiracy, solicitation, and material support of terrorism for conduct preceding passage of the Military Commissions Act (MCA) in 2006. ( Hamdan II did not address conspiracy or solicitation, but the government conceded that these offenses do not constitute universally recognized violations of the international law of war.) The court complied with the request in a per curiam order. The government sought and was granted a rehearing en banc in the Bahlul case. U.S. law provides for the trial of suspected terrorists, including those captured abroad, in several ways. Those who are accused of violating specific federal laws are triable in federal criminal court. Provisions in the U.S. Criminal Code relating to war crimes and terrorist activity apply extraterritorially and may be applicable to some detainees. Those accused of violating the law of war or committing the offenses enumerated in the Military Commissions Act (MCA), as amended by the Military Commissions Act of 2009, may be tried by military commissions under the MCA, or by general court-martial under the UCMJ. The procedural protections afforded to the accused in each of these forums may differ. The MCA authorizes the establishment of military commissions with jurisdiction to try alien "unprivileged enemy belligerents" for offenses made punishable by the MCA or the law of war. Notwithstanding the recent amendments to the MCA, which generally enhance due process guarantees for the accused, critics continue to question their constitutionality. One issue that has been raised by proponents of the use of military commissions is the concern that federal criminal courts would endow accused terrorists with constitutional rights they would not otherwise enjoy. The MCA does not restrict military commissions from exercising jurisdiction within the United States, and the Supreme Court has previously upheld the use of military commissions against "enemy belligerents" tried in the United States under procedural rules that differed from the federal rules. The Supreme Court has not settled the question regarding the extent to which constitutional guarantees apply to aliens detained at Guantanamo, making any difference in rights due to location of the trials difficult to predict. Some view the unpredictability of the Supreme Court's acceptance of the military commission procedures as a factor in favor of using civilian trial courts. The Fifth Amendment to the Constitution provides that "no person shall be ... deprived of life, liberty, or property, without due process of law." Due process includes the opportunity to be heard whenever the government places any of these fundamental liberties at stake. The Constitution contains other explicit rights applicable to various stages of a criminal prosecution. Criminal proceedings provide both the opportunity to contest guilt and to challenge the government's conduct that may have violated the rights of the accused. The system of procedural rules used to conduct a criminal hearing, therefore, serves as a safeguard against violations of constitutional rights that take place outside the courtroom, for example, during arrests and interrogations. The Bill of Rights applies to all citizens of the United States and all aliens within the United States. However, the methods of application of constitutional rights, in particular the remedies available to those whose rights might have been violated, may differ depending on the severity of the punitive measure the government seeks to take and the entity deciding the case. The jurisdiction of various entities to try a person accused of a crime could have a profound effect on the procedural rights of the accused. The type of judicial review available also varies and may be crucial to the outcome. International law also contains some basic guarantees of human rights, including rights of criminal defendants and prisoners. Treaties to which the United States is a party are expressly made a part of the law of the land by the Supremacy Clause of the Constitution and may be codified through implementing legislation, or in some instances, may be directly enforceable by the judiciary. International law is incorporated into U.S. law, but does not take precedence over statute. The law of war, a subset of international law, applies to cases arising from armed conflicts (i.e., war crimes). It remains unclear how the law of war applies to the current hostilities involving non-state terrorists, and the nature of the rights due to accused terrorist/war criminals may depend in part on their status under the Geneva Conventions. The Supreme Court has ruled that Al Qaeda fighters are entitled at least to the baseline protections applicable under Common Article 3 of the Geneva Conventions, which includes protection from the "passing of sentences and the carrying out of executions without previous judgment pronounced by a regularly constituted court, affording all the judicial guarantees which are recognized as indispensable by civilized peoples." The federal judiciary is established by Article III of the Constitution and consists of the Supreme Court and "inferior tribunals" established by Congress. It is a separate and co-equal branch of the federal government, independent of the executive and legislative branches, designed to be insulated from the public passions. Its function is not to make law, but rather to interpret law and decide disputes arising under it. Federal criminal law and procedures are enacted by Congress and codified primarily in title 18 of the U.S. Code. The Supreme Court promulgates procedural rules for criminal trials at the federal district courts, subject to Congress's approval. These rules, namely the Federal Rules of Criminal Procedure (Fed. R. Crim. P.) and the Federal Rules of Evidence (Fed. R. Evid.), incorporate procedural rights that the Constitution and various statutes demand. The charts provided at the end of this report cite relevant rules or court decisions, but make no effort to provide an exhaustive list of authorities. There is historical precedent for using federal courts to try those accused of terrorism or war related offenses, including some that might under some circumstances be characterized as "violations of the law or war." The U.S. Constitution empowers Congress to "define and punish Piracies and Felonies committed on the high Seas, and Offences against the Law of Nations." The First Congress provided for the punishment of persons who committed murder or robbery or the like on the high seas, declaring that each offender was to be "taken and adjudged to be a pirate and felon and being thereof convicted," would be sentenced to death. In 1798, Attorney General Charles Lee advised Secretary of State Timothy Pickering that federal courts were fully competent to try and punish pirates, whether U.S. citizens or aliens. Federal courts exercised jurisdiction in many such cases. More recently, several high-profile prosecutions involving terrorism abroad have resulted in federal convictions. The 1985 hijacking of the Achille Lauro by Palestinian Liberation Organization (PLO) terrorists resulted in the federal conviction of a Lebanese suspect on charges of aircraft piracy and hostage-taking, notwithstanding the defendant's claim to have been merely following military orders. Federal courts also handled prosecutions related to the 1993 bombing of the World Trade Center in New York City, the 2000 bombing of the U.S.S. Cole in the Gulf of Aden, and the 1998 U.S. Embassy bombings in Africa. Federal courts are currently handling several high-profile terrorism cases, including that of Sulaiman Abu Ghaith, a former Al Qaeda spokesman and son-in-law of Osama bin Laden who is on trial in Manhattan on charges of providing material support to Al Qaeda and conspiracy to kill Americans. This and other trials slated to begin soon are seen as providing test cases to demonstrate the efficacy or inadequacy of civilian courts for prosecuting terrorism suspects. In March 2010, the Department of Justice released a list of terrorism trials conducted since 2001, and reported a total of 403 unsealed convictions from September 11, 2001, to March 18, 2010. Around 60% of these convictions were charged under criminal code provisions that are not facially terrorism offenses, including such offenses as fraud, immigration violations, firearms offenses, drug-related offenses, false statements, perjury, obstruction of justice, and general conspiracy charges under 18 U.S.C. Section 371, some of which may not have law-of-war analogs that would permit their trial by military commissions. The remaining 40% are what the Justice Department labeled "Category I Offenses" for the purposes of its report, which covers crimes that are directly related to international terrorism. These crimes include the following: Aircraft Sabotage (18 U.S.C. SS32) Animal Enterprise Terrorism (18 U.S.C. SS43) Crimes Against Internationally Protected Persons (18 U.S.C. SSSS112, 878, 1116, l201(a)(4)) Use of Biological, Nuclear, Chemical or Other Weapons of Mass Destruction (18 U.S.C. SSSS175, 175b, 229, 831, 2332a) Production, Transfer, or Possession of Variola Virus (Smallpox) (18 U.S.C. SS175c) Participation in Nuclear and WMD Threats to the United States (18 U.S.C. SS832) Conspiracy Within the United States to Murder, Kidnap, or Maim Persons or to Damage Certain Property Overseas (18 U.S.C. SS956) Hostage Taking (18 U.S.C. SS1203) Terrorist Attacks Against Mass Transportation Systems (18 U.S.C. SS1993) Terrorist Acts Abroad Against United States Nationals (18 U.S.C. SS2332) Terrorism Transcending National Boundaries (18 U.S.C. SS2332b) Bombings of Places of Public Use, Government Facilities, Public Transportation Systems and Infrastructure Facilities (18 U.S.C. SS2332f) Missile Systems designed to Destroy Aircraft (18 U.S.C. SS2332g) Production, Transfer, or Possession of Radiological Dispersal Devices (18 U.S.C. SS2332h) Harboring Terrorists (18 U.S.C. SS2339) Providing Material Support to Terrorists (18 U.S.C. SS2339A) Providing Material Support to Designated Terrorist Organizations (18 U.S.C. SS2339B) Prohibition Against Financing of Terrorism (18 U.S.C. SS2339C) Receiving Military-Type Training from a Foreign Terrorist Organization (18 U.S.C. SS2339D) Narco-Terrorism (21 U.S.C. SS1010A) Sabotage of Nuclear Facilities or Fuel (42 U.S.C. SS2284) Aircraft Piracy (49 U.S.C. SS46502) Violations of the International Emergency Economic Powers Act (IEEPA, 50 U.S.C. SS1705(b)) involving E.O. 12947 (Terrorists Who Threaten to Disrupt the Middle East Peace Process); E.O. 13224 (Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism or Global Terrorism List); and E.O. 13129 (Blocking Property and Prohibiting Transactions With the Taliban) The Constitution empowers Congress to declare war and "make rules concerning captures on land and water," to define and punish violations of the "Law of Nations," and to make regulations to govern the armed forces. The power of the President to convene military commissions flows from his authority as Commander in Chief of the Armed Forces and his responsibility to execute the laws of the nation. Under the Articles of War and subsequent statute, the President has at least implicit authority to convene military commissions to try offenses against the law of war. The authority and objectives underlying military courts-martial and military commissions are not coextensive. Rather than serving the internally directed purpose of maintaining discipline and order of the troops, the military commission is externally directed at the enemy as a means of waging successful war by punishing and deterring offenses against the law of war. Military commissions have historically been used in connection with military government in cases of occupation or martial law where ordinary civil government was impaired. Jurisdiction of military commissions is limited to time of war and to trying offenses recognized under the law of war or as designated by statute. While case law suggests that military commissions could try U.S. citizens as enemy belligerents, the Military Commissions Act permits only aliens to be tried. The United States first used military commissions to try enemy belligerents accused of war crimes during the occupation in Mexico in 1847, and made heavy use of them in the Civil War and in the Philippine Insurrection. However, prior to President Bush's Military Order of 2001 establishing military commissions for certain alien terrorism suspects, no military commissions had been convened since the aftermath of World War II. As non-Article III courts, military commissions have not been subject to the same constitutional requirements that are applied in Article III courts. The Military Commissions Act authorizes the Secretary of Defense to establish regulations for military commissions in accordance with its provisions. To date, there have been eight convictions of Guantanamo detainees by military commissions, six of which were procured by plea agreement. A few commission rulings have been appealed. The following charts provide a comparison of the military commissions under the revised Military Commissions Act and standard procedures for federal criminal court under the Federal Rules of Criminal Procedure and the Federal Rules of Evidence. Chart 1 compares the legal authorities for establishing both types of tribunals, the jurisdiction over persons and offenses, and the structures of the tribunals. Chart 2 , which compares procedural safeguards incorporated in the MCA to those applicable in federal criminal cases, follows the same order and format used in CRS Report RL31262, Selected Procedural Safeguards in Federal, Military, and International Courts , Selected Procedural Safeguards in Federal, Military, and International Courts , by [author name scrubbed], in order to facilitate comparison of the those tribunals to safeguards provided in the international military tribunals that tried World War II crimes at Nuremberg and Tokyo, and contemporary ad hoc tribunals set up by the UN Security Council to try crimes associated with hostilities in the former Yugoslavia and Rwanda. For a comparison with previous rules established under President George W. Bush's Military Order, refer to CRS Report RL33688, The Military Commissions Act of 2006: Analysis of Procedural Rules and Comparison with Previous DOD Rules and the Uniform Code of Military Justice . For a comparison of the rules established by the MCA 2006 with those found in the MCA 2009 and to the rules that apply to courts martial under the UCMJ, see CRS Report R41163, The Military Commissions Act of 2009 (MCA 2009): Overview and Legal Issues , by [author name scrubbed].

The renewal of military commission proceedings against Khalid Sheik Mohammad and four others for their alleged involvement in the 9/11 terrorist attacks has focused renewed attention on the differences between trials in federal court and those conducted by military commission. The decision to try the defendants in military court required a reversal in policy by the Obama Administration, which had publicly announced in November 2009 its plans to transfer the five detainees from the U.S. Naval Station in Guantanamo Bay, Cuba, into the United States to stand trial in the U.S. District Court for the Southern District of New York for criminal offenses related to the 9/11 attacks. The Administration's plans to try these and possibly other Guantanamo detainees in federal court proved controversial, and Congress responded by enacting funding restrictions which effectively barred any non-citizen held at Guantanamo from being transferred into the United States. These restrictions, which have been extended for the duration of FY2014, effectively make military commissions the only viable option for trying detainees held at Guantanamo for the foreseeable future, and have resulted in the Administration choosing to reintroduce charges against Mohammed and his co-defendants before a military commission. While military commission proceedings have been instituted against some suspected enemy belligerents held at Guantanamo, the Obama Administration has opted to bring charges in federal criminal court against terrorist suspects arrested in the United States, as well as some terrorist suspects who were taken into U.S. custody abroad but who were not transferred to Guantanamo. Some who oppose the use of federal criminal courts argue that bringing detainees to the United States for trial poses a security threat and risks disclosing classified information, or could result in the acquittal of persons who are guilty. Others have praised the efficacy and fairness of the federal court system and have argued that it is suitable for trying terrorist suspects and wartime detainees, and have also voiced confidence in the courts' ability to protect national security while achieving justice that will be perceived as such among U.S. allies abroad. Some continue to object to the trials of detainees by military commission, despite the amendments Congress enacted as part of the Military Commissions Act of 2009 (MCA), P.L. 111-84, because they say it demonstrates a less than full commitment to justice or that it casts doubt on the strength of the government's case against those detainees. Others question the continued viability of military commissions in light of the recent appellate court decision invalidating the offense of material support of terrorism as to conduct occurring prior to the 2006 enactment of the MCA (Hamdan v. United States). This report provides a brief summary of legal issues raised by the choice of forum for trying accused terrorists and a chart comparing selected military commissions rules under the Military Commissions Act, as amended, to the corresponding rules that apply in federal court. The chart follows the same order and format used in CRS Report RL31262, Selected Procedural Safeguards in Federal, Military, and International Courts, to facilitate comparison with safeguards provided in international criminal tribunals. For similar charts comparing military commissions as envisioned under the MCA, as originally passed in 2006, to the rules that had been established by the Department of Defense (DOD) for military commissions and to general military courts-martial conducted under the Uniform Code of Military Justice (UCMJ), see CRS Report RL33688, The Military Commissions Act of 2006: Analysis of Procedural Rules and Comparison with Previous DOD Rules and the Uniform Code of Military Justice, by [author name scrubbed].

Amid more than a half a century of antagonistic political relations between the United States and Cuba during which commercial ties were largely severed, U.S. exports of agricultural products to the island nation currently stand out as one of the few points of engagement between the two countries, if to a limited degree. U.S. exports of medicine and medical products is the other product category for which the U.S. government has eased its long-standing embargo on trade with Cuba. In a major diplomatic initiative, President Obama announced in December 2014 a significant shift in relations with Cuba with the goal of transitioning from a decades-long policy of sanctions that were designed to isolate Cuba toward a more normal bilateral relationship. To advance the goal of normalizing relations with Cuba, the President announced a series of actions designed to move the two nations closer to this objective. These included reestablishing diplomatic relations; reviewing the State Department's designation of Cuba as a state sponsor of international terrorism; and providing limited openings for increasing travel, and for expanding commerce and the flow of information. In May 2015, the State Department removed Cuba from the list of state sponsors of terrorism, and on July 20, 2015, the United States and Cuba reestablished diplomatic relations and reopened embassies in their respective capitals. In March 2016, President Obama visited Cuba, marking the first visit by a U.S. President in almost 90 years. While these actions are tangible steps in the direction of a more normal relationship with Cuba and will ease the embargo in some areas, the majority of economic restrictions first imposed on Cuba in 1962 remain in place. This report reviews the current state of agricultural trade between the United States and Cuba, identifies key impediments to expanding bilateral trade in agricultural products, identifies key provisions in the law to which these obstacles are anchored, and considers the potential consequences for trade in agricultural goods in the event that the current thaw in diplomatic relations was to be extended more broadly so that bilateral trade was returned to a more normal footing. It also summarizes several of the bills introduced in the 114 th Congress that propose to remove specific restrictions that impede trade in agricultural goods or that seek to lift the embargo on Cuba entirely. Relations between the United States and Cuba deteriorated sharply, and then decisively, in the early 1960s following a series of dramatic events that recast the U.S.-Cuba relationship along antagonistic lines. Chief among these events were Fidel Castro's action in the early 1960s to build a repressive communist regime and move Cuba toward close relations with the Soviet Union; the expropriation of U.S. economic assets on the island nation located a mere 90 miles from Florida; U.S. covert operations to overthrow the Castro regime in the failed Bay of Pigs invasion of Cuba in 1961; and the subsequent confrontation between the United States and the Soviet Union over the Kremlin's attempt to install offensive nuclear missiles in Cuba in 1962. In response to these events, President Kennedy imposed an embargo on trade with Cuba in 1962. The trade embargo was subsequently expanded--to prohibit most financial transactions and to freeze Cuban government assets in the United States. The web of U.S. sanctions on Cuba was strengthened in subsequent years and was also broadened to include various democracy-building measures with the enactment of additional laws, including the Cuban Democracy Act (CDA) of 1992 ( P.L. 102-484 ) and the Cuban Liberty and Solidarity (LIBERTAD) Act of 1996 ( P.L. 104-114 ), the latter frequently referred to as Helms/Burton legislation. In 2000, with passage of P.L. 106-387 , the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), Congress opened the door to U.S. agricultural exports to Cuba, but with restrictions on credit and financing. The U.S. sanctions regime against Cuba has been tweaked in various ways in the years since TSRA was enacted, but alterations have been mostly at the edges, and this continues to be the case. Notwithstanding the new diplomatic opening to Cuba that President Obama unveiled late in 2014 in tandem with his expressed desire to move toward a more normal relationship with Cuba, key restrictions on economic relations with Cuba persist. Among the plethora of restrictions that remain in place, those frequently identified as suppressing trade in U.S. products to Cuba include the following: a prohibition on the provision of credit and financing for U.S. exports; denial of access to government programs and commercial facilities that otherwise would be available to promote and facilitate U.S. agricultural exports to Cuba; the ban on general U.S. tourism to Cuba; and a general ban on U.S. imports of goods from Cuba, with a recently introduced exception for goods produced by Cuban entrepreneurs. Subsequently, the Obama Administration rescinded Cuba's designation as a state sponsor of terrorism in May 2015. Among a number of other actions taken to ease the embargo on Cuba, in 2015 and early 2016 the Obama Administration issued a policy of general approval for the export to Cuba of certain additional categories of goods and followed this up in January 2016 by permitting U.S. private export financing of these goods. But agricultural products continue to be excluded from private U.S. financing due to TSRA. That significant barriers continue to restrict the potential for U.S. agricultural exports to Cuba was acknowledged by the U.S. Department of Agriculture (USDA) in April 2015 testimony before the Senate Agriculture Committee. USDA asserted that if the embargo were removed, the United States could become "a major trading partner with Cuba," considering that Cuba imports around 80% of its food and that U.S. exporters enjoy significant logistical advantages over their major export competitors in Brazil and Europe. But USDA contends that these potential advantages are more than offset by a number of policies governing food and agricultural exports to Cuba, pointing to the prohibition on any U.S. government export assistance under TSRA, such as credit guarantees and market promotion programs, as one. Among impediments to expanding U.S. agricultural exports to Cuba that are not governed by the embargo, USDA cited Cuba's limited supply of foreign exchange and its requirement that all U.S. imports be funneled through Cuba's state corporation, Alimport--a requirement that is not imposed on all of Cuba's suppliers. Subsequently, in a report of June 2015 on the potential for U.S.-Cuba agricultural trade, USDA's Economic Research Service cited restrictions imposed by TSRA on the terms of payments and financing as a "major inhibitor of U.S. agricultural exports to Cuba." Under TSRA, payment or financing terms are limited to either cash in advance or financing by third-country financial institutions, with the latter being a more laborious process than making a conventional payment directly from the buyer's financial institution in Cuba to the seller's financial institution in the United States. Following President Obama's "normalization" initiative in late 2014, the U.S. Treasury altered its interpretation of "cash in advance" from one that required cash payment before the shipment of goods from a U.S. port of departure to one that requires cash payment before transfer of title. Moreover, U.S. institutions also were allowed to open correspondent accounts at Cuban financial institutions. Still, in its Cuba report of June 2015, USDA concludes that lacking the ability to extend credit to Cuban buyers places U.S. agricultural exporters at a competitive disadvantage in relation to other exporting countries. Prior to the Cuban revolution in 1959 that brought Castro to power and triggered the deterioration in U.S.-Cuban relations, the United States and Cuba conducted a brisk trade in agricultural products. During the three fiscal years before the revolution--FY1956-1958--Cuba ranked as the ninth largest market for U.S. agricultural exports and the second largest supplier of U.S. agricultural imports, according to the U.S. Department of Agriculture (USDA). In a report issued in June 2015, the agency notes that rice, lard, pork, and wheat flour led the list of U.S. farm exports to Cuba in value terms, with Cuba ranking as the largest foreign market for U.S. long-grain rice. Cane sugar, molasses, tobacco, and coffee topped the list of U.S. agricultural imports from Cuba during that period. With the advent of the Castro regime and the imposition of U.S. sanctions, U.S. agricultural trade with Cuba ground to a halt in the early 1960s. Trade in farm products remained at a standstill until Congress enacted the Trade Sanctions Reform and Export Enhancement Act of 2000 ( P.L. 106-387 ), or TSRA, which authorized certain sales of food, medicines, and medical equipment to a number of countries, including Cuba. TSRA did not change the general ban on imports from Cuba, including agricultural products, and it added prohibitions on extending credit to facilitate agricultural sales to Cuba and on providing any U.S. government support for exports to Cuba. Notwithstanding these disadvantages, U.S. agricultural exporters quickly established a foothold in Cuba, with export sales reaching a peak of $685 million in calendar year (CY) 2008 in the aftermath of several hurricanes and tropical storms ( Figure 1 ), representing 0.6% of total U.S. agricultural exports of $114.8 billion that year. The level of U.S. agricultural exports to Cuba has trended lower since 2008, averaging $365 million a year during the most recent three calendar years, from 2012 to 2014, or about 0.25% of average U.S. agricultural exports to the world of $145.4 billion over this period. Most recently, U.S. agricultural exports to Cuba dipped to $286 million in CY2014. A parallel trend is that U.S. exports to Cuba have become increasingly concentrated in a few commodities, with chicken meat (leg quarters), corn, soybean meal, and soybeans accounting for 84% of the total between 2012 and 2014 ( Table 1 ). A number of close observers have suggested the decline in U.S. food and agricultural exports to Cuba in recent years is likely the product of several factors, among which are a preference within the Cuban government for diversifying its supplier network; an effort to establish closer relations with certain allies, such as China and Vietnam; and the availability of credit offered by some non-U.S. suppliers that U.S. competitors are prevented from providing under the U.S. trade sanctions regime. Concerning the role of credit, USDA asserts that "U.S. restrictions on extending credit to Cuban buyers have made it harder for U.S. agricultural exporters to sell a larger volume and broader variety of commodities to Cuba." Figure 2 illustrates that as Cuba's agricultural imports from the United States have fallen in recent years, Cuba has increased its imports from the rest of the world, with the European Union and Brazil ranking as Cuba's largest suppliers in CY2014. In December 2014, the Senate Committee on Finance requested that the U.S. International Trade Commission (ITC) conduct an investigation and issue a report on trends in Cuban imports of goods and services, including from the United States. The committee also requested that the agency provide an analysis of U.S. restrictions affecting Cuba's purchases. In its letter to ITC, the committee identified three areas of particular interest: 1. An overview of Cuba's imports of goods and services from 2005 to the present, to the extent possible, including identification of major supplying countries, products, and market segments; 2. A description of how U.S. restrictions on trade, including those relating to export financing terms and travel to Cuba by U.S. citizens, affect Cuban imports of U.S. goods and services; and 3. For sectors where the impact is likely to be significant, a qualitative and, to the extent possible, quantitative estimate of U.S. exports of goods and services to Cuba in the event that statutory, regulatory, or other trade restrictions on U.S. exports of goods and services as well as travel to Cuba by U.S. citizens are lifted. The committee subsequently expanded its request to include the following elements: A qualitative analysis of existing Cuban non-tariff measures, Cuban institutional and infrastructural factors, and other Cuban barriers that would inhibit U.S. and non-U.S. firms in conducting business in and with Cuba, including restrictions on trade and investment; property rights and ownership; customs duties and procedures; sanitary and phytosanitary measures; state trading; protection of intellectual property rights; and infrastructure affecting telecommunications, port facilities, and the storage, transport, and distribution of goods; A qualitative analysis of any effects that such measures, factors, and barriers would have on U.S. exports of goods and services to Cuba in the event of changes to statutory, regulatory, or other trade restrictions on U.S. exports of goods and services to Cuba; and To the extent feasible, a quantitative analysis of the aggregate effects of Cuban tariff and non-tariff measures on the ability of U.S. and non-U.S. firms to conduct business in and with Cuba. In response to the Finance Committee's request, ITC held a hearing in June 2015 to solicit the views of a range of experts and interested stakeholders, among which were food and agricultural interests. Overall, ITC concluded in its March 2016 report that U.S. agricultural exports could expand significantly if U.S. restrictions on trade with Cuba were removed. In particular, ITC observed that U.S. agricultural suppliers view the inability to offer credit and U.S. restrictions on travel to Cuba as key obstacles to increasing U.S. farm exports. The ITC report makes a number of observations concerning U.S. farm and food exports to Cuba, including the following: 1. U.S. agricultural exports to Cuba have declined every year since 2009--in dollar terms, in market share, and in the variety of products shipped--whereas Cuba's overall agricultural imports have increased significantly over this period; 2. The United States is a competitive exporter of farm products, such as grains, meat, soybeans, and soybean products--products for which Cuba depends heavily on imports; 3. U.S. exporters enjoy advantages compared with major competitors, including the close proximity of U.S. ports to Cuba and lower shipping costs, which would allow them to be highly price competitive on certain agricultural products if U.S. travel and financing restrictions were lifted; 4. It is unclear whether lifting U.S. restrictions would lead the Cuban government to change its requirement that U.S. agricultural products be imported exclusively by the state trading agency, Alimport; 5. The potential for increasing U.S. exports could be tempered by Cuba's desire to diversify its supplier network to prevent it from becoming overly dependent on one country, particularly the United States; and 6. Other important factors in determining any expansion in U.S. agricultural exports would include the purchasing power of the Cuban economy, the availability of hard foreign currency, and the extent to which Cuba succeeds in its policy of import substitution through increases in agricultural production. The ITC report also provides an analysis of potential commodity-specific effects of removing U.S. restrictions on trade with Cuba. A summary of its conclusions is included in Table 2 . Overall, ITC concludes that if U.S. restriction on trade with Cuba were to be lifted, exports of the agricultural commodities listed in Table 2 could increase by 155% within five years to a total of about $800 million from a 2010-2013 average of just over $300 million. A University of Florida economist raised an agriculture-specific word of caution in citing a number of potential concerns for Florida agriculture in the event the current ban on imports from Cuba were to be lifted, among which were subsidized competition from Cuban farmers--who pay no rent to the government for their land, among other subsidies--and the possibility that imported Cuban produce could introduce new pests and diseases into Florida agriculture. In a separate analysis, USDA issued a report in June 2015 in which it assesses the potential for increased U.S. agricultural trade with Cuba. In its report, USDA points to several important similarities between Cuba and the Dominican Republic, including population size and per capita income in terms of purchasing power parity. Given these similarities, the report goes on to consider whether the Cuban market for U.S. agricultural exports, which averaged $365 million from 2012-2014, might have the potential to expand to a level closer to that of the Dominican Republic, which absorbed an average of $1.1 billion of U.S. agricultural products over the same three years. USDA cites Cuba's close geographic proximity to the United States as a potential advantage for U.S. food and agricultural product exports that could help to drive export gains. Another reason that the agency sees an opportunity to expand U.S. agricultural product exports to Cuba is that the U.S. share of the market in Cuba, at about 20%, is less than half the U.S. market share in the Dominican Republic. In terms of product mix, USDA, like the ITC report, sees the potential for U.S. rice to "regain a large share of Cuba's import market," if a normal trading relationship were to be established--but only if U.S. suppliers are allowed to provide competitive terms of credit. Among the advantages that favor U.S. rice compared with rice from current suppliers Vietnam and Brazil are the year-round availability of high-quality rice that Cuban consumers prefer, and transportation cost advantages. USDA suggests that exports of other U.S. commodities that have flagged in recent years, such as dry beans, wheat, and dry milk, could also rebound if normal trade relations were restored. In addition, USDA contends that tourist-oriented food service sales could support U.S. exports of cheese; yogurt; and higher value cuts of pork, poultry meat, and beef, particularly if restrictions on tourism to Cuba were relaxed. The agency also sees potential for expanded U.S. export sales of low-value cuts of pork, pork variety meats, chicken leg quarters, and milk powder, subject to further income growth within Cuba. These conclusions are largely reflected in the ITC report of March 2016. In recent years, Cuba has imported significant quantities of wheat, rice, and nonfat dried milk ( Figure 3 ), but almost all of this trade accrued to non-U.S. suppliers. Research conducted by Texas A&M University's Center for North American Studies is consistent with USDA's analysis in concluding that U.S. agricultural exports to Cuba have the potential to climb to $1.2 billion within five years if restrictions on trade financing and travel were to be relaxed. As concerns the potential effects on individual U.S. states of easing the trade embargo against Cuba along these lines, Texas A&M named Arkansas, Texas, Minnesota, Louisiana, Missouri, and Nebraska as the states that would be expected to benefit most from an expected increase in agricultural exports. Among the factors most likely to influence the volume and mix of U.S. agricultural exports to Cuba, Texas A&M cited remittances to Cuba from Cuban-Americans in the United States and access to foreign exchange based on Cuba's exports--led by tourism, nickel/cobalt, pharmaceuticals, sugar, and tobacco products. In addition to the potential for U.S. agricultural export gains from lifting certain trade restrictions with Cuba, or from removing the U.S. trade embargo completely, is the potential opportunity for Cuba to ship its agricultural products to the United States. A potential concern that could arise over U.S. imports of Cuban agricultural produce is that Florida farmers grow many of the same products during the same season as Cuba. Observers have pointed out that vegetables, citrus, sugar, and tropical fruit are among the overlapping product categories and concluded that if the prohibition on Cuban agricultural exports were removed, Florida growers could face increased competition." As previously noted, a corollary concern about such a policy change centers on the possibility that Florida growers could face subsidized competition: For example, some Cuban farms make no payments to the government for the use of their land. Concern about possible subsidized competition would be compounded if firms outside Cuba were to develop the island as a production platform for exporting produce to the United States, a development that some believe might alter the competitive structure of the U.S. winter fresh vegetable industry. Some also worry that opening the U.S. market to Cuba's produce could pose a threat to Florida agriculture by exposing it to new invasive pests and diseases. Cuba's agricultural exports are limited, averaging $526 million per year during CY2012-2014, according to USDA, and are concentrated in a few products--sugar accounted for 89% of its farm exports during this period, followed by honey with about 4% of the total. China and the European Union are the leading markets for Cuba's agricultural exports. Although not considered agricultural products per se, cigars and cigarettes also were significant export earners during this period, averaging $222 million per year. USDA suggests that Cuba could exploit comparative advantages it has in the production of certain crops, such as tropical fruit, vegetables, sugar, and tobacco, to boost its agricultural exports to the United States if the embargo on its products were lifted. Cuba was long known as a major producer and exporter of sugar, but its production and export trade have declined precipitously since the demise of the Soviet Union in 1991, so its capacity to be a major influence on the world market has diminished sharply. USDA states that Cuban sugar production has fallen from between 6.5 million and 8.5 million metric tons during the 1980s, when it exported some 90% of its output, to an average of 1.6 million metric tons during the three most recent marketing years of 2012/2013 through 2014/2015 with exports averaging just below 1 million tons annually. ( Figure 4 ). Given Cuba's resource endowments and history as a major sugar producer, Cuba might expand its output and exports with additional investments. Although the United States is the world's largest sugar importer and Cuba was the largest foreign source of sugar for the U.S. market prior to the U.S. embargo, any post-embargo access to the U.S. sugar market would have to be negotiated. Any such access might well be quite limited in scope given the existing limitations on sugar imports under the U.S. sugar program via tariff rate quotas (TRQs), free-trade agreements, and through a 2014 export limitation agreement with Mexico. The United States currently provides low- or no-duty access to most of its supplier countries based on historical trade patterns as determined under an agreement struck under the auspices of the World Trade Organization. In its June 2015 study, USDA concluded, "A more normal trading relationship with Cuba would likely result in the establishment of some U.S. sugar imports from Cuba, but at volumes much smaller than during the late 1950s." USDA cites a 2002 paper authored by two officials at the U.S. International Trade Commission that identifies six possible options for providing Cuba with access to the U.S. sugar market that the authors contend would be compliant with the existing multilateral trade agreements at the World Trade Organization (WTO): allocate WTO quotas on a first-come, first-serve basis; auction sugar quotas; redistribute the tariff-rate quota (TRQ) among countries, including Cuba; increase the TRQ to accommodate Cuba; replace the existing TRQ with a simple tariff; and provide market access for sugar as part of a free trade agreement with Cuba. When President Obama announced his initiative to alter the course of U.S.-Cuba relations late last year, he indicated that he does not have the authority to end the embargo because it is codified in legislation. Under the LIBERTAD Act, the President would be required to end the trade embargo if he determines that Cuba has elected a government under free and fair elections and has met other criteria, among which are showing respect for basic civil liberties and human rights of Cuban citizens and Cuba moving to establish a free market economic system. Otherwise, congressional action would be required to end it, either by amending or repealing the LIBERTAD Act and other embargo-related statutes. The text box below identifies existing statutes that contain restrictions that are of particular importance for trade in food and agricultural products with Cuba. Recognizing that U.S. farmers and exporters are competing for food and agricultural markets in Cuba under terms that place them at a distinct disadvantage compared with foreign competitors that are not subject to restrictions under the U.S. embargo, some Members of Congress have proposed legislation that would ease various elements of the U.S. economic embargo on Cuba, or repeal it entirely. A brief review of several of the legislative initiatives that address agricultural aspects of the trade embargo against Cuba follows. Three bills would lift the overall embargo: H.R. 274 (Rush), H.R. 403 (Rangel), and H.R. 735 (Serrano). H.R. 635 (Rangel), among its various provisions, has the goal of facilitating the export of U.S. agricultural and medical exports to Cuba by permanently redefining the term "payment of cash in advance" to mean that payment is received before the transfer of title and release and control of the commodity to the purchaser; authorizing direct transfers between Cuban and U.S. financial institutions for products exported under the terms of TSRA; establishing an export promotion program for U.S. agricultural exports to Cuba; and prohibiting restrictions on travel to Cuba. S. 491 (Klobuchar) would remove various provisions of law restricting trade and other relations with Cuba, including certain restrictions in the CDA, the LIBERTAD Act, and TSRA that currently prohibit financing of agricultural sales to Cuba, U.S. export assistance for sales to Cuba including credit and guarantees, and the entry of Cuban goods into the United States. S. 1049 (Heitkamp) would amend TSRA to allow for the private financing of agricultural commodity sales to Cuba. S. 1543 (Moran)/ H.R. 3238 (Emmer) would repeal or amend various provisions of law restricting trade and other relations with Cuba, including certain restrictions in the CDA, the LIBERTAD Act, and TSRA. It would repeal restrictions on private financing for Cuba in TSRA but continue to prohibit U.S. government foreign assistance or financial assistance, loans, loan guarantee, extension of credit, or other financing for export to Cuba, albeit with presidential waiver authority for national security or humanitarian reasons. Under the initiative, the federal government would be prohibited from expending any funds to promote trade with Cuba or develop markets in Cuba, although certain federal commodity research and promotion programs that are funded through mandatory assessments would be allowed. H.R. 3687 (Crawford) would amend TSRA to remove the prohibition on U.S. entities from making loans or extending credit to Cuba to facilitate sales of agricultural commodities. The bill would also permit U.S. government assistance in support of U.S. agricultural exports to Cuba--including the Market Access Program, the Export Credit Guarantee Program and the Foreign Market Development Cooperator Program and federal commodity promotion programs--provided the recipient of the assistance is not controlled by the Cuban government. It would also authorize investment for development of an agricultural business in Cuba so long as it is not controlled by the Cuban government or does not traffic in property of U.S. nationals confiscated by the Cuban government.

After more than half a century during which trade relations between the United States and Cuba have evolved from a tight economic embargo to a narrow window of trade in U.S. agricultural and medical products, the diplomatic initiative that President Obama announced in December 2014 to restore more normal relations with Cuba has raised the possibility that bilateral relations could move toward an expansion in commercial opportunities. Many U.S. agricultural and food industry interests believe the Cuban market could offer meaningful export expansion potential for their products--but only if a number of restrictions under the U.S. embargo on trade with Cuba were to be removed. Among the measures most often cited as inhibiting exports of U.S. products, while simultaneously benefiting foreign competitors, are a prohibition on the provision of private financing and credit on sales to Cuba; denial of access to U.S. government credit guarantees and export promotion programs; the ban on general tourism to Cuba; and the general prohibition on U.S. imports of Cuban goods. A question that arises for policymakers as diplomatic relations with Cuba are restored is what the potential opportunity is for U.S. food and agricultural exports to Cuba if bilateral relations are returned to a more normal status in the future. Corollary questions are what agricultural products Cuba might export to the United States if the existing prohibition on Cuban products were to be removed, and what implications trade in Cuban products could hold for U.S. agriculture. Numerous stakeholders within the food and agriculture industry, as well as the U.S. Department of Agriculture (USDA), contend that U.S. agricultural exports to Cuba could expand markedly if key elements of the embargo against Cuba were removed. The prohibition on providing private credit and financing and the ban on access to government export promotion programs are two that are often cited. USDA asserts that basic commodities, like U.S. rice, wheat, dry beans, and dried milk could readily gain market share in Cuba under more normal trade relations in view of the close proximity of U.S. ports to Cuba compared with export competitors. Higher value food and agricultural products might make inroads in Cuba over time, it is argued, particularly if Cuba could increase its access to foreign exchange by selling its products in the United States. Similarly, a report on Cuban imports and the effects of U.S. restrictions on U.S. agricultural exports to Cuba that the U.S. International Trade Commission issued in March 2016 at the request of the Senate Finance Committee concluded that the removal of U.S. restrictions on trade could result in significant gains for U.S. agricultural exports. A concern voiced by some in agriculture is that opening the U.S. market to Cuba could pave the way for a new influx of tropical fruit and vegetable products that would compete directly with winter-season production in Florida, particularly if foreign investors perceive the opportunity to create an export platform for the U.S. market in Cuba. Among the concerns raised is that Cuban production is often subsidized by the government; also, that allowing Cuban produce into the U.S. market could become a conduit for introducing new pests and plant diseases. While Cuba was once a leading sugar producer and the largest foreign supplier to the U.S. market prior to the embargo, its sugar industry has undergone a steep decline since the demise of the Soviet Union. Cuba continues to export limited quantities of sugar and might very well request access to the lucrative U.S. sugar market if normal trade relations were restored. But any such opportunity would most likely be the result of a negotiated agreement between the United States and Cuba. Some Members of Congress have introduced legislation in the 114th Congress that would ease U.S. economic sanctions on Cuba. These bills span a broad range of approaches, from a narrow focus on removing the ban on providing private financing and credit for the sale of agricultural goods to Cuba to far broader legislative initiatives that seek to lift the Cuban embargo altogether.

The U.S. Constitution establishes qualifications for Representatives and Senators, but it is silent about the roles and duties of an individual Member of Congress. House and Senate rules require only that Members be present and vote on each question placed before their chamber. The job of a Member of Congress has been characterized as "a license to persuade, connive, hatch ideas, propagandize, assail enemies, vote, build coalitions, shepherd legislation, and in general cut a figure in public affairs." Beyond voting requirements, there is no formal set of expectations or official explanation of what roles or duties are required, or what different Members might emphasize as they carry out their work. In the absence of such formal authorities, many of the responsibilities that Members of Congress have assumed over the years have evolved from the expectations of Members and their constituencies. Today, the roles and duties carried out by a Member of Congress are understood to include representation, legislation, and constituent service and education, as well as political and electoral activities. In a typical week, Members may oversee constituent services in the state or district, travel between their state or district to Washington, DC, to participate in committee activities, greet a local delegation from the home state, meet with lobbyists, supervise office staff, speak on the floor, conduct investigations, interact with the news media, and attend to various electoral duties, including fundraising, planning, or campaigning for election. Given that no precise definition exists for the role of a Member, upon election to Congress, each new Member is responsible for developing an approach to his or her job that serves a wide range of roles and responsibilities. One observer of Congress notes that the first job of a Member is to come to grips with the dimensions of [their] role and develop a personal approach to [their] tasks. Given the many challenges, the overall conclusion is readily apparent: the key to effectiveness in Congress is the ability to organize well within a framework of carefully selected priorities. It is not possible, however, to construct a grand master plan such that priorities and the time devoted to each will neatly mesh, for legislative life is subject to sudden and numerous complications. Observers note that after identifying and organizing priorities, a Member typically carries out some of the resulting duties personally, and delegates others to congressional staff who act on his or her behalf. The staff may work in the Member's individual office, on committees to which the Member is assigned, in offices connected to leadership posts the Member may hold, and in the separate political and reelection operations the Member may maintain. In this understanding, the Member sets broad policies to fulfill his or her duties, and the appropriate staff act to carry them out. The distribution of responsibility will vary according to the preferences and priorities of the Member at the center of the effort. Nevertheless, the work carried out by staff is typically attributed to the effort of the Member. Many scholars of Congress see these Member choices and delegation arrangements as dependent in part on their goals. Generally, these observers suggest that Members pursue three primary goals: gaining reelection, securing influence within Congress, and making good public policy. The relative priority a Member may assign to these goals can affect a wide range of choices regarding a congressional career, including (1) the emphasis given to different roles and duties; (2) activities in the Washington, DC, and district or state offices; (3) staffing choices in Member and committee offices; and (4) preference for committee assignments. It can also affect a Member's approaches to legislative work, constituent relations, media relations, party issues, and electoral activities. Given the dynamics of the congressional environment, the priorities that Members place on various roles may change as their seniority increases, or in response to changes in committee assignments, policy focus, district or state priorities, institutional leadership, or electoral pressures. As part of a broader evaluation of House administrative practices in the mid-1970s, the House Commission on Administrative Review surveyed Members of the House and asked them to describe the major jobs, duties, and functions that they believed they were expected to perform. At the same time, the commission hired the research firm Louis Harris and Associates to conduct a survey of the public to gauge its expectations of Congress and its Members. The Member survey found that the three most frequently mentioned duties and activities were the drafting and introduction of legislation; helping constituents solve problems; and representing the interests of their districts and constituents. Other expectations included position taking and constituent education. Table 1 summarizes the responses received by role categories established by the commission. According to the public survey conducted by the commission, the most common expectations of Members were to represent the people and district according to the wishes of the majority; to solve problems in the district; and to keep in contact with the people in the district through regular visits and meetings in the district and polls or questionnaires. Other public expectations included regular attendance in legislative sessions and voting on legislation. Table 2 summarizes the most frequently mentioned responses to the public survey. Despite differences in point of view, both the Member and public survey results describe common interests in local representation, constituency services, legislative activity, and regular contact between the Member and the district. The differences between Member and public expectations may reflect the different perspectives on the work of a Member of Congress. Where Members are daily confronted with representational, legislative, and institutional duties, the public focuses on representational, legislative, and service responsibilities, apparently without recognizing a broader underlying institutional, procedural, and operational framework in which Members of Congress operate. Some observers suggest that this narrow public focus is in part a reflection of the attention the public gives, or does not give, to political matters in general. Common Member and public interest in local representation, constituency service issues, legislative activity, and regular contact between the Member and the constituency may partially explain how individual Members of Congress receive broad public satisfaction or approval of their performance while Congress as an institution, where Members engage the procedural and operational barriers the public disdains, routinely trails the executive and judicial branches in public approval. The responses to the Member and public surveys suggest that the roles and duties of a Member of Congress can be identified in part as an outgrowth of congressional and public expectations. These congressional roles may be described by focusing on some of the underlying tasks typically required to carry them out. Because some of the duties are complex, and some of the underlying tasks often overlap, some of the roles may overlap. The roles described below are derived from congressional duties mentioned in the Constitution; responses to the House surveys of Members and the general public; and scholarly studies. Broadly, a system of representative government assumes that the will of the people is consulted and accommodated when making public policies that affect them. Consequently, representational activity is present in all of the roles of a Member of Congress. Representational activity is seen in the legislative process, constituent service, oversight, and investigation duties that Members carry out. In Congress, Members are elected to represent the interests of the people in their congressional district or state. In addition, they represent regional and national interests in matters which might come before Congress. On the local level, Members of the House represent congressional districts of populations ranging approximately from 527,000 (Rhode Island's two congressional districts) to 994,000 (Montana's single district) constituents. Senators represent states that range in population from 568,000 (Wyoming) to more than 37.7 million (California). In the nation's capital, Members serve as advocates for the views and needs of their constituents as well as stewards of national interests. Representational work may involve legislative activity, such as analyzing the provisions of proposed legislation for their potential impact on the area represented, or constituent service activity, such as assisting individuals, local governments, and organizations in obtaining federal grants and benefits. Styles of representation differ. Some Members might view themselves as responding to instructions from their constituents--sometimes called the "delegate" style. Others might prefer to act upon their own initiative and rely upon their own judgment--sometimes called the "trustee" style. In practice, when considering new legislation or the effects of implementing existing law, the opinion of their constituency often may be uppermost in a Member's mind. Constituent views, however, may vary in intensity from issue to issue, or fall on several sides of an issue, and the Member would typically take into account opinions from other sources as well. Consequently, most Members typically balance or reconcile these competing viewpoints with their own judgment when casting their votes, providing constituent service, or conducting oversight. Another facet of representation involves presenting a view of government activity to constituents and the broader American public. Members of Congress regularly draw attention to policy issues and federal government activities in order to educate constituents and other citizens and to encourage more robust citizen participation in public affairs. This educational function is typically performed through newsletters and special mailings sent to residents in the district or state, or through a variety of media outlets, which may include a Member website, and appearances and interviews on local television and radio programs. In developing and debating legislative proposals, Members may take different approaches to learn how best to represent the interests of their district or state, together with the interests of the nation. This may require identifying local, national, and international issues or problems which need legislative action, and proposing or supporting legislation which addresses them. Throughout the legislative process, Members of Congress routinely attend committee hearings and briefings, hold meetings and conversations with executive branch officials and with lobbyists representing various interested groups, and have discussions with congressional colleagues. In addition, many Members receive staff briefings based on a broad range of sources, including congressional support agencies, local and national media outlets, specialized policy-oriented literature, and background material on legislative issues, among others. An important venue for congressional activities is the committee, through which much of the work of Congress is organized. Committees typically are the first place in which legislative policy proposals receive substantive consideration. Members of Congress are assigned to a number of committees and subcommittees simultaneously, and are expected to develop issue expertise in the policy areas that come before these panels. Typically, each Senator is assigned to three committees and at least eight subcommittees. With the exception of Members who serve on committees that their party has designated as exclusive, each Representative is typically assigned to two standing committees and four subcommittees. Committee members usually participate in hearings to question witnesses; engage in markup sessions to draft, amend, and refine the text of legislation; and vote on whether to send specific measures to the floor of their chamber. Members also testify before other congressional committees on matters of interest to their district or state, or on matters in which the Member has developed expertise. In addition to these duties, Senate committee membership involves review of executive and judicial nominations and may include consideration of treaties. Some Members, generally those with more seniority, also participate in conference committees. Conference committees are convened to work out differences when the House and Senate pass different versions of the same bill. Members of conference committees participate in the final resolution of policy disputes, legislative-executive bargaining, and significant policy decisions. Members generally participate in floor debate most fully when measures of importance to their home district or state are involved, or when matters reported from their legislative committees are under consideration. Floor activity might include preparing statements, conducting research to defend or deter provisions of a bill, and offering amendments. It may also mean debating other Members, in an effort to persuade the undecided, and engaging in extensive informal political negotiations to advance legislative goals. The constituency service role is closely related to the representative and educational roles of a Member of Congress. Frequently, when constituents or local firms or organizations need assistance from the federal government, they contact their Representative or Senators. Members then act as representatives, ombudsmen, or facilitators, and sometimes as advocates, in discussions with the federal government. The constituency service role may be highly varied, and involve several activities, provided to individual constituents, including outreach, in which Members introduce themselves and inform constituents of the services typically provided; gathering information on federal programs; casework, in which congressional staff members provide assistance in obtaining federal benefits or in solving constituents' problems with agencies; providing nominations to United States service academies; and arranging visits or tours to the Capitol or other Washington, DC, venues. Assistance on behalf of firms and organizations may involve providing letters and other communication in support of grant or other applications for federal benefits. The constituency service role also allows a Member the opportunity to see how government programs are working, and what problems may need to be addressed through formal oversight or legislation. In addition to its legislative responsibilities, Congress is responsible for seeing that the laws are administered according to congressional intent. While some Members receive feedback on the success of public policies through constituency service and the experiences of constituents who seek casework assistance, most of the oversight and investigation duties of Members are carried out through committees. Committees and Members can review the actions taken and regulations formulated by departments and agencies through hearings, studies, and informal communication with agencies and those affected by a program or policy. Oversight and investigation can take several forms. In addition to casework activity, the process of authorizing and appropriating funds for executive branch departments and agencies in committee hearings also affords Members and committees the opportunity to review the adequacy of those agencies' organization, operations, and programs. Investigatory hearings are often conducted in response to an emerging crisis or scandal. At various points in the oversight and investigative process of Congress, individual Members can participate in the proceedings, for example, by questioning executive branch leaders, or reporting the experiences constituents have had with particular programs or agencies. The Constitution places upon the Senate, but not the House, the responsibility for confirming nominations of individuals for appointive federal office, federal judicial nominations, and to ratify treaties negotiated by the executive branch with foreign nations. Individual Senators typically participate in hearings to determine the suitability of candidates nominated for executive office and the adequacy of the provisions of treaties. Senators may also participate in the floor debate on these matters. Some Members of Congress hold leadership positions within their chamber. Leadership responsibilities include leading negotiations within the party to formulate party positions on legislative issues, mediating political conflicts among Members of the same party, persuading Members to join in voting coalitions, keeping count as voting blocs form, participating in decisions to set the legislative agenda for the chamber, and negotiating agreements on when to schedule, and how to consider, specific bills on the floor. Representatives and Senators may also hold the position of chairman or ranking minority Member on a committee or subcommittee, and have responsibility, or participate in the process of, scheduling of that committee's business and selecting the issues that will compose the committee or subcommittee's agenda. Some Representatives and Senators also participate in a leadership capacity in their respective party caucus or conferences. Leadership duties may be carried out both by Members who hold formal leadership positions and those who do not. Issues on which individual Members have recently taken informal leadership roles include campaign finance reform, planning for the continuity of Congress, and lobbying and ethics reform. Members of Congress are supported by a personal office in which staff perform legislative research, prepare materials for the Member to study, provide constituency service, manage constituency correspondence, handle media relations, and perform administrative and clerical functions. Staff and office facilities are provided through funds appropriated annually, and allocated to Members according to the procedures of each chamber. The precise duties and tasks carried out in a Member office will vary with the Member's personal preferences, which are typically informed by seniority, committee assignment, policy focus, district or state priorities, institutional leadership, and electoral considerations. Each Member is allocated public funds to maintain office payroll and expense accounts, and typically supervises work carried out in Washington, DC, and state or district offices. Every Representative is authorized to have up to 18 full-time and 4 half-time positions to assist them in their duties. In the Senate, the number of authorized staff varies according to the population of the state a Senator represents. An integral part of the work of Members of Congress, their reelection plans, is separate from their official congressional duties. For those Members of Congress running for reelection, activities may include organizing and maintaining a personal campaign staff, campaigning, and raising funds for reelection or election to another office. Members may also be significant political leaders of their party, as public spokespersons, and as fund raisers for themselves and other congressional candidates. At the state or district level, they may also aid and influence the candidacies of state and local government officials. In addition, some Members also hold leadership posts within their national political parties, such as serving on their party's congressional campaign committee. House and Senate rules mandate that with very limited exceptions, political and campaign activities must be conducted outside of federal facilities, including congressional offices. With no formal or definitive requirements, each Member of Congress is free to define his or her own job and set his or her own priorities. Although elements of each of the roles described can be found among the duties performed by any Senator or Representative, the degree to which each is carried out differs among Members as they pursue the common goals of seeking reelection, building influence in Congress, and making good public policy. Each Member may also emphasize different duties during different stages of his or her career as other conditions of the Member's situation change. For example, some may focus on outreach, constituent service, and other state or district activity. Others may focus on developing influence in their chamber by developing policy expertise or advancing specific legislation. No Member, however, is likely to focus on any one role or duty at the exclusion of another, because the extent to which a Member successfully manages all of those roles is the basis on which his or her constituents may judge the Member's success.

The duties carried out by a Member of Congress are understood to include representation, legislation, and constituent service and education, as well as political and electoral activities. The expectations and duties of a Member of Congress are extensive, encompassing several roles that could be full-time jobs by themselves. Despite the acceptance of these roles and other activities as facets of the Member's job, there is no formal set of requirements or official explanation of what roles might be played as Members carry out the duties of their offices. In the absence of formal authorities, many of the responsibilities that Members of Congress have assumed over the years have evolved from the expectations of Members and their constituents. Upon election to Congress, Members typically develop approaches to their jobs that serve a wide range of roles and responsibilities. Given the dynamic nature of the congressional experience, priorities placed on various Member roles tend to shift in response to changes in seniority, committee assignment, policy focus, district or state priorities, institutional leadership, and electoral pressures. In response, the roles and specific duties a Member carries out are often highlighted or de-emphasized accordingly. Although elements of all the roles described can be found among the duties performed by any Senator or Representative, the degree to which each is carried out differs among Members. Each Member may also emphasize different duties during different stages of his or her career. With no written requirements, each Member is free to define his or her own job and set his or her own priorities. This report is one of several CRS reports that focus on congressional operations. Others include CRS Report RL34545, Congressional Staff: Duties and Functions of Selected Positions, by [author name scrubbed]; CRS Report RL33209, Casework in a Congressional Office: Background, Rules, Laws, and Resources, by [author name scrubbed]; and CRS Report RL33213, Congressional Nominations to U.S. Service Academies: An Overview and Resources for Outreach and Management, by [author name scrubbed].

There is continuing interest in the potential for ethanol to displace petroleum as a transportation fuel. In 2010, the United States consumed roughly 13 billion gallons of fuel ethanol, representing about 10% of all U.S. gasoline consumption (by volume). Fuel ethanol consumption has grown from roughly 1 billion gallons per year in the early 1990s, largely as a result of federal policies promoting its use, including tax incentives and mandates for the use of renewable fuels. Arguably the most significant incentive for ethanol's use is the renewable fuel standard (RFS) established in the Energy Policy Act of 2005 and expanded in the Energy Independence and Security Act of 2007. The RFS mandates the use of 9.0 billion gallons of renewable fuel in 2008, increasing steadily through 2022 ( Figure 1 ). While the RFS is not an explicit ethanol mandate, the vast majority of the requirement has been met using corn-based ethanol. Going forward, there are limitations on the amount of corn-based ethanol that may be used to meet the mandate, although it is likely that much of the additional mandate for "advanced biofuels" will be met using ethanol derived from sugarcane and from cellulosic feedstocks such as perennial grasses, fast-growing trees, and agricultural wastes. By 2022, EISA requires the use of 36 billion gallons of renewable fuels, and much of this would likely be ethanol from a variety of feedstocks. However, there is a key obstacle to the use of so much ethanol in gasoline. Currently, although some ethanol is sold as an alternative fuel (E85), most is sold as an additive in conventional and reformulated gasoline. Before EPA's decision on the Growth Energy waiver petition, the amount of ethanol that could be blended in gasoline for all conventional gasoline vehicles and engines was limited to 10% by volume (E10) by guidance developed by the Environmental Protection Agency (EPA) under the Clean Air Act (CAA), as well as by vehicle and engine warranties, and certification procedures for fuel-dispensing equipment. Under the RFS, assuming that most of the mandate is met using ethanol, gasoline blenders are likely to hit a limit in the next few years. In 2012, the RFS will require over 15 billion gallons of renewable fuel, while projected gasoline consumption in 2012 is just above 140 billion gallons. After 2012, the renewable fuel mandate will continue to increase. However, a limit of 10% ethanol would mean that ethanol for gasoline blending (not including E85) likely cannot exceed 14 billion gallons per year. This "blend wall" is the maximum possible volume of ethanol that can be blended into U.S. motor gasoline (see Figure 2 ). It is likely that the actual limit is lower, since older fuel tanks and pumps at some retail stations may not be equipped to handle ethanol-blended fuel. Because of this "blend wall," there is interest, especially among ethanol producers, in increasing the allowable concentration of ethanol in gasoline. Research is ongoing on intermediate-level blends, including 15%, 20%, 30%, and 40% ethanol (E15, E20, E30, and E40, respectively). On March 6, 2009, Growth Energy (on behalf of 52 U.S. ethanol producers) applied to EPA for a waiver from the CAA E10 limit. The application requested an increase in the maximum concentration to 15% (E15). The waiver would allow the use of significantly more ethanol in gasoline than was permitted under the 10% limit. Under EISA, EPA had 270 days (December 1, 2009) to grant or deny the waiver. In a November 2009 letter to Growth Energy, EPA noted that "it is clear that ethanol will need to be blended into gasoline at levels greater than the current limit of 10 percent" to meet the EISA mandates. In the letter, EPA noted that long-term testing on newer vehicles had not been completed, but that the agency expected that model year 2001 and newer vehicles "will likely be able to accommodate higher ethanol blends, such as E15." On October 13, EPA granted a partial waiver for MY2007 and later vehicles, and deferred a decision on MY2001-MY2006 vehicles until it received final testing data from the Department of Energy (DOE) --EPA granted that waiver on January 26, 2011. As part of the October 2010 decision, EPA denied the waiver for use of E15 in MY2000 and older passenger vehicles, as well as for all heavy-duty vehicles, motorcycles, marine engines, and non-road equipment. However, a group of engine and equipment manufacturers has challenged the partial waiver in court, arguing that EPA failed to estimate the likelihood of misfueling (using E15 equipment denied a waiver), and the economic and environmental consequences of that misfueling. EPA estimates that MY2007 and later vehicles will represent 29% of the cars and light trucks on the road in 2011. Expanding the waiver to MY2001 and later covers an additional 38% of vehicles. As newer vehicles are driven longer distances than older vehicles, MY2001 and later vehicles would represent an even larger share of vehicle miles traveled and fuel consumption. As part of the decision, EPA stated that it had "reasons for concern with use of E15 in nonroad products, particularly with respect to long-term exhaust and evaporative emissions durability and materials compatibility." EPA denied this part of the waiver petition but stated that the agency would revisit the issue if new data were submitted. In a July 2010 "Status Update" EPA stated that Although we continue to evaluate all available information, it has become clear that insufficient data have been submitted on the use of E-15 in older vehicles and non-road engines (such as chainsaws and marine engines) to enable EPA to make a decision on a waiver that would allow the use of E-15 for these engines. As noted by EPA, granting Growth Energy's petition to increase gasoline ethanol content to 15% addresses only one component of the blend wall. The other impediments--current state laws, vehicle and engine warranties, and distribution infrastructure--still need to be addressed before ethanol use in gasoline is taken beyond 10%. Further, for EPA to allow the sale of E15, a fuel supplier still needs to register the fuel with EPA and submit health effects testing for EPA to review--a process that has not yet been started. The "blend wall" is the upper limit to the total amount of ethanol that can be blended into U.S. gasoline. Before 2010 gasoline ethanol content for all uses was limited to 10% by volume, and in 2009 gasoline consumption was roughly 140 billion gallons. Therefore, the 10% blend wall is roughly 14 billion to 15 billion gallons of ethanol that could be blended into gasoline. The blend wall is largely driven by four factors. First, under the CAA it is unlawful to sell gasoline that contains additives at levels higher than those approved by EPA. For ethanol, the limit was 10% by volume for all vehicles through 2010. To allow a higher percentage, a fuel manufacturer would need to petition EPA for a waiver. (See " Approval of New Fuels and Fuel Additives .") Second, automakers currently warranty their vehicles to operate on ethanol/gasoline blends up to 10%. While there are data to suggest that newer vehicles could be operated reliably on higher levels of ethanol without modification, no automaker has yet approved those higher blends for use. Further, small engine manufacturers generally advise against using gasoline with more than 10% ethanol in machines such as lawnmowers, trimmers, and snowmobiles. Even with EPA's approval of higher ethanol blends for use in some vehicles, it is unclear whether vehicle and machine owners will be willing to use the new fuel without explicit approval from the engine/vehicle manufacturer. Third, most existing infrastructure (e.g., underground gasoline storage tanks, fuel pumps) is designed and certified to deliver blends up to E10. It is unclear whether it can tolerate higher ethanol concentrations. Underwriters Laboratories (UL), an independent testing and certification company, announced guidance supporting the use of ethanol blends up to a maximum of 15% in existing fuel pumps currently certified to dispense E10. However, according to the same announcement, UL stated that "under normal business conditions, E10 at the dispenser can vary from about seven to 13 percent ethanol." However, a similar variance is likely to exist for E15: according to a UL representative, "it cannot ever be said that [E15] is exactly 15 percent." Therefore, a higher maximum level, perhaps 18%, would be necessary to allow those pumps to be certified to deliver E15. In November 2010, the National Renewable Energy Laboratory (NREL) released a study (conducted by UL) on the compatibility of new and legacy equipment (listed to dispense up to E10) with E15. UL determined that some of the testing was inconclusive, and some parts did corrode. While modifications to address some of these corrosion issues might be relatively inexpensive, some may represent a significant cost to fuel retailers. In March 2010, UL certified two new pumps to dispense blends up to E25. Further, one pump manufacturer, Gilbarco, retroactively expanded its warranty coverage to E15 for pumps manufactured after April 1, 2008. Fourth, many state laws and regulations, including fire codes and other standards, limit ethanol in gasoline to 10%. To allow E15, these state laws and regulations would also need to be amended. In addition, private or state insurance restrictions may or may not reflect changes to UL certification. While all of these components of the blend wall are relevant, this report focuses on the process for addressing the first component, the CAA restriction on ethanol concentration in gasoline. For a blend of gasoline and gasoline additives to be approved under Section 211(f)(1)(A) of the CAA, it must be "substantially similar" to unleaded gasoline. EPA has defined "gasoline" to have an upper limit of 2.7% oxygen content (by weight), effectively limiting the ethanol concentration to roughly 7.5% (by volume). However, Section 211(f)(4) of the CAA (as amended by EISA) allows manufacturers of fuels and fuel additives to apply for a waiver from the "substantially similar" requirement if they can prove that the use of the fuel or additive will not "cause or contribute to" a vehicle not meeting applicable emissions standards over its useful life. The EPA Administrator, upon application of any manufacturer of any fuel or fuel additive, may waive the prohibitions established under paragraph (1) or (3) of this subsection or the limitation specified in paragraph (2) of this subsection, if he determines that the applicant has established that such fuel or fuel additive or a specified concentration thereof, and the emission products of such fuel or fuel additive or specified concentration thereof, will not cause or contribute to a failure of any emission control device or system (over the useful life of the motor vehicle, motor vehicle engine, nonroad engine or nonroad vehicle in which such device or system is used) to achieve compliance by the vehicle or engine with the emission standards with respect to which it has been certified pursuant to Sections 206 and 213(a) of this title. The Administrator shall take final action to grant or deny an application submitted under this paragraph, after public notice and comment, within 270 days of the receipt of such an application. EPA has twice granted waivers for 10% ethanol under Section 211(f). The first was granted in 1978 to Gas Plus, Inc. for blends of ethanol up to 10%. The second was in 1982 to Synco 76 Fuel Corp. for a blend of 10% ethanol plus a proprietary additive. To allow the use of E15 or E20, EPA would need to revise its definition of "substantially similar" to allow a higher oxygen content, or a manufacturer would need to petition EPA for a waiver under Section 211(f), as Growth Energy has done. According to EPA, there are no specific guidelines for what data must accompany a waiver application. However, based on communication between EPA's Office of Transportation and Air Quality (OTAQ) and the Minnesota Department of Agriculture, as well as a presentation made by a member of OTAQ staff to the American Petroleum Institute Technology Committee, a submission must include both evaporative and exhaust emissions; be comprehensive, assessing the emissions effects both short-term and over the full useful life of the vehicle; include tests on a variety of vehicles (e.g., new and used, car, truck, and motorcycle), and the selection of vehicles should reflect their frequency on the road; and assess the durability of vehicles and vehicle parts using the fuel, including assessments of the compatibility of the new fuel (or blend level) with engine materials, and the effects on operability and performance. Because gasoline is also used in other engines (e.g., lawnmowers, snowmobiles, boats, etc.), the long-term effects on emissions and engine durability for these engines must also be studied, according to EPA. In the case of higher-level ethanol blends, this may be a key concern. While newer automobiles have complex fuel systems, including computers that can measure and adjust fuel/air ratios in real time, most small non-road engines have much simpler carburetor systems with set fuel/air ratios. One potential problem is that ethanol contains oxygen: by increasing the oxygen content in the fuel--increasing the ethanol content from 10% to 20% effectively doubles the oxygen content--while keeping the amount of air coming into the engine constant, the engine will run much leaner. This could cause the engine to misfire, and/or to run much hotter than originally designed, especially in the case of air-cooled engines (e.g., lawnmowers). After the waiver is granted, but before sale of the new fuel is permitted, the fuel must be registered with EPA. That registration must include an assessment of the health effects of the fuel (e.g., inhalation exposure studies). Research has been completed or is ongoing on many of the above data requirements. Much of the preliminary research has been conducted by or for the state of Minnesota. Minnesota has a state law requiring the use of E10 across the state. Assuming E20 is approved as a motor fuel, the state will mandate its use starting in 2013. Therefore, Minnesota has headed much of the research that led to the Growth Energy waiver application. According to the Minnesota Department of Agriculture, some of the preliminary research has been completed or is ongoing on materials compatibility and driveability. In a presentation to EPA's Clean Air Act Advisory Committee's Mobile Sources Technical Review Committee, representatives of Chrysler and Honda highlighted key research areas in assessing mid-level ethanol blends. For cars and trucks they categorized the research into seven main topics: durability, tailpipe emissions, evaporative emissions, driveability, materials compatibility, emissions inventory, and on-board diagnostic (OBD) integrity. For most of these topics, they showed that fuel producers, automakers, EPA and/or DOE had completed "preliminary, partial or screening" assessments, but that comprehensive testing had just started in some areas, while other areas may still need to be addressed. According to their timeline, much of the comprehensive research would not have been completed before the end of 2009. Similar research must be completed for non-road engines. However, their timeline showed that the planning for that research was incomplete as of mid-2008. In its November 30, 2009, letter to Growth Energy, EPA noted that durability testing was ongoing at DOE. According to the letter, DOE was testing a total of 19 newer vehicles, had completed testing of two of those vehicles, and expected "testing [to] be completed on an additional 12 vehicles by the end of May 2010. As a result EPA expects to have a significant amount of the total data being generated through this testing program available to us by mid-June." The letter made no comment on the status of testing for older vehicles or for non-road engines. In its July 2010 update, EPA pushed back the expected completion date for testing of the newest (model year 2007 and later) vehicles to the end of September. The completion of that testing led to EPA's granting a partial waiver in October 2010. For vehicles between model years 2001 and 2006, EPA expected DOE to complete testing by late November 2010. EPA received that data and expanded the waiver in January 2011. For older vehicles and non-road engines, EPA stated that insufficient data have been submitted to alleviate concerns about durability and evaporative emissions--thus EPA denied that part of the waiver. However, as noted above, the partial waiver has been challenged in court by automakers and other equipment manufacturers concerned about the effects of misfueling. Under CAA Section 211(f)(4), as amended by Section 251 of EISA, the Administrator must grant or deny the waiver request within 270 days of receipt. Before being amended by EISA, the language in Section 211(f)(4) stated that "if the Administrator has not acted to grant or deny an application under this paragraph within one hundred and eighty days of receipt of such application, the waiver authorized by this paragraph shall be treated as granted." The amended section no longer specifies the status of a waiver request if EPA neither grants nor denies the request within 270 days, as was the case with Growth Energy's request. A question that has been raised is whether EPA can grant a partial waiver. For example, some contended that it is possible for EPA to quickly grant a waiver to allow E12 or E13, and take more time to review Growth Energy's application for E15. In press reports, Agriculture Secretary Tom Vilsack supported this strategy. In a June 2010 letter, Archer Daniels Midland Company (ADM) requested that EPA grant a waiver for E12 or determine that E12 is "substantially similar" to E10. In its decision on the Growth Energy petition, EPA determined that there were insufficient data to determine that E12 was substantially similar, that similar data concerns exist for older vehicles and non-road engines, and that for newer vehicles E12 is subsumed in the waiver for E15. According to CAA Section 211(f)(4), the EPA Administrator may waive the limitations "upon application of any manufacturer of any fuel or fuel additive." Therefore, presumably any gasoline or ethanol producer may petition EPA for the waiver, provided they can demonstrate to EPA that the new additive or (in this case) specified concentration of an existing additive will meet the criteria set out in Section 211(f)(4). In the case of the current waiver application, Growth Energy filed the application on behalf of 52 U.S. ethanol manufacturers, in partnership with the American Coalition for Ethanol, the Renewable Fuels Association, and the National Ethanol Vehicle Coalition. The provisions of Section 211 are explicit, and there seem to be few options outside of the Section 211(f)(4) waiver process for E15 or other intermediate blends to be approved. While there may be no administrative action that could permit the use of E15 other than an EPA waiver or a determination that E15 is "substantially similar" to gasoline, there are potential legislative options. These include amending the CAA to explicitly allow the use of E15 (or some other level of ethanol); amending the CAA to provide expedited approval of higher levels of previously approved fuel additives; and mandating the production and sale of flexible fuel vehicles (since intermediate blends between E85 and E0--straight gasoline with no ethanol--are already approved for use in these vehicles), and promoting (or mandating) the use of E85 fuel. As stated above, on March 6, 2009, Growth Energy petitioned EPA for a waiver to allow the use of up to 15% ethanol in gasoline. Under the CAA, EPA had up to 270 days (December 1, 2009) to approve or deny the waiver request, but on November 30, 2009, EPA sent a letter to Growth Energy stating that not enough testing had been completed, and that it would continue to evaluate the petition. On October 13, 2010, EPA granted a partial waiver for MY2007 and later passenger vehicles; EPA denied the waiver for MY2000 and older vehicles, as well as for heavy-duty vehicles, motorcycles, and non-road equipment; and deferred a decision on MY2001-MY2006 passenger vehicles. In its application, Growth Energy stated that "recent and extensive research demonstrates that use of higher ethanol blends will significantly benefit the environment by reducing greenhouse gas emissions, reducing harmful tailpipe emissions, reducing smog, using less energy for an equivalent amount of fuel, and protecting natural resources." Growth Energy contended that available data and multiple recent studies regarding the impact of various intermediate blends [of ethanol] on emissions, materials compatibility, durability, and driveability, were completed on extensive and representative test fleets, provide a reliable comparison to certification conditions, and demonstrate that use of E-15 will not cause or contribute to failure of any emission control device or system to meet its certification emissions standards. Growth Energy cited a DOE study that found a statistically significant decrease in carbon monoxide emissions using E15, and a marginally significant decrease in non-methane hydrocarbon emissions. The same study also found a statistically significant increase in acetaldehyde emissions, and a marginally significant increase in formaldehyde emissions. Both formaldehyde and acetaldehyde are regulated as toxic air pollutants under Sections 202 and 211 of the CAA. However, the fact that emissions increased using the fuel is not enough for EPA to deny the waiver: EPA would need to prove that the increase in emissions is enough to cause the vehicle or engine to fall out of compliance with emissions standards. Growth Energy asserts that the DOE study and other studies have found that the use of E15 results in emissions within applicable limits. In its November 30 letter to Growth Energy, EPA stated that "we want to make sure we have all necessary science to make the right decision," including more long-term testing data. On October 13, 2010, EPA granted a partial waiver for newer (MY2007 and later) passenger cars and light trucks, initially deferring a decision on MY2001-MY2006 passenger vehicles before granting the partial waiver on January 26, 2011, and denied the waiver for older passenger vehicles as well as all other vehicles. In its October 13 decision, EPA determined that there were insufficient data to alleviate concerns over potential emissions increases from older passenger vehicles and non-road engines. As stated above, the EPA waiver is not the only hurdle in enabling the use of intermediate-level ethanol blends. With the waiver granted, a fuel supplier still must register the fuel with EPA under the CAA, a process which includes an assessment of the health effects of the fuel. A key non-vehicle issue is whether existing infrastructure can support ethanol blends above E10. Like automobiles, while some existing gasoline tanks and pumps were designed and/or certified to handle up to E10, none to date have been designed or certified to handle higher ethanol blends. Even with approval by EPA for use in newer motor vehicles, presumably fuel suppliers and/or retailers would be unwilling to sell the fuel unless they are confident that it will not damage their existing systems or lead to liability issues in the future, and that they will not compromise their insurance coverage. Otherwise, it seems doubtful that fuel suppliers and retailers would voluntarily upgrade their systems to handle the new fuel. For example, underground storage tank (UST) owners must demonstrate that the components of their UST systems are compatible with the fuel they are storing under the UST provisions of the Solid Waste Disposal Act. EPA took comments through December 17, 2010, on updating its guidance to include ways for owners to demonstrate compatibility with E15. Further, loan covenants and insurance policies would need to be modified to reflect the use of the higher ethanol blend. In addition to fuel supply concerns, for vehicle and machine owners to accept the new fuel, engine and auto manufacturers would likely need to convince their customers that both new and existing equipment would not be damaged by using the new fuel, and that its use would not void vehicle and equipment warranties. This may be especially difficult for small-engine manufacturers and users who are currently concerned about the effects on their engines from E10, let alone higher blends of ethanol. Because of concerns over potential misfueling, a group of automobile and equipment manufacturers has challenged the partial waiver in court. They argue that EPA did not estimate the likelihood of misfueling or the potential economic and environmental effects. They also argue that some misfueling may be unavoidable if E15 becomes so prevalent that fuel suppliers stop selling E10. Many state laws and regulations limit the use of ethanol in gasoline to 10%. These state rules would also need to be updated to allow widespread use of E15. Further, gasoline retailers are concerned that they could lose insurance coverage if they distribute gasoline with higher than 10% ethanol concentration. A key issued raised with EPA's partial waiver decision is the likelihood of misfueling of E15 in vehicles and engines not approved for its use. As part of the October 2010 partial waiver approval, EPA proposed new rules to prevent misfueling, including requiring new labels for fuel pumps that dispense E15. EPA finalized the misfueling rules in June 2011. Along with public comments, EPA consulted with the Federal Trade Commission (FTC) to harmonize the design and content of the label with current FTC labeling rules for motor fuels. One of the key questions was whether the label should be treated as a cautionary label warning users of non-approved equipment or as one providing information but not necessarily a "warning label." Proponents of E15 were concerned that a too-strongly-worded warning label would lead to concerns about the fuel among owners of approved vehicles that could hamper its introduction into the marketplace. Ultimately, EPA and FTC settled on the word "attention" as providing the proper level of information and aligning the design and wording with other similar FTC labels. (See Figure 3 .)

On March 6, 2009, Growth Energy (on behalf of 52 U.S. ethanol producers) applied to the Environmental Protection Agency (EPA) for a waiver from the Clean Air Act (CAA) limitation on ethanol content in gasoline. Ethanol content in gasoline for all uses had been capped at 10% (E10); the application requested an increase in the maximum concentration to 15% (E15). A broad waiver would allow the use of more ethanol in gasoline than is currently permitted. On October 13, 2010, EPA issued a partial waiver for the use of E15 in model year (MY) 2007 and later passenger cars and light trucks. At the same time EPA denied the waiver request for the use of E15 in MY2000 and older vehicles, and in motorcycles, heavy trucks, and non-road applications, citing a lack of sufficient data to alleviate concerns about potential emissions increases from these engines. EPA deferred a decision on MY2001-MY2006 cars and light trucks until January 2011, when the agency expanded the waiver for those vehicles after analyzing final testing data from the Department of Energy (DOE). Concerned about potential damage by E15 to equipment not designed for its use, a group of vehicle and engine manufacturers has challenged the partial waiver in court. Of key concern before the waiver decision was made is the fact that a 10% limitation on ethanol content leads to an upper bound of roughly 15 billion gallons of ethanol in all U.S. gasoline. This "blend wall" will likely limit the fuel industry's ability to meet an Energy Independence and Security Act (EISA, P.L. 110-140) requirement to use increasing amounts of renewable fuels (including ethanol) in transportation. To meet the high volumes mandated by EISA, EPA recognized in a November 2009 letter to Growth Energy that "it is clear that ethanol will need to be blended into gasoline at levels greater than the current limit of 10 percent." The partial waiver for MY2001 and later vehicles--roughly two-thirds of the cars and light trucks on the road in 2011--will allow the use of more ethanol going forward, assuming other conditions are met. To receive a waiver, the petitioner must establish to EPA that the increased ethanol content will not "cause or contribute to a failure of any emission control device or system" to meet emissions standards. In addition to the emissions concerns, other factors affecting consideration of the blend wall include vehicle and engine warranties and the effects on infrastructure. Currently, no automaker warrants its vehicles to use gasoline with higher than 10% ethanol. Small engine manufacturers similarly limit the allowable level of ethanol. In addition, most gasoline distribution systems (e.g., retail pumps and tanks) are designed to dispense up to E10. While some of these systems may be able to operate effectively on E15 or higher, their warranties/certifications would likely need to be modified. Further, many current state laws prohibit the use of blends higher than E10. Questions have been raised whether fuel suppliers would be willing to sell E15 alongside or in lieu of E10. As EPA's waiver only applies to newer vehicles, a key question is how fuel pumps might be labeled to keep owners from using E15 in older vehicles and other equipment. Along with the waiver decision, EPA proposed new rules, including pump labeling, to prevent misfueling of E15 in vehicles not approved for its use. EPA finalized those rules in June 2011. EPA also sought comment (through December 17, 2010) on how to update guidance for underground storage tank (UST) owners, who must demonstrate compatibility of UST components with E15 before they may sell the fuel. Further, for EPA to allow the sale of E15, a fuel supplier would still need to register E15 with EPA and submit health effects testing for EPA to review--a process that had not been started as of late June 2011.

Murder, committed under any of more than 50 jurisdictional circumstances, is a federal capital offense. So are treason, espionage, and certain drug kingpin offenses. The Federal Death Penalty Act and related provisions establish the procedure that must be followed before a defendant convicted of a federal capital offense may be executed. The Federal Death Penalty Act reflects the constitutional boundaries identified in Furman and subsequent related Supreme Court decisions. The opinion for the Court in Furman v. Georgia runs less than a page. It simply states the following: "The Court holds that the imposition and carrying out of the death penalty in these cases constitute cruel and unusual punishment in violation of the Eighth and Fourteenth Amendments." Furman drew two responses. Some states sought to remedy arbitrary imposition of the death penalty by making capital punishment mandatory. Some states and Congress narrowed the category of cases in which the death penalty might be a sentencing option and crafted procedures designed to guide jury discretion in capital cases in order to equitably reduce the risk of random imposition. The Court in Woodson rejected the first approach, and in Gregg endorsed the second. The Court has subsequently noted that Furman and Gregg "establish that a ... capital sentencing system must: (1) rationally narrow the class of death-eligible defendants; and (2) permit a jury to render a reasoned, individualized sentencing determination based on a death-eligible defendant's record, personal characteristics, and the circumstances of his crime." With respect to eligibility for the death penalty, the Court declared "that capital punishment must 'be limited to those offenders who commit a narrow category of the most serious crimes and whose extreme culpability makes them the most deserving of execution.'" "Applying this principle, [the Court] held in Roper and Atkins that the execution of juveniles and mentally retarded persons are punishments violative of the Eighth Amendment because the offender had a diminished personal responsibility for the crime." Moreover, the Eighth Amendment cannot accept imposition of the death penalty where it is disproportionate to the crime itself as, at least in some instances, "where the crime did not result, or was not intended to result, in death of the victim. In Coker , for instance, the Court held it would be unconstitutional to execute an offender who had raped an adult woman.... And in Enmund , the Court overturned the capital sentence of a defendant who aided and abetted a robbery during which a murder was committed but did not himself kill, attempt to kill, or intend that a killing would take place. On the other hand, in Tison , the Court allowed the defendants' death sentences to stand where they did not themselves kill the victims but their involvement in the events leading up to the murders was active, recklessly indifferent, and substantial." Imposition of the death penalty as punishment for a particular crime will be considered cruel and unusual when it is contrary to the "evolving standards of decency that mark the progress of maturing society." Those standards find expression in legislative enactments, prosecution practices, jury performance, and execution records, viewed in light of "the Court's own understanding and interpretation of the Eighth Amendment's text, history, meaning, and purpose." Once a defendant has been found to be a member of a capital punishment eligible class, the question becomes whether he is among that limited number within that class for whom the death penalty is an appropriate punishment. The Court, after Gregg , found acceptable sentencing schemes that reserved capital punishment for those cases in which the jury's consideration involved one or more aggravating factors and any mitigating factors. If an aggravating factor is not already required for eligibility, one must be found in the course of the individualized selection assessment. Aggravating factors must satisfy three requirements. "First the circumstance may not apply to every defendant convicted of the murder; it must apply only to a subclass of defendants convicted of murder. Second, the aggravating circumstance may not be constitutionally vague." Third, the aggravating circumstance may not be statutorily or constitutionally impermissible or irrelevant. As for mitigating evidence, evidence must be received and considered "if the sentencer could reasonably find that it warrants a sentence less than death." The Constitution insists "that the jury be able to consider and give effect to a capital defendant's relevant mitigating evidence.... [V]irtually no limits are placed on the relevant mitigating evidence a capital defendant may introduce concerning his own circumstances." The Eighth Amendment also condemns execution in a cruel and unusual manner. It proscribes any method of execution which presents an "objectively intolerable risk" that the method is "sure or very likely to cause serious illness and needless suffering." The federal and state capital punishment statutes all require, or at least permit, execution by lethal injunction. In Baze , the Court rejected an Eighth Amendment challenge which failed to show that the lethal injunction procedure at issue was sure or very likely to cause needless suffering. Existing federal law affords capital cases special treatment. There is no statute of limitations for capital offenses, but there is a preference for the trial of capital cases in the county in which they occur. The Attorney General must ultimately approve the decision to seek the death penalty in any given case. Defendants in capital cases are entitled to two attorneys, one of whom "shall be learned in the law applicable to capital cases." Defendants are entitled to notice when the prosecution intends to seek the death penalty, and at least three days before the trial, to a copy of the indictment as well as a list of the government's witnesses and names in the jury pool. Defendants have twice as many peremptory jury challenges in capital cases as in other felony cases and prosecutors more than three times as many. Should the defendant be found guilty of a capital offense, the Furman/Gregg -inspired sentencing procedures set forth in the Federal Death Penalty Act come into play. The death penalty may be imposed under its provisions only after (1) the defendant is convicted of a capital offense; (2) in the case of murder, the defendant has been found to have acted with one of the required levels of intent; (3) the prosecution proves the existence of one or more of the statutory aggravating factors; and (4) the imbalance between the established aggravating factors and any mitigating factors justifies imposition of the death penalty. Statute of Limitations and Related Matters : "An indictment for any offense punishable by death may be found at any time without limitation." This provision applies when the offense is statutorily punishable by death, even if the prosecution elects not to seek the death penalty or the jury fails to recommend it. Prosecutorial options are somewhat more limited than this statement might imply. In rare cases, due process may preclude a stale prosecution even in the absence of a statute of limitations. The due process delay proscription only applies where the delay is the product of prosecutorial bad faith prejudicial to the defendant: "[A]pplicable statutes of limitations protect against the prosecution's bringing stale criminal charges against any defendant, and, beyond that protection, the Fifth Amendment requires the dismissal of an indictment, even if it is brought within the statute of limitations, if the defendant can prove that the Government's delay in bringing the indictment was a deliberate device to gain an advantage over him and that it caused him actual prejudice in presenting his defense." Moreover, the statute of limitations only marks time from the commission of the crime to accusation, in the form of either arrest or indictment. Deadlines between accusation and trial are the province of the constitutional and statutory speedy trial provisions. Here too, the limits are not particularly confining in most instances. "The Sixth Amendment ... Speedy Trial Clause is written with such breadth that, taken literally, it would forbid the government to delay the trial of an 'accused' for any reason at all. [The] cases, however, have qualified the literal sweep of the provision by specifically recognizing the relevance of four separate enquiries: whether delay before trial was uncommonly long, whether the government or the criminal defendant is more to blame for that delay, whether, in due course, the defendant asserted his right to a speedy trial, and whether he suffered prejudice as the delay's result." The Speedy Trial Act provides a more detailed time table, but one that comes with a number of extensions and exclusions. All in all, time before trial is rarely a matter of the essence in a capital case. Justice Department Review : The decision to seek or not to seek the death penalty is ultimately that of the Attorney General. Under the procedure established in the United States Attorneys Manual, the United States Attorney where the trial is to occur files a recommendation with the Justice Department, ordinarily after conferring with the victim's family and in the case of a recommendation to seek the death penalty with defense counsel. The recommendation is referred to the Capital Review Committee. The Committee's task is to ensure that the decision to seek the death penalty reflects fairness, national consistency, statutory compliance, and law enforcement objectives. It makes its recommendation to the Attorney General through the Deputy Attorney General. Appointment of Counsel : Capital defendants are entitled upon request to the assignment of two attorneys for their defense. There is some uncertainty over whether they are to be appointed immediately following indictment for a capital offense or whether they need only be appointed "promptly" sometime prior to trial; and whether the right expires with the decision of the government not to seek the death penalty. The federal appellate courts are divided over whether a lower court's erroneous refusal to appoint a second attorney in a capital case is presumptively prejudicial or if the defendant must still show that the error was prejudicial. The trial court may authorize the payment of attorneys, investigators, experts, and other professional services reasonably necessary for the defense of indigent defendants charged with a capital offense. This does not entitle the accused to the attorney or expert of his choice or to a jury-selection expert. Moreover, removal of the defendant's attorney in a compensation dispute is not appealable until after the trial. Pre-trial Notice of Intent to Seek the D eath Penalty : Section 3593 obligates the prosecutor to advise the defendant and the court, "a reasonable time before trial" or before the acceptance of a plea, of the government's intention to seek the death penalty. Capital Juries : The Sixth Amendment affords the accused the right to trial before an impartial jury. The Federal Death Penalty Act affords the defendant convicted of a capital offense the right to a jury for sentencing purposes. The accused may waive his right to a jury trial, either by pleading guilty or by agreeing to a trial by the court without a jury. A convicted defendant may also waive his right to a jury during the capital sentencing phase. The prosecution, on the other hand, enjoys comparable prerogatives. It may insist upon a jury if there is to be a trial. It must also agree if the capital sentencing hearing is to be held before the court without a jury. Moreover, it too is entitled to an impartial jury. Thus, the Sixth Amendment permits the exclusion of those potential jurors who assert that they will not vote to impose the death penalty under any circumstances. In most felony cases, the accused may peremptorily reject up to 10 potential jurors without regard to cause, and the prosecution may peremptorily reject up to 6. In a capital case, each side has 20 peremptory challenges. In the case of multiple defendants, the court may, but need not, allow the defendants additional challenges and may require they agree upon their challenges. Death-Ineligible Offen d ers : Whether by statute, by constitutional command, or both, some offenders may not be exposed to a federal trial in which the prosecution seeks the death penalty for a federal capital offense; some may not be executed. A woman may not be executed while she is pregnant. Neither may a person who is mentally retarded be executed nor a person who lacks the mental capacity to understand that he is being executed and why. The Federal Death Penalty Act may not be employed to charge a juvenile for a capital offense committed when the accused was under 18 years of age. An accused who is incompetent to stand trial may not be tried for a capital offense or any other crime. Death-Eligible Offenses : Federal law permits imposition of the death penalty only where the defendant has been convicted of a death-eligible crime, where the aggravating and mitigating factors present in a particular case justify imposition of the penalty, and in a murder case where the defendant has been found to have the requisite intent for imposition of capital punishment. Federal law divides death-eligible offenses into three categories. The one group consists of homicide offenses, another of espionage and treason, and a third of drug offenses that do not involve a killing. Capital homicide offenses : Murder is a capital offense under more than 50 federal statutes. Some outlaw murder as such under various jurisdictional circumstances. Most, however, make some other offense, such as carjacking, a capital offense, if death results from its commission. A defendant convicted of a capital offense may be executed, however, only if it is shown beyond doubt at a subsequent sentencing hearing that one of the statutory aggravating circumstances exists, and that he either (A) killed the victim intentionally; (B) intentionally inflicted serious injuries that resulted in the victim's death; (C) intentionally participated in an act, aware that it would expose a victim to life-threatening force, and the victim died as a consequence; or (D) intentionally engaged in an act of violence with reckless disregard of its life-threatening nature and the victim died as a consequence. The court will sometimes permit a separate preliminary jury proceeding to determine the existence of the requisite intent. Some courts have upheld the submission of all four mental states to the jury. Even in the presence of the necessary intent and at least one of the statutory aggravating factors, a defendant may only be sentenced to death, if the jury unanimously concludes that on balancing the aggravating and mitigating factors imposition of the death penalty is justified. Subsection 3592(c) of the Federal Death Penalty Act lists 16 statutory aggravating factors: "(1) Death during commission of another crime. (2) Previous conviction of violent felony involving firearm. (3) Previous conviction of offense for which a sentence of death or life imprisonment was authorized. (4) Previous conviction of other serious offenses. (5) Grave risk of death to additional persons. (6) Heinous, cruel, or depraved manner of committing offense. (7) Procurement of offense by payment. (8) Pecuniary gain. (9) Substantial planning and premeditation. (10) Prior conviction for two felony drug offenses. (11) Vulnerability of victim. (12) Conviction for serious federal drug offenses. (13) Continuing criminal enterprise involving drug sales to minors. (14) High public officials. (15) Prior conviction of sexual assault or child molestation. (16) Multiple killings or attempted killings." The jury may also consider any non-statutory aggravating factors which it finds beyond a reasonable doubt to exist. The Constitution and the Federal Death Penalty Act favor the introduction of mitigating evidence during the capital sentencing proceeding. The Supreme Court declared some time ago that "the Eighth Amendment ... require[s] that the sentencer ... not be precluded from considering, as a mitigating factor, any aspect of a defendant's character or record and any of the circumstances of the offense that the defendant proffers as a basis for a sentence less than death." The Federal Death Penalty Act directs the finder of fact to consider any mitigating factor and permits the defendant to present any information relevant to a mitigating factor. This gives the defendant considerable latitude. Yet his options are not boundless. The evidence he offers must be relevant and not invite confusion or unfair prejudice. Moreover, the prosecutor may question the weight that a mitigating factor warrants. Subsection 3592(b) of the Federal Death Penalty Act describes seven statutory mitigating factors and adds a catch-all that encompasses "other factors in the defendant's background, record, or character or any other circumstance of the offense that mitigate against imposition of the death sentence." The other seven cover the following: "(1) Impaired capacity. (2) Duress. (3) Minor participation. (4) Equally culpable, disparate punished defendants. (5) No prior criminal record. (6) Disturbance. (7) Victim's consent." Treason : Treason is punishable by death or imprisonment for not less than five years and a fine of not less than $10,000. The death penalty for treason may only be imposed upon conviction, a finding of one or more of the statutory aggravating factors, and a determination that the aggravating factors outweigh any mitigating factors. The mitigating factors in a treason case are the same as those in a murder case, seven statutory factors and one catch-all: impaired capacity; duress; minor participation; equally culpable but less severely punished defendants; absence of prior criminal record; mental disturbance; victim consent; and any other mitigating factor relating to the offender or the offense. Different aggravating factors, however, apply in treason and espionage cases. The aggravating factors are four: prior treason or espionage conviction; grave risk to national security; grave risk of death; and "any other aggravating factor." Commentators have questioned whether the Constitution allows imposition of the death penalty in cases involving treason, espionage, or murder-less drug offenses, since in such cases the statute on its face authorizes the death penalty without requiring the death of a victim. The Court in Kennedy specifically distinguished this class of crimes from those involving violence against individuals. Each of the crimes presents considerations of its own and might under some circumstances survive scrutiny even under the individual violence standards. Nevertheless, it seems likely that any court confronting the issue would at a minimum consider the Kennedy standards (indicia of "the evolving standards of decency that mark the progress of a maturing society" read in conjunction with the Court's precedents). Under the Federal Death Penalty Act, the death penalty does not follow inevitably from a treason conviction. Capital punishment is confined to those cases marked by one of the three aggravating factors and by the absence of countervailing mitigating factors. The national security factor might be considered a bit too open ended, but that defect, if it is one, might be cured by jury instruction or appellate construction. Of the three--treason, espionage, and murder-less drug kingpin offenses--commentators seem to consider treason the most likely to survive constitutional scrutiny. Espionag e: Espionage is a death-eligible offense under any of three conditions. First, it is a capital offense to disclose national defense information with the intent to injure the United States or aid a foreign government, if the disclosure results in the death of an American agent. Second, it is a capital offense to disclose information relating to major weapons systems or elements of U.S. defense strategy with the intent to injure the United States or aid a foreign government. Third, it is a capital offense to communicate national defense information to the enemy in time of war. The statutory aggravating and mitigating factors are the same as those used in treason cases. Drug Kingpin (Continuing Criminal Enterprises) : Murder committed in furtherance of a drug kingpin (continuing criminal enterprise) offense is a capital crime. It is one of the many federal homicide offenses discussed earlier. Certain drug kingpin offenses, however, are capital offenses even though they do not involve a murder. A continuing criminal enterprise is one in which five or more individuals generate substantial income from drug trafficking. The leader of such an enterprise is subject to a mandatory term of life imprisonment, if the enterprise either realizes more than $10 million in gross receipts a year or traffics in more than 300 times of the quantity of controlled substances necessary to trigger the penalties for trafficking in heroin, methamphetamines, or other similarly categorized controlled substances under 21 U.S.C. 841(b)(1)(B). A drug kingpin violation is a capital offense, if it involves twice the gross receipts or twice the controlled substances distributed necessary to trigger the life sentence, or if it involves the use of attempted murder to obstruct an investigation or prosecution of the offense. Presenting and Weighing the Factors : The Federal Death Penalty Act establishes the same capital sentencing hearing procedures for all capital offenses--murder, treason, espionage, or murder-less drug kingpin offenses. The hearing is conducted only after the defendant has been found guilty of a death-eligible offense. It is held before a jury, unless the parties agree otherwise. The prosecution and the defense are entitled to offer and rebut relevant evidence in aggravation and mitigation without regard to the normal rules of evidence in criminal proceedings. As noted earlier, there is some question whether the prosecutors' arguments or rebuttal concerning the defendant's lack of remorse constitute a violation of the defendant's right not to testify. Some also question whether prosecutors are free to argue that the death penalty is made more appropriate by a defendant's insistence of his right to a trial. The prosecution bears the burden of establishing the existence of aggravating factors and the defendant of establishing mitigating factors. The burdens, however, are not even. The prosecution must show proof beyond a reasonable doubt; the defendant a less demanding proof by a preponderance of the evidence. The finding on aggravating circumstances must be unanimous; the finding on mitigating circumstances need only be espoused by a single juror. Capital punishment may only be recommended and imposed, if the jurors all agree that the aggravating factors sufficiently outweigh the mitigating factors to an extent that justifies imposition of the death penalty. If they find the death penalty justified, they must recommend it. If they recommend the death penalty, the court must impose it. If they cannot agree, the defendant must be sentenced to a term of imprisonment, most often to life imprisonment. Appellate Review : A defendant sentenced to death is entitled to review by the court of appeals. The defendant is entitled to relief if the court determines that (1) the sentence was the product of passion, prejudice, or other arbitrary factor; (2) the finding of at least one statutory aggravating factor cannot be supported by the record; or (3) there exists some other legal error that requires the sentence to be overturned. Convictions and sentences imposed in a capital case are subject to normal appellate and collateral review as well. Execution of Sentence : Once all opportunities for appeal and collateral review have been exhausted, a defendant sentenced to death is executed pursuant to the laws of the state where the sentence was imposed, or if necessary, pursuant to the laws of a state designated by the court. The United States Marshal has the authority to use state or local facilities and personnel to carry out the execution. The regulations permit six defense witnesses and 18 public witnesses to attend the execution. Video and audio recording are forbidden.

Murder is a federal capital offense if committed in any of more than 50 jurisdictional settings. The Constitution defines the circumstances under which the death penalty may be considered a sentencing option. With an eye to those constitutional boundaries, the Federal Death Penalty Act and related statutory provisions govern the procedures under which the death penalty may be imposed. Some defendants are ineligible for the death penalty regardless of the crimes with which they are accused. Children and those incompetent to stand trial may not face the death penalty; pregnant women and the mentally retarded may not be executed. There is no statute of limitations for murder, and the time constraints imposed by the due process and speedy trial clauses of the Constitution are rarely an impediment to prosecution. The decision to seek or forgo the death penalty in a federal capital case must be weighed by the Justice Department's Capital Review Committee and approved by the Attorney General. Defendants convicted of murder are death-eligible only if they are found at a separate sentencing hearing to have acted with life-threatening intent. Among those who have, capital punishment may be imposed only if the sentencing jury unanimously concludes that the aggravating circumstances that surround the murder and the defendant outweigh the mitigating circumstances to an extent that justifies execution. The Federal Death Penalty Act provides several specific aggravating factors, such as murder of a law enforcement officer or multiple murders committed at the same time. It also permits consideration of any relevant "non-statutory aggravating factors." Impact on the victim's family and future dangerousness of the defendant are perhaps the most commonly invoked non-statutory aggravating factors. The jury must agree on the existence of at least one of the statutory aggravating factors if the defendant is to be sentenced to death. The Federal Death Penalty Act permits consideration of any relevant mitigating factor, and identifies a few, such as the absence of prior criminal record or the fact that a co-defendant, equally or more culpable, has escaped with a lesser sentence. The Federal Death Penalty Act recognizes other capital offenses that do not necessarily involve murder: treason, espionage, large-scale drug trafficking, and attempted murder to obstruct a drug kingpin investigation. The constitutional standing of these is less certain or at least different. This report is an abridged version of CRS Report R42095, Federal Capital Offenses: An Overview of Substantive and Procedural Law, without some of the discussion, the footnotes, and much of the attributions of authority and quotations found there.

Though only about three times the size of Washington, DC, and with a population of 4.7 million, the city-state of Singapore punches far above its weight in both economic and diplomatic influence. Its stable government, strong economic performance, educated citizenry, and strategic position along key shipping lanes make it a major player in regional affairs. For the United States, Singapore is a crucial partner in trade and security cooperation as the Obama Administration executes its rebalance to Asia strategy. Singapore's value has only grown as the Administration has given special emphasis to the Association of Southeast Asian Nations (ASEAN) as a platform for multilateral engagement. Singapore's heavy dependence on international trade makes regional stability and the free flow of goods and services essential to its existence. As a result, the nation is a firm supporter of both U.S. trade policy and the U.S. security role in Asia, but also maintains close relations with China. The People's Action Party (PAP) has won every general election since the end of the colonial era in 1959, aided by a fragmented opposition, Singapore's economic success, and electoral procedures that strongly favor the ruling party. Some point to shifts in the political and social environment that may herald more political pluralism, including generational changes and an increasingly international outlook among Singaporeans. In May 2011, opposition parties claimed their most successful results in history, taking six of parliament's 87 elected seats, and garnering about 40% of the popular vote. Though this still left the PAP with an overwhelming majority in Parliament, the ruling party described the election as a watershed moment for Singapore and vowed to reform the party to respond to the public's concerns. Singapore's parliamentary-style government is headed by the prime minister and cabinet, who represent the majority party in Parliament. The president serves as a ceremonial head of state, a position currently held by Tony Tan Keng Yam. Lee Hsien Loong has served as prime minister since 2004. Lee is the son of former Prime Minister Lee Kuan Yew, who stepped down in 1990 after 31 years at the helm. The senior Lee, 89 and widely acknowledged as the architect of Singapore's success as a nation, resigned his post as "Minister Mentor" following the 2011 elections, citing a need to pass leadership to the next generation. In 2010, changes to the constitution guaranteed that more non-PAP members would be represented in the parliament. The electoral reforms were seen as an acknowledgement by the PAP that it must adjust to a more open and diverse Singapore. Singapore's leaders have acknowledged a "contract" with the Singaporean people, under which individual rights are curtailed in the interest of maintaining a stable, prosperous society. Supporters praise the pragmatism of Singapore, noting its sustained economic growth and high standards of living. Others criticize the approach as stunting creativity and entrepreneurship, and insist that Singapore's leaders must respond to an increasingly sophisticated public's demand for greater liberties for economic survival. Greater, and generally freer, use of the Internet may be threatening to some of the leadership; in the past the government attempted to tighten control over bloggers, who may not exercise the same restraint as the mainstream media in limiting criticism of the ruling party or touching on sensitive issues such as race, in Singapore's multi-ethnic environment. Although it has been elected by a comfortable majority in every election since Singapore's founding, the PAP "places formidable obstacles in the path of political opponents," according to the U.S. State Department's 2012 Country Report on Human Rights Practices. The report states that "the PAP maintained its political dominance in part by circumscribing political discourse and action." According to Amnesty International, defamation suits by PAP leaders to discourage opposition are widespread. The political careers of opposition politicians are marked by characteristic obstacles from the ruling party, including being forced to declare bankruptcy for failing to pay libel damages to prominent PAP members. Singapore's economy depends heavily on exports, particularly in consumer electronics, information technology products, pharmaceuticals, and financial services. The GDP per capita is $61,400 (2012 estimate). China, Malaysia, and the United States are Singapore's largest trading partners. The U.S.-Singapore Free Trade Agreement (FTA) went into effect in January 2004--the U.S.'s first bilateral FTA with an Asian country--and trade has burgeoned. In 2012, Singapore was the 17 th largest U.S. trading partner with $50 billion in total two-way goods trade, and a substantial destination for U.S. foreign direct investment. In 2012, U.S. exports to Singapore exceeded $30 billion, a historic high. Singapore was the largest U.S. trading partner in ASEAN in 2012, accounting for $31.4 billion in exports and $19.1 billion in imports. The U.S. trade surplus with Singapore is the fifth largest American surplus in the world. U.S. direct foreign investment in Singapore has increased more than 20%, exceeding $116 billion in cumulative investment in 2012. Singapore and the United States are among the 12 countries on both sides of the Pacific involved in the Trans-Pacific Partnership (TPP), which is the centerpiece of the Obama Administration's economic rebalance to Asia. With Japan's entry in the talks, the TPP participants represent a third of the world's trade. Singapore's record of championing rigorous trade pacts make it an important negotiating partner in pushing for a comprehensive agreement. Singapore has concluded at least 18 free trade agreements (FTAs) and is pursuing several more, including the Regional Comprehensive Economic Partnership (RCEP), a 16-nation group of Asian nations which is negotiating a free trade agreement at the same time some of its members are working on the TPP. Such agreements are relatively easy for Singapore to negotiate because, in addition to having a mature, globalized economy, it has virtually no agricultural sector and its manufacturing is limited to specialized sectors. The 2005 "Strategic Framework Agreement" formalizes the bilateral security and defense relationship. The agreement, the first of its kind with a non-ally since the Cold War, builds on the U.S. strategy of "places-not-bases" in the region, a concept that allows the U.S. military access to facilities on a rotational basis without bringing up sensitive sovereignty issues. The agreement allows the United States to operate resupply vessels from Singapore and to use a naval base, a ship repair facility, and an airfield on the island-state. The U.S. Navy also maintains a logistical command unit--Commander, Logistics Group Western Pacific--in Singapore that serves to coordinate warship deployment and logistics in the region. As part of the agreements, squadrons of U.S. fighter planes are rotated to Singapore for a month at a time, and naval vessels make regular port calls. Changi Naval Base is the only facility in Southeast Asia that can dock a U.S. aircraft carrier. Singapore forces also train regularly in the United States. Security cooperation has continued to grow under the Obama Administration: the two sides have increased bilateral exercises and training, including combined air combat exercises for fighter units for the countries' air forces, as well as enhanced joint urban training at Singapore's sophisticated Murai Urban Training Facility. An April 2012 agreement outlines bilateral initiatives to strengthen global cargo security procedures; in 2003, Singapore was the first Asian country to join the Container Security Initiative (CSI), a series of bilateral, reciprocal agreements that allow U.S. Customs and Border Patrol officials at selected foreign ports to pre-screen U.S.-bound containers. It was also a founding member of the Proliferation Security Initiative (PSI), a program that aims to interdict weapons of mass destruction-related shipments. In April 2013, the USS Freedom , a U.S. Navy littoral combat ship (LCS) arrived in Singapore to begin a 10-month deployment in Southeast Asia. The stationing of the LCS, the first of four ships, is emblematic of the role that Singapore can play in the U.S. "pivot" to the region. The vessel is the first U.S. Navy ship to be designed to fight close to shore in shallow waters, to carry a smaller crew, and to boast flexible capabilities that include anti-mine and anti-submarine missions. The smaller size also makes them more amenable to doing exercises with countries that have smaller-scale naval forces. Singapore's combination of sophisticated facilities and political standing in the region allows it to host such U.S. naval assets. Singapore has been a strong champion of ASEAN, which helps Southeast Asia's mostly small countries to influence regional diplomacy, particularly vis-a-vis China. Renewed U.S. engagement under the Obama Administration has pleased Singapore and may have allowed it more diplomatic space to stand up to Beijing on key issues. Singapore has praised the Administration's "rebalancing" effort toward Asia, yet has been careful to warn that anti-China rhetoric or efforts to "contain" China's rise will be counterproductive. During an April 2013 visit to Washington, Prime Minister Lee advised the United States to strengthen its economic ties to the region and develop more trust with Beijing. Maintaining strong relations with both China and the United States is a keystone of Singapore's foreign policy. Singapore often portrays itself as a useful balancer and intermediary between major powers in the region. In the South China Sea dispute, for example, in 2011 Singapore--a non-claimant--called on China to clarify its island claims, characterizing its stance on the issue as neutral, yet concerned because of the threat to maritime stability. At the same time, Singapore was hosting a port visit by a Chinese surveillance vessel, part of an ongoing exchange on technical cooperation on maritime safety with Beijing. China's economic power makes it a crucial component of trade policy for all countries in the region, but Singapore's ties with Beijing are multifaceted and extend to cultural, political, and educational exchanges as well. There are frequent high-level visits between Singapore and China. Singapore adheres to a one-China policy, but has an extensive relationship with Taiwan and has managed it carefully to avoid jeopardizing its strong relations with Beijing. Taiwan and Singapore have held large-scale military exercises annually for over 30 years and, in 2010, announced the launch of talks related to a free-trade pact under the framework of the World Trade Organization. Although it has been elected by a comfortable majority in every election since Singapore's founding, the PAP "places formidable obstacles in the path of political opponents," according to the U.S. State Department's 2012 Country Report on Human Rights Practices. The report states that "the PAP maintained its political dominance in part by intimidating organized political opposition and circumscribing political discourse and action." According to Amnesty International, defamation suits by PAP leaders to discourage opposition are widespread. The PAP ideology stresses the government's role in enforcing social discipline and harmony in society, even at the expense of individual liberties. The political careers of opposition politicians are marked by characteristic obstacles from the ruling party, including being forced to declare bankruptcy for failing to pay libel damages to prominent PAP members. International watchdog agencies criticize Singapore's control of the press as well. In 2013, Reporters Without Borders ranked Singapore 149 th out of 179 countries in terms of press freedom, its worst performance ever on the index. New media controls have been stepped up as well: in 2013 the government issued new regulations for online news sites that report on Singapore, prompting international internet companies with a presence in the city-state to criticize the move as backward-looking.

A former trading and military outpost of the British Empire, the tiny Republic of Singapore has transformed itself into a modern Asian nation and a major player in the global economy, though it still substantially restricts political freedoms in the name of maintaining social stability and economic growth. Singapore's heavy dependence on international trade makes regional stability and the free flow of goods and services essential to its existence. As a result, the island nation is a firm supporter of both U.S. international trade policy and the U.S. security role in Asia, but also maintains close relations with China. The Obama Administration's strategy of rebalancing U.S. foreign policy priorities to the Asia-Pacific enhances Singapore's role as a key U.S. partner in the region. Singapore and the United States are among the 12 countries on both sides of the Pacific involved in the Trans-Pacific Partnership (TPP), which is the centerpiece of the Obama Administration's economic rebalance to Asia. The People's Action Party (PAP) has won every general election since the end of the colonial era in 1959, aided by a fragmented opposition, Singapore's economic success, and electoral procedures that strongly favor the ruling party. Some point to changes in the political and social environment that may herald more political pluralism, including generational changes and an ever-increasingly international outlook among Singaporeans. In May 2011, opposition parties claimed their most successful results in history, taking six of parliament's 87 elected seats. Though this still left the PAP with an overwhelming majority in Parliament, the ruling party described the election as a watershed moment for Singapore and vowed to reform the party to respond to the public's concerns. In 2012, Singapore was the 17th largest U.S. trading partner with $50 billion in total two-way goods trade, and a substantial destination for U.S. foreign direct investment. The U.S.-Singapore Free Trade Agreement (FTA) went into effect in January 2004, and trade has burgeoned. In addition to trade, mutual security interests strengthen ties between Singapore and the United States. A formal strategic partnership agreement outlines access to military facilities and cooperation in counterterrorism, counter-proliferation of weapons of mass destruction, joint military exercises, policy dialogues, and shared defense technology.

The defense acquisition workforce consists of civilian and uniformed personnel at the Department of Defense (DOD) who manage the planning, design, development, testing, contracting production, introduction, acquisition logistics support, and disposal of systems, equipment, facilities, supplies, or services that are intended for use in, or support of, military missions. The defense acquisition workforce plays a key role to ensure that DOD's contract dollars are properly spent on goods and services. As part of this role, the workforce is responsible for ensuring that acquisition programs--including major weapons and information technology (IT) systems--remain within their estimated cost and delivery schedules and produce the desired capabilities. In FY2015, DOD obligated roughly $438 billion on federal contracts, which comprised 62% of contract obligations government-wide. To fulfill its duties, the workforce must have an adequate number of acquisition professionals with an appropriate mix of technical skills (such as cost estimating, program management, and systems engineering). There are concerns, however, that the workforce may not be adequately sized or equipped with the skills necessary to support DOD's acquisition workload. According to a 2014 compilation of expert views published by the Senate Committee on Homeland Security and Governmental Affairs (Permanent Subcommittee on Investigations), two-thirds of contributors felt that improved recruiting, training, and incentives for the acquisition workforce are necessary for comprehensive acquisition reform. As of March 31, 2016, the defense acquisition workforce consisted of 158,212 employees, roughly 90% (142,728) employees) of which were civilians. Between FY2008 and FY2015, the workforce grew by 24.2%, or 30,343 employees ( Figure 1 ). The workforce experienced the largest increase between FY2009 and FY2010, growing by 11%, or 14,602 employees. In April 2009, the Secretary of Defense launched an acquisition workforce growth initiative that aimed to add 20,000 uniformed and civilian employees to FY2008 workforce levels through 2015. The initiative was launched, in part, to address reported workforce size and skill imbalances resulting from past downsizing, particularly the congressionally mandated cuts to the acquisition workforce in the 1990s. DOD has utilized several tools to help rebuild the size and capability of the acquisition workforce, one of which is hiring flexibilities. Hiring flexibilities are a suite of tools that are intended to simplify, and often accelerate, the federal hiring process. The way in which they do so, however, can vary by flexibility. Hiring flexibilities vary in structure and function in order to help agencies best meet their evolving recruitment needs. For example, some flexibilities provide hiring exemptions--waivers from competitive hiring requirements in Title 5 of the United States Code . Other flexibilities provide no hiring exemptions, but grant agencies more control in administering the hiring process. Flexibilities can also vary in terms of their Scope: Agency-specific or government-wide Coverage: One position or a group of positions Length: Temporary or permanent Authorization: Congress, the President, or the Office of Personnel Management (OPM) Service: Competitive or excepted service At least 38 hiring flexibilities are currently applicable to the civilian defense acquisition workforce--24 government-wide, 11 DOD-specific, and 3 acquisition-specific. A description of each of these flexibilities can be found in Appendix A . The subsections below describe six hiring flexibilities that, according to DOD, were used most frequently for external hires to the civilian acquisition workforce between FY2008 and FY2014 (during the acquisition workforce growth initiative): Direct-hire authority (DHA) Expedited hiring authority for civilian defense acquisition workforce positions (EHA) Pathways Recent Graduates program (established in December 2010) Pathways Internship program (established in December 2010) Federal Career Intern Program (eliminated in March 2011) Delegated examining authority DHA and EHA--a type of DHA--allow agencies to appoint individuals directly to a position or group of positions without regard for certain competitive hiring requirements in Title 5 of the United States Code . The specific hiring exemptions granted and applicability vary depending on the type of DHA. There are two different types of DHAs: OPM direct-hire and direct-hire authorized by statute . Regardless of type, the authorities are intended to accelerate job offers, though the level of acceleration may vary depending on an agency's interpretation of the authority. Appendix A provides examples of DHAs that are applicable to defense acquisition positions. The OPM direct-hire authorizes agencies to, upon OPM approval, waive competitive hiring requirements in 5 U.S.C. SSSS3309-3318--veterans' preference, competitive rating and ranking, and the rule of three --when filling positions for which OPM determines there is a severe shortage of candidates or a critical hiring need. DHAs can be established independently by OPM or upon request from an agency, though OPM ultimately determines the application and duration of the authority. Agencies must present evidence of a severe shortage of candidates or critical hiring need in order to receive the DHA. DHAs authorized by statute operate similarly to OPM direct-hire, but often differ in three primary ways: 1. Agencies generally do not need OPM approval to use DHAs authorized by statute and thus do not have to demonstrate the existence of a severe shortage of candidates or critical hiring need. 2. The authorities can exempt agencies from a broader set of competitive hiring requirements compared with the OPM direct-hire. 3. The authorities often apply to a specific department or agency and rarely apply government-wide. For example, the National Defense Authorization Act (NDAA) for FY2016 authorized a DHA that allows each military department to appoint a certain number of individuals with scientific and engineering degrees to scientific and engineering positions within the defense acquisition workforce without regard to competitive hiring requirements in 5 U.S.C. SSSS3301-3330. Expedited hiring authority (EHA) for certain defense acquisition workforce positions is a type of DHA that was first authorized by the NDAA for FY2009. The EHA authorizes DOD to use the OPM-direct hire to fill defense acquisition positions facing a severe shortage of candidates or critical hiring need, as identified by the Secretary of Defense rather than OPM. The EHA is the broadest of existing DHAs established exclusively for defense acquisition positions. Congress has expanded the scope and applicability of the EHA over time to include (1) all qualified individuals rather than those who are highly qualified, and (2) positions facing a critical hiring need in addition to those facing a severe shortage of candidates . Congress changed the EHA from a temporary to a permanent authority in 2015. The Pathways Recent Graduates and Pathways Internship programs are training and development programs designed to recruit high-performing individuals into the federal government and create a pipeline of talent for agencies. Under the programs, qualified individuals are temporarily appointed to agency positions and receive job-related training. The appointment length, eligibility requirements, and covered positions vary by program ( Table 1 ). Upon program completion, participants can be noncompetitively converted to permanent federal positions in the competitive service. The two Pathways programs were based on the Federal Career Intern Program (FCIP)--a structurally distinct training and development program that was terminated on March 1, 2011, under Executive Order 13562. The Merit Systems Protection Board (MSPB) found that the FCIP violated veterans' preference and public notice laws in November 2010. Positions under the Pathways programs are filled using an excepted service hiring authority, which places positions in the excepted service rather than the competitive service or Senior Executive Service. In so doing, the authority provides DOD with more flexibility and control over hiring for Pathways-covered acquisition positions. Namely, DOD can (1) restrict position eligibility to qualified students and recent graduates, (2) evaluate qualifications solely based on a candidate's education rather than work experience, and (3) use non-Title 5 recruitment, assessment and selection procedures, which may be more streamlined compared to procedures used for the competitive service. For example, DOD can post an abbreviated job announcement on USAJOBS for Pathways-covered acquisition positions. The table below provides a summary of different services within the federal civilian workforce. Delegated examining authority is arguably the standard for modern-day competitive federal hiring and can be considered the baseline for non-flexibility hiring. Delegated examining authority does not provide any hiring exemptions--agencies must comply with all competitive hiring requirements in Title 5 of the United States Code when filling positions under the authority. Delegated examining authority is considered a flexibility because it allows agencies, rather than OPM, to administer the federal hiring process for all competitive service positions (except Administrative Law Judge positions). Prior to delegated examining, federal hiring was centrally managed by OPM. Delegated examining is available to any agency that enters into an agreement with OPM. OPM can terminate, suspend, or revoke the agreement at any time. This section analyzes DOD's use of the six hiring flexibilities described above for some, but not all, civilian acquisition hires between FY2008 and FY2014 ( Table 2 ). According to DOD, the data in Table 2 include external civilian acquisition hires (i.e., applicants from outside the federal government), but do not include internal civilian acquisition hires (i.e., current or former federal employees). Internal hires may represent a sizeable portion of total civilian acquisition hires each year. Two of six flexibilities were available throughout the six-year period, while one was discontinued and three were established during that period. Regardless, the flexibilities were identified by DOD as the top six used to fill civilian defense acquisition positions between FY2008 and FY2014. Approximately 66% of total external civilian defense acquisition hires were made under the six flexibilities described above between FY2008 and FY2014 ( Table 2 ). The remaining 34% of external civilian hires were made through a mix of other hiring mechanisms that use competitive and noncompetitive procedures. The EHA flexibility was used most frequently, accounting for 17,699 external civilian acquisition hires over the six-year period. In FY2010, the EHA accounted for the largest amount of external civilian hires in a single year among the six flexibilities--5,393 hires. A 2016 GAO report found that the EHA was one of the top 20 hiring flexibilities used for all new hires government-wide in FY2014. The FCIP was the second most frequently used flexibility, accounting for 13,574 of total external acquisition hires over the six-year period. The FCIP was the only flexibility used more than the EHA in a single year, in raw numbers, accounting for 3,266 more external civilian acquisition hires than the EHA in FY2009. The FCIP was the second most frequently used flexibility over the six-year period despite being eliminated on March 1, 2011, and replaced by the Pathways Recent Graduate and Internship programs. DHAs and the two Pathways programs were among the least used flexibilities during the six-year period. DHAs accounted for the fewest external civilian hires across the entire six-year period--1,429 hires. The two Pathways programs accounted for the fewest external civilian hires during the time they were in effect --878 external civilian hires between FY2012 and FY2014. The Pathways programs were first implemented by DOD in FY2012, which may partially explain their relatively low use. Delegated examining authority, which features no hiring exemptions, accounted for a larger number of external civilian acquisition hires (3,040 hires) than DHAs and the Pathways programs combined (1,761 hires) between FY2012 and FY2014--the time period in which all four flexibilities were simultaneously in effect. Figure 2 , below, depicts trends in the aggregate use of the six most frequently used flexibilities for civilian external acquisition hiring from FY2008 to FY2014. Data from DOD show a rise in external civilian hires under the six flexibilities between FY2008 and FY2010, from 4,607 hires to 10,928 hires. External civilian hires then declined to 3,391 hires in FY2013, but experienced a slight uptick to 3,848 hires in FY2014. The following external events may have contributed to trends in aggregate flexibility use over the six-year period: The acquisition workforce growth initiative: As mentioned previously, in April 2009, DOD established a goal to add 20,000 personnel to FY2008 acquisition workforce levels through 2015. DOD exceeded this goal in FY2010, adding 21,826 employees to the workforce ( Figure 1 ). Thus, flexibility use--and overall external civilian acquisition hiring--may have surged through FY2010 to meet the growth initiative goal and declined through FY2013 after reaching it. Sequestration: The across-the-board budget cuts in FY2013, known as sequestration, might explain the slight uptick in flexibility use from FY2013 to FY2014. Flexibility hiring may have dipped in FY2013 due to civilian hiring freezes instituted by DOD in response to sequestration and then increased in FY2014, at which point sequestration was no longer in effect and certain hiring freezes were lifted. Civilian a cquisition workforce losses: The flexibility hiring uptick from FY2013 to FY2014 might also reflect DOD efforts to combat overall workforce losses and preserve growth achieved in previous years. The size of the overall civilian defense acquisition workforce decreased by 1,906 employees between FY2012 and FY2014, from 136,714 to 134,808 employees ( Figure 1 ). Workforce losses outpaced growth in FY2013 and FY2014. Shortfalls in certain acquisition career fields: The flexibility hiring uptick from FY2013 to FY2014 might also reflect DOD efforts to address staffing shortfalls in certain acquisition career fields. While DOD accomplished its overall acquisition workforce growth goal, a 2015 GAO report found that DOD did not meet growth targets for six acquisition career fields. The report further asserted that three of these fields that are considered as critical to reshaping the acquisition workforce--contracting, business, and engineering--experienced high attrition rates and difficulty recruiting qualified personnel. Data from DOD also show notable patterns in individual flexibility use during the six-year period, which might have resulted from a mix of structural changes and external events. Some notable patterns include the following: EHA: EHA use surged between FY2009 and FY2010, from 1,184 to 5,080 external civilian acquisition hires. In contrast, use of two of the remaining three most frequently used flexibilities in place during that time decreased. The EHA was expanded to cover a broader range of acquisition positions at the beginning of FY2009, which may have reduced the use of other flexibilities. FCIP: FCIP use consistently decreased between FY2009 and FY2014, with the largest decreases occurring between FY2010 and FY2011--from 3,875 to 1,104 external civilian acquisition hires. These decreases were likely in response to the November 2010 ruling that the FCIP violated certain hiring laws and the December 2010 announcement that the program would be terminated on March 1, 2011. DHA s: Although among the least-used identified flexibilities, use of DHAs generally increased between FY2008 and FY2014. The largest increase in DHA use occurred between FY2013 and FY2014, from 233 to 406 external civilian acquisition hires. These increases may reflect a rising number of DHAs available for the civilian defense acquisition workforce. For example, Congress authorized two new DHAs for DOD Science and Technology Reinvention Laboratories (STRLs) in 2013 that are applicable to certain scientific and engineering acquisition positions. While the previous section discussed the use of flexibilities over time to fill civilian defense acquisition positions, this section discusses time to hire under the flexibilities. Table 3 presents data from DOD on average time to hire between FY2008 and FY2014 for five of the six hiring flexibilities described above--the flexibilities that are still currently available. Time to hire is presented for the years that flexibilities were available during the six-year period. DOD defines time to hire as the number of days from the date of the Request for Personnel Action (SF-52) to the appointment date. As shown in Table 3 , there are no discernible time to hire trends across all five flexibilities--time to hire fluctuates within and between flexibilities from year to year. However, some flexibility-specific trends exist in relation to OPM's 80-day hiring model. Specifically: Delegated examining authority--the only flexibility in Table 3 that provides no hiring exemptions and can be used as a baseline for standard competitive hiring--did not meet the 80-day hiring timeline in any year between FY2008 and FY2014. The EHA met the 80-day timeline in FY2009 (65 days). Average hiring speed under the EHA then slowed between FY2009-FY2013. The number of civilian external hires made under the EHA also declined each year between FY2009 and FY2013. The Pathways Internship program consistently met the 80-day hiring timeline between FY2012 - FY2014. In contrast, the Pathways Recent Graduates program consistently missed the 80-day timeline between FY2013-FY2014. As mentioned previously, DOD began implementing these programs in 2012, but only made hires under the Internship program in FY2012. DHAs did not meet the 80-day timeline, but was the only flexibility to be within five days of the timeline for three consecutive years--FY2009 to FY2011. Several factors may contribute to fluctuations in time to hire within and between the flexibilities listed in Table 3 . Some of these factors are discussed in the sections below. The presence of hiring exemptions may contribute to faster hiring. For instance, DOD data in Table 3 show that hiring under DHAs and EHA was faster than delegated examining authority for certain fiscal years. Certain Title 5 hiring requirements--such as competitive rating and ranking and veterans' preference--do not apply under the EHA and DHAs, while they do under delegated examining. According to a 2001 MSPB report, agency supervisors estimated that rating and ranking took an average of 21 days to complete under merit promotion--the second most time consuming hiring procedure identified in the report. The type of hiring exemptions may also affect time to hire. For example, hiring was faster under the Pathways Internship program compared to the EHA and DHA between FY2012 and FY2014. The Pathways Internship program does not waive veterans' preference or competitive rating and ranking like the EHA and DHAs. However, Pathways Internship allows for simplified job announcements that do not have to be posted on USAJOBS.gov and the use of agency-developed, rather than OPM-developed, qualification standards. These exemptions may have contributed to faster hiring under the Pathways Internship program. As mentioned previously, the two Pathways programs were first implemented in FY2012, which may affect their time to hire. Some hiring flexibilities are not designed to accelerate hiring. For example, delegated examining authority is designed to ensure that all candidates are given a fair and equal chance to obtain a position, specifically by having them compete with one another based on their knowledge, skills, and abilities. These flexibilities, however, may still accelerate the hiring process. According to a 1999 MSPB report, agencies believed that delegated examining resulted in faster and more effective hiring compared to OPM's centralized hiring system. Time to hire for individual flexibilities can vary by DOD component based on their interpretation of the flexibilities' governing laws. The laws provide broad discretion for implementation procedures and application of hiring exemptions. For example, DOD officials stated that the Departments of the Navy and Air Force have a broad interpretation of laws governing the DHA and EHA, while the Department of the Army "takes a very risk adverse [sic] approach." This might partially explain component-level time to hire differences for the two flexibilities ( Figure 3 ). More broadly, DOD components may have different internal hiring procedures that affect time to hire. While the components must abide by the applicable Title 5 hiring requirements, they have wide discretion to develop unique internal hiring policies and procedures within those requirements. For example, some components may hold a series of interviews for each best qualified candidate, whereas others may only hold one interview per candidate. In addition, components may have different approval and vetting processes for selecting final candidates. As Congress continues to consider reforms to the defense acquisition system, the following policy questions regarding hiring flexibilities for the civilian defense acquisition workforce may be of interest: Are flexibilities improving the civilian defense acquisition workforce? Does DOD have the appropriate number and type of flexibilities? What factors may impact effective use of available flexibilities to improve the civilian defense acquisition workforce? A fundamental question is whether available hiring flexibilities are improving the acquisition workforce, or effectively recruiting high-quality acquisition professionals with the right skills to the workforce and placing them in appropriate positions in a timely manner. Accurate and comprehensive data on the use of flexibilities is an integral first step in determining their effectiveness. Such data could identify, among other things, which flexibilities are used most frequently and the specific features that are most useful in recruiting high-quality acquisition personnel. As mentioned previously, however, the flexibility usage data provided by DOD is limited--it only reflects a subset of civilian acquisition hires (external hires) and may contain some counting discrepancies. These limitations might be partially attributable to the lack of hiring codes for individual flexibilities. According to a 2016 GAO report, OPM's hiring codes do not always link to individual hiring flexibilities and sometimes "represent an unknown number" of flexibilities. Some analysts may argue that the current number and structure of flexibilities is sufficient, based on several arguments: DOD exceeded its acquisition workforce growth goal and should focus on retention of acquisition talent through other tools. Flexibilities have been expanded over time to cover a broad range of acquisition positions. For example, the EHA has been made permanent and expanded to cover an increasing number of positions in the majority of acquisition career fields. Some flexibilities are not used effectively, and if used more effectively, would preclude the need for more flexibilities. DOD officials have acknowledged that two flexibilities currently available to fill certain acquisition positions--the Intergovernmental Personnel Act (IPA) and Highly Qualified Expert (HQE) authority--are underutilized. More broadly, a 2016 GAO report found that a "relatively small number" of hiring flexibilities (20) accounted for 91% of new hires government-wide in FY2014. In contrast, other analysts may argue that continued recruitment problems indicate the need for expanded or additional flexibilities, such as reported staffing shortfalls in six acquisition career fields, three of which are considered as critical to reshaping the acquisition workforce and whose shortfalls were partly driven by difficulty in hiring qualified personnel--contracting, engineering, and business; and reported difficulty recruiting acquisition talent from certain populations in the labor market, such as students and recent graduates. For example, although the Pathways programs allow for targeted recruitment of students and recent graduates, DOD acquisition officials asserted that the lack of a direct hire authority for those populations creates hiring challenges at campus recruiting events. Section 1106 of the NDAA for FY2017 ( S. 2943 ), as passed by the Senate, would create a DHA for post-secondary students and recent college graduates. The provision was not included in the subsequently House-passed version of S. 2943 . Several factors may impact the use of flexibilities for the defense acquisition workforce, and by extension, their effectiveness in improving the workforce. These factors include, but are not limited to, the following: Flexibility structure: As mentioned previously, 35 of 38 identified flexibilities are applicable to, but not explicitly targeted at, defense acquisition positions. In addition, some of these flexibilities have arguably narrow eligibility criteria, which may affect their use for acquisition positions. For example, DHAs for scientific and engineering positions at DOD STRLs include degree requirements and usage caps. The NDAA for FY2016 authorized acquisition-specific DHAs nearly identical to those for STRLs. Budgetary constraints: Flexibility use may be affected by cost-cutting initiatives--such as workforce reductions and hiring freezes--instituted by DOD in response to congressional mandates to reduce the size and cost of its civilian workforce and discretionary spending limits in place through 2021 by the Budget Control Act of 2011. For example, in March 2011, the Secretary of Defense announced the elimination of 33 HQEs as part of a department-wide initiative to reduce overhead costs. Recruitment needs: Use of individual flexibilities may have fluctuated over time to meet DOD's evolving acquisition workforce needs and goals. For instance, as mentioned previously, increased use of the EHA in FY2010 may have occurred to help reach the acquisition workforce growth goal established in FY2009. Establishment of new flexibilities: Some hiring flexibilities may be used less or no longer needed due to the establishment of new flexibilities. For example, DOD officials reported that some flexibilities available under the Civilian Defense Acquisition Personnel Demonstration Project (AcqDemo)--such as modified rating and ranking and scholastic achievement appointment --have been largely superseded by the EHA and Pathways programs. Some Interviewees for a 2011 RAND report also asserted that some of AcqDemo's flexibilities have been superseded by the EHA. Limited knowledge of flexibilities: Given the amount and complex structure of flexibilities, some DOD staff might be unfamiliar with (1) the full range of flexibilities that are available for the defense acquisition workforce, (2) the positions they cover, or (3) how to implement their individual requirements. For example, DOD officials noted that hiring managers have the "impression" that using the HQE authority is too difficult and recommended identifying strategies to address this "misconception." Unclear/inconsistent implementation guidance: Unclear or inconsistent implementing guidance on flexibilities--at the department or component-level--may lead to improper or inefficient use. Some DOD acquisition officials reported difficulty using certain flexibilities due to unclear guidance on the application of veterans' preference. For example, some DOD components appear to apply veterans' preference under the EHA, though the flexibility appears to waive it. This may stem from confusion over applicable department-level EHA guidance, which directed components to "make offers to qualified candidates with veterans' preference whenever practicable " (italics added). Balancing hiring speed and equity: As recommended by OPM and MSPB, DOD may be balancing the use of hiring flexibilities with traditional competitive hiring to achieve efficient, high-quality hiring. During a congressional hearing, one DOD official noted the efficiency of the EHA, but also acknowledged the importance of traditional competitive hiring to ensure fair and equal consideration of all qualified candidates. The oversight options presented in this section may help Congress gauge whether the current number and type of hiring flexibilities are appropriate and are improving the civilian acquisition workforce. Doing so may enable Congress to consider (1) expanding or authorizing new flexibilities, (2) consolidating or removing flexibilities, (3) otherwise restructuring flexibilities, and/or (4) using other tools to achieve workforce reforms. As stated above, comprehensive and accurate data on the use of flexibilities is integral to determining their effectiveness in improving the civilian acquisition workforce. However, such data is not publicly available and may be difficult to produce. As such, Congress might consider directing DOD to report, to the extent possible, the total number of all civilian acquisition hires--internal and external--made under all available hiring flexibilities. If such data cannot be reported, DOD could be further directed to identify barriers to providing such data, including any issues with assigning hiring codes to individual flexibilities. develop an internal system to identify and track the use of all individual hiring flexibilities for civilian acquisition positions. The system could take many forms, such as an internal coding structure that is cross-walked with OPM's existing hiring codes. In addition to gathering usage data, Congress might also consider requiring DOD to report on four additional metrics to help determine the effectiveness of flexibilities in improving the acquisition workforce. The metrics could serve as proxy measures for flexibilities' recruitment power and the quality of acquisition personnel hired under flexibilities. Four examples of additional metrics are discussed below. This measure might help determine whether flexibilities accelerate the hiring process from the view of the candidate rather than the agency. Specifically, measuring the days from closing a vacancy announcement to a conditional offer would isolate the impact of a flexibility on hiring procedures that directly affect a candidate's waiting time in the hiring process (such as rating and ranking, interviews, and selection). DOD currently measures time to hire from the perspective of the agency--from the request for personnel action to the candidate's appointment date --thus capturing days dedicated to procedures that do not affect a candidate's waiting time (such as reviewing a position description and conducting a job analysis). As such, it is difficult to determine how effective flexibilities are in expediting job offers from the candidate's view. Formally tracking the number of first choice candidates who accept a job offer for an acquisition position may help determine whether and which flexibilities minimize the loss of top talent to other entities. For example, suppose that 20% of first choice candidates decline job offers for contracting positions filled under the EHA, compared to 50% under traditional competitive hiring. This, in tandem with the aforementioned time to hire data, might indicate that the EHA's hiring exemptions affected candidates' decisions to accept job offers. In contrast, similar or lower acceptance rates under the EHA might indicate little to no impact of the flexibility on recruiting first choice candidates. DOD components are generally not required, statutorily or by internal guidance, to routinely report on job acceptances or declinations under flexibilities. Pursuant to the Defense Acquisition Workforce Improvement Act (DAWIA), DOD established certifications for defense acquisition workforce positions that include education, training, and experience requirements. Acquisition personnel must earn the DAWIA certifications associated with their respective positions within two years of their appointment. The following metrics related to DAWIA certifications might shed light on which flexibilities are most effective in recruiting high-quality acquisition personnel: the number of employees hired under flexibilities who are eligible to earn the appropriate DAWIA certification at the time of appointment, the number of employees hired under flexibilities who earn the appropriate DAWIA certification within the required 24-month timeframe, and the amount of time taken to earn the DAWIA certification. Tracking retention rates and career progression rates under flexibilities might help determine whether flexibilities attract acquisition professionals who stay longer and gain position-specific expertise faster relative to professionals recruited through standard competitive hiring. Consistent with GAO's recommendations on hiring authorities, Congress might consider directing the DOD inspector general or a special task force--such as the Advisory Panel on Streamlining and Codifying Acquisition Regulations --to conduct a study on the overall effectiveness of flexibilities in improving the civilian acquisition workforce. Results from the study could help determine whether flexibilities should be expanded or created, consolidated or removed, or otherwise restructured. The study could, among other things, evaluate the use of all available flexibilities to fill civilian acquisition positions (as described above), including the extent to which flexibilities are targeted at critical or understaffed acquisition career fields. As mentioned previously, a 2015 GAO report found that six of 13 acquisition career fields fell below their planned growth levels, three of which are deemed as critical to reshaping the acquisition workforce--contracting, business, and engineering. implement the proxy measures described above for determining flexibilities' recruitment power and quality of acquisition personnel hired under flexibilities; identify the factors that affect the effective use of flexibilities for the workforce, including those previously described; and determine whether personnel hired under flexibilities have improved defense acquisition outcomes, such as delivering acquisition programs with the desired capabilities within the projected costs and timeline. Congress could direct DOD to undertake specific activities, such as the ones listed below, to clarify and align department- and component-level implementing guidance for hiring flexibilities. Such clarification might improve their use and effectiveness in improving the workforce: Mandatory training: DOD staff for the Office of the Undersecretary for Personnel and Readiness (USD(P&R)), in coordination with USD(AT&L) staff, could provide training to DOD component and sub-component human resources staff on proper interpretation of department-level implementing guidance for flexibilities. Training could occur whenever revised guidance is issued, or on a more frequent cycle. Periodic reviews: USD(P&R) staff, in coordination with USD(AT&L) staff, could periodically review component and sub-component level implementing guidance to ensure alignment with department-level guidance. As part of this requirement, DOD components and sub-components could be directed to notify P&R staff when revised guidance is issued and submit a copy of the guidance. Technical assistance: Prior to issuing final implementing guidance, DOD components and sub-components could involve USD(P&R) and USD(AT&L) staff, in an advisory capacity, during the drafting phase to help mitigate any potential discrepancies with department-level guidance. DOD has taken steps to encourage better use of hiring flexibilities department-wide. The USD(AT&L) and USD(P&R) offices began holding joint summits on acquisition workforce recruitment and retention issues in 2015, which have resulted in several recommendations to use flexibilities more effectively. As a result of one summit, DOD updated its department-level EHA guidance in December 2015, which aimed to clarify the application of certain hiring exemptions, such as veterans' preference and competitive rating and ranking. While this report has focused on enhancing recruitment through hiring flexibilities for the civilian defense acquisition workforce, Congress may also want to consider other workforce improvement efforts, such as retaining acquisition personnel that have been hired. As mentioned previously, a 2016 GAO report found that high attrition rates contributed to shortfalls in certain acquisition career fields. While hiring flexibilities aim to enhance the recruitment of qualified individuals, they are not necessarily structured to retain them. The subsections below describe two efforts undertaken by Congress and DOD in recent years to increase the retention of acquisition personnel: pay flexibilities and AcqDemo. Pay flexibilities aim to increase retention by providing additional or higher compensation that is not typically available to federal employees. DOD officials asserted that the department is exploring ways to better use OPM-issued retention incentives, such as targeting incentives to acquisition career fields experiencing high attrition. DOD officials further noted that use of retention incentives is restricted to employees who are likely to leave federal service and "needs to" be expanded to those likely to leave the current organization. Congress has also authorized pay flexibilities for the defense acquisition workforce. For instance, the FY2016 NDAA authorized DOD to pay certain acquisition personnel up to 150% above the basic pay rate for level I of the Executive Schedule, which exceeds GS-15, step 10 pay rates. AcqDemo is an alternative personnel system that operates outside the GS and waives certain personnel laws and regulations. AcqDemo features, among other things, consolidated pay bands and a contribution-based performance management system. These structures are intended to provide a stronger link between pay and performance, particularly by basing pay increases on contribution to the agency. A 2014 RAND report found higher retention rates among AcqDemo employees compared to those covered by the GS and other alternative personnel systems. Congress and DOD have taken steps to expand the scope and use of AcqDemo, including (1) expanding the participation cap to 120,000 employees, (2) extending operation to December 31, 2020, and (3) streamlining the application process to join the project. Section 1104 of the NDAA for FY2017 ( S. 2943 ), as passed by the Senate, would establish a new personnel system for defense acquisition personnel and support staff. According to the Senate Committee on Armed Services report accompanying S. 2943 , the provision would, among other things, change AcqDemo from a temporary, OPM/DOD-controlled system to a permanent, DOD-controlled system. The provision was not included in the subsequently House-passed version of S. 2943 . Appendix A. Hiring Flexibilities Available for the Civilian Defense Acquisition Workforce

Policymakers and defense acquisition experts have asserted that improved recruitment for the defense acquisition workforce is a necessary component for comprehensive acquisition reform. To help rebuild the workforce and enhance recruitment, DOD has used several hiring flexibilities authorized by Congress, the President, and OPM in recent years. Hiring flexibilities are a suite of tools that are intended to simplify, and sometimes accelerate, the hiring process. The impact of hiring flexibilities on recruitment and workforce quality, however, remains unclear. Congress may consider three high-level questions regarding hiring flexibilities for the workforce: Are flexibilities effectively improving the workforce? Are the current number and type of flexibilities appropriate? What factors may impact effective use of flexibilities to improve the workforce? Congress could consider several oversight options to help gauge and improve the effectiveness of flexibilities in improving the civilian defense acquisition workforce. Such options might help Congress determine whether flexibilities should be expanded or newly created, consolidated or removed, or otherwise restructured. Congress could direct DOD to provide data on the use of all available flexibilities to fill the full range of civilian defense acquisition positions, including any barriers to producing such data; establish proxy measures for effectiveness related to employee quality (such as employee timeliness in earning required certifications and retention and career progression rates) and recruitment (such as time to hire from the perspective of the candidate and job acceptance rates); conduct a study that evaluates the effectiveness of flexibilities; and improve the quality, clarity, and use of implementing guidance for flexibilities. At least 38 hiring flexibilities are currently available for the civilian defense acquisition workforce. According to DOD, the following six flexibilities were used most frequently to fill external civilian acquisition positions between FY2008 and FY2014: 1. Direct-hire authority (DHA) 2. Expedited hiring authority (EHA) for certain civilian acquisition positions 3. Pathways Recent Graduates program 4. Pathways Internship program 5. Federal Career Intern Program 6. Delegated examining authority The six flexibilities accounted for roughly 66% of total external civilian acquisition hires between FY2008 and FY2014 (i.e., hires from outside the government). Some of the flexibilities were available throughout the six-year period, while others were discontinued or established during that period. Potential factors affecting the use of flexibilities include their structure, clarity of implementing guidance, establishment of new flexibilities, staff knowledge of appropriate use, budgetary constraints, and efforts to balance hiring speed with equity.

The 111 th Congress enacted the Patient Protection and Affordable Care Act ( P.L. 111-148 , PPACA) and the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ). On January 19, 2011, the House passed H.R. 2 , which would repeal PPACA. Nonetheless, it is possible that the 112 th Congress will examine other legislation to amend parts of PPACA. During any debate to amend PPACA, one issue that may arise is the eligibility of aliens (noncitizens) for some of the key provisions of the act. This report discusses alien eligibility for the provisions in PPACA that have restrictions based on immigration status: participation in high-risk pools, the requirement to maintain health insurance, the ability to purchase insurance through an exchange, and eligibility for premium credits and cost-sharing subsidies. The report concludes with an analysis of data from the Current Population Survey (CPS) that illuminate some of the possible effects of PPACA on the health insurance coverage of the noncitizen population. Table 1 presents the definitions of some of the terms related to the noncitizen population and several of the different immigration statuses. In addition, because alien eligibility under PPACA is governed by the term "aliens who are lawfully present," the table outlines which aliens are considered to be lawfully present. Using the March 2010 Current Population Survey (CPS), the Congressional Research Service (CRS) estimated that as of March 2010 there were approximately 37.6 million foreign-born persons in the United States, approximately 12% of the U.S. population. The foreign-born population was comprised of approximately 16 million naturalized U.S. citizens and 21.6 million noncitizens. The literature often cites estimates published by the Pew Hispanic Center. Researchers at the Pew Hispanic Center used the same data but adjusted the survey weights to account for perceived noncitizen undercounts in the survey. They also assigned a specific immigration status (e.g., legal permanent resident, unauthorized alien) to each foreign-born survey respondent and used a methodology to estimate the illegally present population. The Pew Hispanic Center estimated that in March 2010 there were approximately 40.2 million foreign-born persons in the United States, and of the foreign-born population, approximately 14.9 million (37%) were naturalized U.S. citizens, 12.4 million (31%) were legal permanent residents (LPRs), 1.7 million (4%) were temporarily in the United States (i.e., nonimmigrants), and 11.2 million (28%) were estimated to be unauthorized (illegal) aliens. The following section discusses alien eligibility for the following provisions under PPACA: high-risk pools, the heath insurance mandate, the exchanges, and premium credits and cost-sharing subsidies. In general, aliens are separated into two groups for eligibility purposes under PPACA: aliens who are "lawfully present in the United States" are eligible for the provisions discussed below while aliens who are not "lawfully present in the United States" (i.e., unauthorized/illegal aliens) are ineligible. PPACA (SS 1101) required the Secretary of the Department of Health and Human Services (Secretary) to establish a temporary high-risk pool program to provide health insurance coverage for eligible individuals during the period beginning on the date the program was established and ending on January 1, 2014, the date when the exchanges will be operational. This program began offering coverage on August 1, 2010. Individuals are eligible for the high-risk pool if they have not been covered under creditable coverage during the six-month period prior to application for coverage in the high-risk pool and have a pre-existing condition as determined following guidance issued by the Secretary. To participate in the temporary high-risk pool program, a person must be a citizen or national of the United States or be lawfully present in the United States. Thus, unauthorized aliens are ineligible for participation in the high-risk pool program because they are not lawfully present in the United States. PPACA includes an individual mandate as of 2014 to maintain health insurance and has tax penalties for noncompliance. In other words, individuals--with some exceptions--who do not maintain acceptable health insurance coverage for themselves and their dependents would be required to pay a penalty. All aliens who are lawfully present are covered by the requirement to maintain health insurance. Unauthorized (illegal) aliens are expressly exempted from this mandate. In addition, the act specifies that a person is only considered lawfully present if the person is, and is reasonably expected to be for the entire period of enrollment, a U.S. citizen or national or an alien who is lawfully present in the United States. Until the exchanges are operational, it is unknown what the shortest period of enrollment will be and whether certain nonimmigrants who are in the United States for limited periods of time, in many cases under six months, would be covered by the mandate (e.g., tourists (B-visas), cultural exchange (J-visas), performers and athletes (O- and P-visas)). In addition, no penalty will be imposed on those without coverage for less than three months (with only one period of three months allowed in a year), so for aliens in the United States for less than three months (e.g., most tourists) there would be no consequences to not having health insurance. Because the penalties for noncompliance with the individual mandate are tax-based, the following section discusses the rules for taxation of noncitizens. In particular, understanding these rules might be important because there has been debate about the extent to which the Internal Revenue Service, in light of the limits PPACA places on enforcement, will be able to collect penalties from individuals who do not have other tax liability. To the extent that this might be a concern, it would seem to arise regardless of the individual's citizenship status. All foreign nationals working in the United States are subject to U.S. tax laws. For federal tax purposes, foreign nationals working in the United States are classified as resident or nonresident aliens. These terms are in the Internal Revenue Code (I.R.C.) but do not exist in the Immigration and Nationality Act (INA). As a result, the specific immigration statuses under the INA do not align directly with the terms resident and nonresident alien. In general, an individual is a nonresident alien unless he or she meets the qualifications under one of the following residency tests: Green card test: the individual is a lawful permanent resident of the United States at any time during the current year, or Substantial presence test: the individual is present in the United States for at least 31 days during the current year and at least 183 days during the current year and previous two years. For computing the 183 days, a formula is used that counts all the qualifying days in the current year, one-third of the qualifying days in the immediately preceding year, and one-sixth of the qualifying days in the second preceding year. While resident aliens are subject to the same tax treatment as U.S. citizens, nonresident aliens are subject to different treatment, such as generally being taxed only on income from U.S. sources. Nonetheless, their income that is "effectively connected" with a U.S. trade or business is generally taxed by the same rules and at the same rates as the income of U.S. citizens and resident aliens. There are several situations in which an individual may be classified as a nonresident alien even though he or she meets the substantial presence test. For example, an individual will generally be treated as a nonresident alien if he or she has a closer connection to a foreign country than to the United States, maintains a tax home in the foreign country, and is in the United States for fewer than 183 days during the year. Another example is that an individual in the United States under an F-, J-, M-, or Q-visa may be treated as a nonresident alien if he or she has substantially complied with visa requirements. Other individuals who may be treated as nonresident aliens even if they would otherwise meet the substantial presence test include employees of foreign governments and international organizations, regular commuters from Canada or Mexico, aliens who are unable to the leave the United States because of a medical condition, foreign vessel crew members, and athletes participating in charitable sporting events. Additionally, depending on where the individual is from, there may be an income tax treaty between that country and the United States with provisions for determining residency status. Under PPACA, "American Health Benefit Exchanges" will begin operation by 2014. An exchange cannot be an insurer, but it will provide eligible individuals and small businesses with access to insurers' plans in a comparable way. In addition, based on income certain individuals may qualify for a tax credit toward their premium costs and a subsidy for their cost-sharing; the credits and subsidies will be available only through an exchange beginning in 2014. The law allows all lawfully present noncitizens to purchase insurance through an exchange and bars unauthorized aliens from obtaining insurance through an exchange. Based on their income, certain individuals may qualify for a tax credit toward their premium costs and a subsidy for their cost-sharing; the credits and subsidies will be available only through an exchange beginning in 2014. All lawfully present aliens who meet specified criteria are eligible for the premium tax credit and cost-sharing subsidies. Unauthorized (illegal) aliens are ineligible for the tax credit and subsidies. In addition, the law provides specific rules for calculating the credits and subsidies for mixed-status families. Some have raised concerns that PPACA created an inequality between U.S. citizens and some noncitizens with incomes at or below 133% of the federal poverty level (FPL) with respect to eligibility to participate in an exchange and receive premium credits or cost-sharing subsidies. In general, all U.S. citizens and Medicaid-eligible noncitizens with incomes at or below 133% of the FPL will be eligible for Medicaid, while similarly situated Medicaid-ineligible lawfully present noncitizens will be eligible to participate in an exchange and possibly to receive the credits or subsidies. The following section explores the reasons for these differences. Under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), as amended, noncitizens' eligibility for Medicaid largely depends on their immigration status , whether they arrived in the United States (or were on a program's rolls) before August 22, 1996 , and how long they have lived and worked in the United States. Notably, to be eligible for Medicaid aliens must also meet the program's financial and categorical eligibility requirements. Most legal permanent residents (LPRs) entering the United States after August 22, 1996, are barred from Medicaid for five years, after which time they are eligible at the state's option. However, states may also choose to use state and federal Medicaid funds to cover pregnant women and children who are "lawfully residing" in the United States. In addition, states have the option to use state-only funds to provide medical coverage for other LPRs within five years of their arrival in the United States. Refugees and asylees are eligible for Medicaid for seven years after arrival. After the seven years, they may be eligible for Medicaid at the state's option. LPRs with a substantial (10-year) U.S. work history or a military connection are eligible for Medicaid without regard to the five-year bar. LPRs receiving Supplemental Security Income (SSI) on or after August 22, 1996, are eligible for Medicaid because Medicaid coverage is required for all SSI recipients. Nonimmigrants and unauthorized aliens are barred from Medicaid. However, states may choose to cover these individuals using state-only funds. Beginning in 2014, or sooner at state option, PPACA requires states to expand Medicaid to certain individuals who are under age 65 with income up to 133% of the FPL. Thus, in 2014 all non-elderly U.S. citizens and certain noncitizens with income up to 133% FPL will be eligible for Medicaid. This reform not only expands eligibility to a group that is not currently eligible for Medicaid (low-income childless adults), but it also raises Medicaid's mandatory income eligibility level for certain existing groups to 133% of the FPL and is considered the most significant expansion of Medicaid eligibility in many years. Nonetheless, PPACA did not amend the current immigration status-based restrictions (i.e., alien eligibility requirements) on receiving Medicaid (discussed above). As discussed above, beginning January 1, 2014, qualifying individuals will receive advanceable, refundable tax credits toward the purchase of an exchange plan. To be eligible for the premium credits, a taxpayer must have a household income that is above 100% of the FPL but does not exceed 400% of the FPL. In addition, lawfully present noncitizens who have household incomes that do not exceed 100% of the FPL and who are ineligible for Medicaid due to their alien status will be deemed to have income at 100% of the FPL and will be eligible for premium credits. Notably, if a person who applies for premium credits in an exchange is determined to be eligible for Medicaid, the exchange will have that person enrolled in Medicaid. Under PPACA, lawfully present noncitizens (including some LPRs within five years of entry) who are ineligible for Medicaid due to their alien status are eligible to participate in an exchange and for premium credits. Similarly situated U.S. citizens and lawfully present noncitizens who are eligible for Medicaid would be enrolled in Medicaid and would not be eligible to participate in an exchange, and, as a result, they would be ineligible for the premium credits. To enforce the alien eligibility requirements under the act, SS 1411 of PPACA requires the Secretary of Health and Human Services (HHS) to establish a program to determine whether an individual who is to be covered through an exchange plan, or who is claiming a premium tax credit or reduced cost-sharing, is a citizen or national of the United States or an alien lawfully present in the United States. This requirement is similar to and compatible with the Department of Homeland Security (DHS) Systematic Alien Verification for Entitlements (SAVE) system established by SS 1137(d) of the Social Security Act. The SAVE system is also the basis for the E-Verify electronic employment eligibility verification system, as discussed below. The verification system created under PPACA will use three pieces of personal data to verify citizenship and immigration status. The Social Security Administration (SSA) will verify the name, social security number, and date of birth of the individual. For those attesting to be U.S. citizens, the attestation will be considered substantiated if it is consistent with SSA data. For individuals who do not claim to be U.S. citizens but attest to be lawfully present in the United States, the attestation will be considered substantiated if it is consistent with DHS data. PPACA requires such verification of all individuals seeking exchange coverage regardless of whether they would be federally subsidized or would pay premiums entirely on their own. Some argue that because the proposed verification system does not include a biometric identifier, it could lead to identity theft; however, requiring applicants to provide documents with biometric identifiers could lead to the inappropriate denial of credits and subsidies to eligible persons. The system only verifies that the name, SSN, and date of birth match the SSA's records and that immigration documents match DHS records; as a result, a person (e.g., a U.S. citizen, an unauthorized alien) who is using the documents of an eligible person would not necessarily be denied access to an exchange or premium and cost-sharing subsidies. Nonetheless, while all lawfully present noncitizens have documents with biometric identifiers, U.S. citizens do not necessarily have such documents, and, as a result, requiring such biometric identifiers may make it more difficult for some eligible U.S. citizens to gain access to an exchange and the premium credits and cost-sharing subsidies. In a recent evaluation of the E-Verify system for employment, a system that is often compared to the new system under PPACA because it electronically verifies both U.S. citizens and noncitizens, researchers estimate that 6.2% of all queries relate to unauthorized aliens, and that in about half (54%) of these queries the unauthorized aliens receive an inaccurate finding of being work-authorized primarily due to identity theft. Thus, the researchers estimate that about 3.3% of all queries receive a false positive verification. In other words, it is estimated that of the unauthorized aliens that are run through the system, approximately 54% who are using false documents are not identified by the system. In an effort to better detect and deter identity fraud, DHS (which administers E-Verify) is taking steps that include adding more photographs to the system and developing methods to prevent stolen identities from being used in the system. As previously discussed, PPACA expressly exempts unauthorized (illegal) aliens from the mandate to have health coverage and bars them from a health insurance exchange. Unauthorized aliens are not eligible for the federal premium credits or cost-sharing subsidies. Unauthorized aliens are also barred from participating in the temporary high-risk pools. The following section uses analysis from the Current Population Survey (CPS) to provide an overview of the health insurance coverage of U.S. citizens and noncitizens, and to gain some insight into the possible effects of the changes in PPACA to Medicaid eligibility on the health insurance coverage of noncitizens. The data used in this study are from the March 2010 supplement of the CPS, the main source of labor force data for the United States. The CPS is a household survey sample of the non-institutionalized civilian population conducted by the Census Bureau for the Bureau of Labor Statistics (BLS). The data are weighted to reflect the population. All differences discussed in the text of this report are statistically significant at the .05 level unless otherwise specified. The comparisons in this report are based on three groups residing in the United States: (1) native-born U.S. citizens, (2) naturalized U.S. citizens, and (3) noncitizens. Although one of the issues surrounding health insurance coverage for noncitizens is the number of unauthorized aliens living in the United States, it is not possible using CPS data to differentiate between aliens who are in the United States legally or illegally, nor is it possible to differentiate between different categories of noncitizens (e.g., legal permanent residents, temporary workers, students, refugees, asylees). The CPS asks whether the respondent has had various types of coverage during the previous year. Thus, respondents may have more than one type of health insurance during the year. Theoretically, an uninsured respondent is someone who lacked any type of health insurance during the past year and the term does not capture people who were uninsured for part of the year. However, research has shown that the CPS estimates appear to reflect the number of people uninsured at a point in time (that is, when the survey was taken) rather than the number uninsured for the entire previous year. The types of health insurance used in this report are private insurance (both employer sponsored and individually purchased), Medicare, Medicaid, and military or veterans coverage. If the respondent reported not having any of these types of coverage, they are considered uninsured. As shown in Figure 1 , noncitizens are more than three times as likely as native-born U.S. citizens, and more than two times as likely as naturalized U.S. citizens, to be uninsured: 46% of noncitizens lacked any type of health insurance, compared with 14.1% of the native-born population and 19% of the naturalized population. Similarly, noncitizens have the lowest rate of private insurance coverage (37.1%), while native-born citizens have a slightly higher rate of private health insurance than naturalized citizens (66.3% and 60.5%, respectively). The noncitizen population also has the lowest rate of Medicare coverage, most likely due to the relatively young age of the population and the decreased likelihood that noncitizens would meet the eligibility requirements for Medicare. Naturalized citizens have the highest rate of Medicare coverage, which may be attributable to the fact that the naturalized population is, on average, older than both the native-born and the noncitizen populations. Noncitizens are slightly less likely to have Medicaid coverage (15.4%) than native-born citizens (15.9%), while naturalized citizens are the least likely to have Medicaid coverage (12.4%). Lastly, due to the fact that, in general, noncitizens must be legal permanent residents (LPRs) to join the Armed Forces, the noncitizen population has much lower rates of military/veterans coverage (0.8%) than the naturalized (3.2%) and native-born (4.4%) populations. Overall, noncitizens tend to be poorer than native-born and naturalized citizens. Thirty-five percent of noncitizens have family incomes that are less than 133% of poverty, compared with 19.2% of native-born citizens and 16.9% of naturalized citizens (see Table 2 ). As shown in Table 3 , expectedly, as family income increases, people are more likely to have private health insurance. Nonetheless, for all levels noncitizens are less likely than citizens to have private insurance, but this difference is smallest for those whose family income is more than 400% of poverty. Only 12.9% of noncitizens with family incomes less than 133% of poverty have private insurance, while 24.5% of native-born citizens and 21.7% of naturalized citizens with similar family incomes have private insurance. For those with family incomes that are more than 400% of poverty, 76.6% of noncitizens, 88.4% of native-born citizens, and 82.8% of naturalized citizens have private insurance. As discussed above (see Figure 1 ), although noncitizens are only slightly less likely overall to have Medicaid coverage (12.6%) than native-born citizens (14.4%), and naturalized citizens are the least likely to have Medicaid coverage (11.4%), when examining those at or below 133% of poverty, noncitizens are much less likely than the native born to be covered by Medicaid. For those with family incomes at or below 133% of poverty, 25.2% of noncitizens are covered by Medicaid, compared with 33.6% of naturalized citizens and 45.7% of native-born citizens. The difference between Medicaid coverage for those with family incomes above 133% and not exceeding 400% of poverty is much smaller, with 12.6% of noncitizens and 13.6% of native-born citizens being covered by Medicaid. For all income levels, noncitizens are more likely to be uninsured than U.S. citizens. For example, as Table 3 illustrates, for those with incomes above 133% and not exceeding 400% of poverty, 46.8% of noncitizens are uninsured, compared to 15.6% of native-born citizens and 21.9% of naturalized citizens. It is likely that due to the changes made in PPACA to Medicaid eligibility, the rates of Medicaid coverage for the U.S. citizen and noncitizen populations with incomes at or below 133% of poverty will increase. However, due to the alien eligibility requirements for Medicaid, which were unchanged by PPACA, this increase in Medicaid coverage (and the resulting decrease in the number of the uninsured) may not be as strong for noncitizens as for U.S. citizens. Nonetheless, the ability of lawfully present noncitizens who are Medicaid-ineligible to purchase insurance through an exchange may be a factor in decreasing the uninsured rate for noncitizen populations with incomes at or below 133% of poverty.

The 111th Congress enacted the Patient Protection and Affordable Care Act (P.L. 111-148, PPACA), and amended it a week later by passing the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152). (PPACA refers to P.L. 111-148 as amended by P.L. 111-152.) On January 19, 2011, the House passed H.R. 2, which would repeal PPACA. It is possible that the 112th Congress will examine other legislation to amend parts of PPACA. One issue that may arise during any debate to amend provisions in PPACA is the eligibility of aliens (noncitizens) for some of the key provisions of the act. Aliens who are "lawfully present in the United States" are subject to the heath insurance mandate and are eligible, if otherwise qualified, to participate in the high-risk pools and the exchanges, and they are eligible for premium credits and cost-sharing subsidies. PPACA expressly exempts unauthorized (illegal) aliens from the mandate to have health coverage and bars them from a health insurance exchange. Unauthorized aliens are not eligible for the federal premium credits or cost-sharing subsidies. Unauthorized aliens are also barred from participating in the temporary high-risk pools. To enforce the alien eligibility requirements under PPACA, the act requires the Secretary of Health and Human Services to establish a program to determine whether an individual who is to be covered in the individual market by a qualified health plan offered through an exchange, or who is claiming a premium tax credit or reduced cost-sharing, is a citizen or national of the United States or an alien lawfully present in the United States. Some have raised concerns that PPACA created an inequality between U.S. citizens and some noncitizens with incomes at or below 133% of the federal poverty level (FPL) with respect to eligibility to participate in an exchange and receive premium credits or cost-sharing subsidies. In general, all U.S. citizens and Medicaid-eligible noncitizens with incomes at or below 133% of FPL will be eligible for Medicaid, while similarly situated Medicaid-ineligible lawfully present noncitizens will be eligible to participate in an exchange and possibly to receive the credits or subsidies. This report will be updated if warranted by legislative events.

RS20787 -- Army Transformation and Modernization: Overview and Issues for Congress Updated March 11, 2004 Modernization is not a new issue or objective for U.S. military forces, but it has taken on new urgency because of: the post-Cold War downsizing andprocurement reductions, the new global environment and unexpected requirements, and the promise of a "revolutionin military affairs" (RMA) suggested byrapid developments in computers, communications, and guidance systems. The last notable surge in modernizationculminated during the "Reagan build-up" ofthe 1980's. Weapons and doctrines developed and fielded in that era made fundamental contributions to UnitedStates successes in the Cold War, the Gulf War,and Kosovo. For the Army, such weapons included the M1 Abrams tank, M2 Bradley armored fighting vehicle,Apache attack helicopter, Blackhawk utilityhelicopter, and Patriot air defense system. During post-Cold War downsizing, the Army greatly decreased purchase of new equipment and largely deferred development of a next generation of weapons,with notable exceptions being R&D for a howitzer, the Crusader, and a reconnaissance helicopter, theComanche. (1) Much older equipment was retired. Modernization was approached through upgrading and inserting new technologies into previously acquired"legacy," systems. Information technology wasseen as the most immediate, promising aspect of RMA. It exploited Desert Storm successes such as pinpointtargeting and navigation, while addressingproblems such as friendly fire casualties. A major initiative was launched in the 1990's to create Army Force XXI,based on the "digitization" of thebattlefield, now dubbed "network-centric warfare." Modern computers and communications systems would connectall weapons systems and give U.S. soldiersand commanders advantages in situational awareness and speed of decisions. (2) One heavy, mechanized division at Fort Hood, TX was so equipped in 2001and was battle tested in Iraq in 2003. Other units were at least partially equipped and trained with this capabilitybefore commitment in Iraq. Even before Desert Storm, the "battlefield" was changing as the Army was called upon to respond to numerous, lengthy operations short of war rather thanoccasionally to defeat a large army. Near-term readiness became a problem as fewer troops were asked to covermore missions, and operation and maintenance(O&M) funds were diverted from fixing aging equipment and facilities to pay for unbudgeted deployments suchas Bosnia (funds eventually replaced in part byemergency supplemental appropriations). The problem of rapidly projecting heavy forces had been highlightedbeginning with the long buildup required for Desert Shield/Desert Storm in 1990-91. In 1999, it was suggested that an Army task force inserted intoAlbania for potential action in Kosovo was too heavyfor rapid air insertion and the unimproved roads and bridges found there. The Army determined that a newcapability was needed in addition to mobile, lightforces and heavy, lethal forces - a medium, lethal force. In October 1999, the Army announced its priority program to transform into a force that could better meet future requirements to be both rapidly deployable andlethal. The first step was near-term fielding of a new unit, first called the Interim Brigade Combat Team but nowcalled the Stryker Brigade Combat Team(SBCT), based on a wheeled armored vehicle much lighter than the standard M2 Bradley. For the long-term, theArmy is developing a Future Combat System(FCS) based on new technologies that would equip very mobile formations with lethality and survivability equalor greater than that of present heavy units. Until the FCS is fielded, the Army believes it must also continue to maintain and upgrade legacy weapons systems(e.g., M1, M2, etc.) and equipment in unitsthat can meet any potential foe across the spectrum of conflict. These Legacy, Interim, and Objective Forces wouldeventually meld into the transformedObjective Force of the future. In Summer of 2003, the new Army Chief of Staff emphasized that the Army was atwar and transforming. The Current Forcewould incorporate usable technology and other ideas being developed for the Future Force without waiting, movingtowards the Future Force while fighting theGlobal War on Terrorism. He also began a short term reorganization of the active Army from 33 to 48 combatbrigade modules using existing resources and atemporary increase of 30,000 in soldier end strength. (4) Stryker Force. The Army is fielding a new capability based on the SBCT. This unit is designed formaximum strategic and operational mobility in that its equipment can be airlifted inter-theater in all U.S. cargoaircraft, including the comparatively smallC-130 Hercules. All vehicles weigh less than 20 tons. The goal is that a SBCT could be completely moved to acombat zone within 96 hours. It is an infantrybrigade of about 3,500 soldiers with the armored mobility needed to fight on a mid-intensity battlefield. Particularstrengths are an included reconnaissance andintelligence battalion and "network-centric" command, control, and communications (C3) systems. The effort beganearly in 2000 at Fort Lewis, WA, wheretwo existing brigades were converted, using temporary, borrowed equipment. In November, 2000 the Army selected the Light Armored Vehicle III (LAV III), built by General Motors Defense and General Dynamics Land Systems, as its"interim armored vehicle" under a six year contract worth $4 billion. (5) Some 2,131 LAV III's, now called Strykers, will be procured. They willinclude twovehicle variants, an infantry carrier with eight additional configurations and a mobile gun system with a 105 mmcannon. The vehicle can negotiate flatsurfaces at 62 mph, convert to 8-wheel drive off-road, and self-recover with its winch if needed. As of early 2004,the first Stryker Brigade was conductingstability operations in a sector of Iraq. Plans also include procurement of the Joint Lightweight 155 mm Howitzerfor the Brigade's included field artillery --an Army-Marine program, with an estimated cost of about $1.1 billion, aiming for Army initial operating capability(IOC) at the end of 2004. Future Force. For the long-term, the Defense Advanced Research Projects Agency and the Army beganwork on some 25 critical technologies for incorporation into R&D of new systems to be selected as early as2006, with fielding to begin by 2008 and IOC by2010. (6) A key component is expected to be a FutureCombat System (FCS) that could, as one capability, assume the role currently held by the Abrams tank. Itis intended to be as transportable and mobile as the Stryker, with lethality and crew survivability equivalent to orgreater than that of today's tanks. The FCSmay, however, bear little or no resemblance to today's tanks and could feature advanced technologies such asrobotics and electric guns and facilitate newoperational doctrines. The FCS currently encompasses some 18 subsystems and the network to tie them together. Boeing Company and Science ApplicationsInternational Corp. were selected as the lead system integrator. As of September 2002, the Army had budgeted $20billion to develop FCS. FutureForce units will also incorporate ongoing developments in information technology. They should respond to allrequirements from stability operations tohigh-intensity conflict. Current Force. Until the Future Force exists, the Army must be prepared to fight with legacy equipment,whether on low or high-intensity battlegrounds. According to Army planners, programs to replace and/or upgradeolder equipment must continue if forces otherthan or additional to 6 new Stryker Brigades are to be ready for combat. The ongoing program to replace old truckswill continue. Older models of the Abramstank and the Bradley fighting vehicles will continue to be rebuilt and upgraded. The current force will have manyM1A2 SEP (for Systems EnhancementPackage) and M1A1D tanks and M2A3 and M2A2ODS with applique Bradley's. Inserting these vehicles into theforce will aid the whole Army in convertingto a digitized force. Although modernization of the current force is important, the Army sacrificed manypreviously desired programs to free funds fortransformation priorities. Examples are a dedicated Command and Control vehicle, the Grizzly Breacher engineervehicle, and the Wolverine assault bridgevehicle. The 107th and 108th Congresses gave strong support to Army modernization and transformation initiatives. At the same time, Congress showed caution bypressing a requirement to compare the wheeled LAV III with similar tracked vehicles already in inventory. TheArmy believes its evaluation demonstrated thatbuying Stryker was more desirable than converting the M113A3 APC. (7) Whether the 108th Congress will continue to support Armytransformation as a highpriority will depend on its evaluation of issues such as those discussed below. Desirability. All Services have felt pressures to "transform," or at least adapt to current circumstances andexperiences with the post-Cold War world. These include opportunities and challenges from a rush of technologicaladvances, unexpected numbers and typesof missions (particularly peacekeeping and urban warfare requirements), new threats from potential enemies withnuclear, chemical, or biological weapons, and,for the Army, criticism that it was not "nimble" enough during 1999 allied operations in Kosovo. The broadest long-term question is whether current transformation plans will yield the military forcecapabilities the United States requires 20 years from now. Should they include a power projection Army capable of fighting equally well across the full spectrum of groundcombat; or, should other services or entitiesassume some parts of that mission? Will Army plans over-stress DoD airlift assets, or would more reliance on fastsealift yield greater flexibility andeconomies? Internally, has the Army sought the right approach to transformation with its emphasis onmedium-weight formations? Does the Army's planstrike the right balance in allocating resources between modernizing the current legacy force and developing andfielding the Future Force? For the short term, it is projected that some amount of modernization for current forces is needed to prevent further aging and degradation. The average age ofthe M1 tank fleet is now 11.9 years and an estimated 11.7 years for support vehicles. (8) Many of these vehicles may not be able to remain in service beyond2030 without some form of service life extension. Deciding the proper allocation of resources is made morecomplex by the large numbers and diverse typesof vehicles and weapons systems in the Army, which makes it difficult to gather and present desirable data, that isboth comprehensive and aggregated, onequipment age, condition, and potential combat effectiveness. The Navy, in managing a fleet of about 315 ships,may have an easier job describing the level ofinvestment needed to maintain a fleet of a given size over time. (9) Congress may consider recommending that the Army attempt to develop some aggregateportrayal of its fleet capitalization status and implications of various funding strategies. Feasibility. The Army plan for transformation is considered aggressive. But, by using largely off-the-shelfmateriel, the "interim Stryker force is fairly low risk for meeting technology objectives. After an initial slip of 16months, a contractor's protest, and initialhesitation by the incoming Bush Administration, deliveries of Strykers are now supporting the fielding of 6 SBCTs,to be completed by May 2010. (10) Plans for the Future Force involve higher risk in both technology and time. It is possible that integration of all the specific FCS technologies into a leap-aheadsystem will experience some problems. The goal of fielding the first unit of this system of 18 systems by 2010 isvery ambitious. (11) Previoussystem-development efforts of this kind have often encountered technical problems, schedule problems, or both. The need for the Comanche helicopter, forexample, was identified in 1979 and it had not yet entered production when cancelled in 2004. The original targetdate proposed for FCS, 2023, may be morerealistic but it also raised concerns regarding duration of development. Congress will likely influence the priorityand speed with which the FCS becomesreality. Affordability. Some question the Army's ability to finance its transformation plan, particularly given aninability in recent years to finance many procurement programs at desired rates. Can the Army adequately financeall three elements of its plan at once, whilealso providing adequate funds for necessary non-transformation priorities such as readiness and pay and benefits? The life-cycle cost for equipping 6 brigadeswith LAV III's has been estimated by program officials at $9 billion through FY2032. (12) This will only be part of the total cost to transform and modernize theArmy; some have estimated that the Army requires a sustained increment of $10 billion annually beyond its averagepost-Cold War expenditures for R&D andprocurement. The Army is not alone in claiming a need for more investment funds. Other Services cite even highernumbers. (13) An issue that will confront Congress is whether to fund Army transformation and modernization efforts at levels proposed by the Bush Administration, orhigher or lower. If Congress ascribes a higher priority to Army transformation, will necessary funds be providedby adding to overall DoD appropriations,subtracting from DoD programs in other services, or reducing deployments? During the FY2003 budget cycle, DoD expressed its intent to cut acquisition programs that do not meet its definition of "transformational" in favor of those thatdo. Its prime example was the Army's Crusader Howitzer program. DoD cut Crusader and allocated the savingsto several other advanced fire support systemsin development. Congress reluctantly endorsed the action with the proviso that Crusader expertise be rolled intothe FCS program. As part of its appropriationsresponsibilities, the 108th Congress may choose to enforce DoD's implied promise to supportadequately fire support throughout the FCS developmentprogram. (14) Wheels or Tracks and How Many Stryker Brigades? An early issue to confront the Army was whether theInterim Force should use tracked or wheeled armored vehicles, or some combination. (15) Traditionally, the U.S. Army has favored tracks for its combatvehicles; with their low ground pressure and greater traction, they generally perform better off roads on difficultterrain. Wheels generally perform better onroads in terms of speed, agility, and quietness. After reviewing proposals, the Army selected the wheeled LAV IIIfrom General Motors, and named it Stryker. Critics of the decision, including some current and former members of Congress, continue to argue for a reversalor curtailment of the Stryker decision. (16) TheArmy defends its case strongly and DoD has not intervened. The question of whether the FCS will be based onwheels, tracks, or a combination remains open. DoD has, however, raised questions about the ultimate number and stationing of SBCT's. In the past, it requested the Army consider stationing one of the sixunits in Europe and thhe first one is now on station in Europe. More recently it suggested that units five and sixnot be funded unless they could be "spiraldeveloped" into much more transformational formations. It appears, however, that funding for all 6 SBCT's willnow be requested. The combination of theseevents and considerations could, however, open prior decisions to station SBCT's in Hawaii and Alaska to debateand thus create political complications. (17) The 108th Congress may play an important role in resolving the ultimate disposition of the proposedSBCT Force.

The U.S. Army continues an ambitious program intended to transform itself into astrategically responsive forcedominant in all types of ground operations. As planned, its Future Force will eventually meld all ongoing initiativesinto a force based on a high-tech FutureCombat System (FCS). Its Current Force is beginning to provide a new combat capability, based oncurrent-technology armored vehicles, for the mid-intensitycombat operations that seem prevalent in today's world. Its current "legacy force" of existing systems is beingmodernized and maintained to ensure effectivelight and heavy force capabilities until the Future Force is realized. This short report briefly describes the programand discusses issues of feasibility, viability,and affordability of potential interest to Congress. It will be updated as events warrant.

In the Anglo-American linguistic tradition, the word "charter" has been used to refer to many legal writs, including "articles of agreement," "founding legislation," "contracts," "articles of incorporation," and more. The varied uses of this term to refer to so many different legal writs may reflect the term's etymology. "Charter" is derived from the Latin "charta" or, perhaps, the ancient Greek "chartes," both of which mean "paper." As used in federal statutory law, the term "charter" usually has carried a much more specific meaning. A congressional or federal charter is a federal statute that establishes a corporation. Such a charter typically provides the following characteristics for the corporation: (1) Name; (2) Purpose(s); (3) Duration of existence; (4) Governance structure (e.g., executives, board members, etc.); (5) Powers of the corporation; and (6) Federal oversight powers. Beyond conferring the powers needed to achieve its statutorily assigned goal, a charter usually provides a corporation with a set of standard operational powers: the power to sue and be sued; to contract and be contracted with; to acquire, hold, and convey property; and so forth. Many of the original 13 colonies were established by royal charters, and both colonies and states incorporated governmental and private entities before the United States was established. However, at the Constitutional Convention in Philadelphia in 1787, the Founders disagreed over the wisdom of giving the proposed federal government the power to charter corporations. Nevertheless, Congress chartered its first corporation--the Bank of the United States--in February of 1791 (1 Stat. 192 Section 3). Any dispute over Congress's power to charter corporations was effectively put to an end by the Supreme Court's decision in McCulloch v. Maryland in 1819 (17 U.S. (4 Wheat.) 315). The Court ruled that incorporation could be a "necessary and proper" means for the federal government to achieve an end assigned to it by the U.S. Constitution. After chartering the national bank, though, for the next century, Congress issued charters mostly in its role as manager of the affairs of the District of Columbia (Article I, Section 8, clause 17). The District of Columbia, which became the seat of the federal government in 1790, had neither a general incorporation law nor a legislature that could grant charters. So it fell to Congress incorporate the District's corporations. Thus, Congress issued charters to establish the office of the mayor and the "Council of the City of Washington" in 1802 (2 Stat. 195-197) and to found the Washington City Orphan Asylum in 1828 (6 Stat. 381). Congress, however, also used charters to establish entities of national significance, such as the transcontinental Union-Pacific railroad in 1862 (12 Stat. 489). In the 20 th century, Congress began chartering a large number of corporations for diverse purposes. In part, Congress's resort to the corporate device was a response to a host of national crises, such as the two World Wars (which required the production of an enormous number of goods) and the Great Depression (which revealed the limited power the federal government had over the national economy). Corporations, it was thought, were by nature better suited than typical government agencies to handle policy areas that required commercial-type activities (for example, selling electrical power, as the Tennessee Valley Authority does). While each congressionally chartered corporation is unique insofar as it is fashioned for a very particular purpose, these entities still may be sorted into rough types. An elementary division is between those chartered as nonprofit corporations versus those that are not. Table 1 provides a further--but not exhaustive--typology of congressionally chartered corporations. Congressionally chartered corporations have raised diverse issues for Congress, including (1) Title 36 corporations' membership practices; (2) prohibitions on Title 36 corporations engaging in "political activities"; (3) confusion over which corporations are governmental and which are private; and (4) federal management of these corporations. The membership practices of some Title 36 corporations periodically have been a subject of concern. In 2011, Congress revised the membership criteria of the Blue Star Mothers of America, Inc. (36 U.S.C. 305) by enacting a statute ( P.L. 112-65 ; 125 Stat. 767). The change, which the organization had advocated, liberalized the membership requirements so as to enable the organization to admit a larger number of members. Similarly, Congress amended the charter of the Military Order of the Purple Heart of the United States of America, Incorporated, in 2007 to make its membership requirements less stringent ( P.L. 110-207 ; 122 Stat. 719). Some individuals had complained that the organization's criteria for membership were too narrow. In 2005, the congressionally chartered American Gold Star Mothers (AGSM) refused to admit to membership a non-U.S. citizen. Some individuals and members of the media called upon Congress to intervene and rectify this situation. Ultimately, the group used its own authorities to address the issue. Approximately 100 Title 36 corporations exist, thus Congress again may find itself having to consider legislation to contend with the membership issues of such organizations. More than half of the Title 36 corporations' charters include prohibitions against various "political activities." For example, the charter of the United States Submarine Veterans of World War II, states the following: "Political Activities. The corporation or a director or officer as such may not contribute to, support, or otherwise participate in any political activity or in any manner attempt to influence legislation" (36 U.S.C. 220707(b)). Other Title 36 corporations' charters forbid them from promoting the candidacy of an individual seeking office (e.g., The American Legion), or contributing to, supporting, or assisting a political party or candidate (e.g., AMVETS). Congressionally chartered organizations that are subject to political activities restrictions occasionally have asked Congress to remove these restrictions from their charters. For example, on May 21, 2008, Representative James P. Moran introduced H.R. 6118 (110 th Congress), which would have removed the political activities prohibition from the charter of Gold Star Wives. Representative Moran stated that this prohibition against attempting to influence legislation hurt the organizations "advocacy on behalf of military families." He also said that the prohibition was "punitive, not practically enforceable, and potentially an unconstitutional infringement upon the [First Amendment] freedom to petition the Government." The bill was referred to the Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law, which took no action on it. Having political activities restrictions in congressional charters raises at least three issues: (1) Should any or all Title 36 corporations be forbidden from engaging in political activities? (2) If some or all of them should be so restricted, which activities ought to be defined as political? (3) Should Title 36 corporations only have the same restrictions on their political activities as purely private sector not-for-profit corporations? Congress is free to draft corporate charters to include whatever elements it deems appropriate. So, for example, the charter of the Securities Investor Protection Corporation (15 U.S.C. 78(ccc) et seq.) looks very different from that of the American National Red Cross (36 U.S.C. 3001 et seq.). The power to craft corporations ad hoc, however, has produced confusion when corporations are established quasi governmental entities (i.e. entities that have both governmental and private sector attributes). This distinction is not without consequence; governmental entities operate under different legal authorities and restrictions than do private sector corporations. For example, federal agencies typically must follow many or all of the federal government's general management laws. Thus, confusion arose over the National Veterans' Business Development Corporation (NVBDC; 15 U.S.C. 657(c)). The Department of Justice declared it to be a government corporation in March 2004. Some members of Congress disagreed. The 2004 Omnibus Appropriations Act ( P.L. 108-447 , Division K, Section 146) attempted to dispel the confusion by stating that the NVBDC was "a private entity" that "is not an agency, instrumentality, authority, entity, or establishment of the United States Government." In some instances, federal courts have been asked to intervene and make a determination of a corporation's status. The management of government corporations has been made difficult by a few factors. First, no single federal department or office is charged with overseeing the activities of all congressionally chartered corporations. Second, many of these corporations were established independently of any department and have few, if any, federal appointees on their boards or in their executive ranks. This separation of corporations from departments may make the federal management of corporations more difficult. Third, the Government Corporation Control Act (31 U.S.C. 9101-9110) provides many tools for managing chartered corporations' activities. However, Congress has excepted many corporations from some or all of the act's provisions. Finally, there is the matter of perpetual succession. In centuries past, states and municipalities often limited the duration of a charter; a corporation would expire unless the sovereign renewed its charter. This practice has fallen by the wayside; usually, Congress charters entities to have "perpetual succession." This means that a corporation may continue to operate, whether it is effective or not, until a law is enacted to abolish it--which seldom occurs. Long-lived chartered entities have been accused of taking business from the private sector, moving into areas of business or activities outside the bounds of their charters, and developing networks of influence to protect themselves from abolition.

A congressional or federal charter is a federal statute that establishes a corporation. Congress has issued charters since 1791, although most charters were issued after the start of the 20th century. Congress has used charters to create a variety of corporate entities, such as banks, government-sponsored enterprises, commercial corporations, venture capital funds, and quasi governmental entities. Congressionally chartered corporations have raised diverse issues for Congress, including (1) Title 36 corporations' membership practices; (2) prohibitions on Title 36 corporations engaging in "political activities"; (3) confusion over which corporations are governmental and which are private; and (4) federal management of these corporations. This report will be updated annually. Readers seeking additional information about congressionally chartered organizations may consult: CRS Report RL30365, Federal Government Corporations: An Overview, by [author name scrubbed]; CRS Report RL30533, The Quasi Government: Hybrid Organizations with Both Government and Private Sector Legal Characteristics, by [author name scrubbed]; and CRS Report RL30340, Congressionally Chartered Nonprofit Organizations ("Title 36 Corporations"): What They Are and How Congress Treats Them, by [author name scrubbed].

Foreign capital inflows are playing an important role in the economy. Such inflows bridge the gap between U.S. supplies and demands for credit, thereby allowing consumers and businesses to finance purchases at interest rates that are lower than they would be without overseas capital inflows. Similarly, capital inflows allow federal, state, and local governments to finance their budget deficits at rates that are lower than they would be otherwise. These foreign capital inflows allow the Nation to support expenditures exceeding its current output level and finance its trade deficit. A sharp reduction in those inflows likely would complicate domestic efforts at making and conducting economic policies. To date, the world economy has benefitted from the stimulus provided by the nation's combination of fiscal and monetary policies and a trade deficit. Foreign investors now hold slightly less than 55% of the publicly held and publicly traded U.S. Treasury securities, 26% of corporate bonds, and about 12% of U.S. corporate stocks. The large foreign accumulation of U.S. securities has spurred some observers to argue that this foreign presence in U.S. financial markets increases the risk of a financial crisis, whether as a result of the uncoordinated actions of market participants or by a coordinated withdrawal from U.S. financial markets by foreign investors for economic or political reasons. Concerns are also growing that over the long run U.S. economic policies and the accompanying large deficit in its international trade accounts could have a negative impact on global economic developments, especially for the economically less developed countries. Some observers are concerned that a foreign investor with significant holdings in the United States or a group of foreign investors could engage in an abrupt and large-scale liquidation of dollar-denominated securities, particularly a sell-off of U.S. Treasury securities. These observers argue that the vast sums of dollars held and managed by some foreign governments, termed sovereign wealth funds, raise the prospects of such a coordinated withdrawal, because the funds potentially increase the ability of foreign governments to instigate a rapid withdrawal. It is uncertain, though, what types of events could provoke a coordinated withdrawal from U.S. securities markets. Indeed, during the 2008-2009 financial crises, dollar-denominated assets were the preferred safe haven investment of foreign investors. Although unlikely, a coordinated withdrawal from U.S. financial markets potentially could be staged by foreign investors for economic or political reasons or it could arise as a result of an uncoordinated correction in market prices. Also, concerns over the ability of the federal government to service its foreign debt and a loss of confidence in the ability of national U.S. policy makers to conduct economic policies that are perceived abroad as prudent and stabilizing could spur some foreign investors to reassess their estimates of the risks involved in holding dollar-denominated assets. In other cases, international linkages that connect national capital markets could be the conduit through which events in one market are quickly spread to other markets and ignite an abrupt, seemingly uncoordinated, withdrawal of capital. A liquidation of capital could be limited to one segment of the credit markets as one foreign investor or a group of foreign investors attempted to adjust the composition of their portfolios. A withdrawal also could mark a major shift in investment strategies by foreign investors as they shifted away from dollar-denominated securities. Short of a financial crisis, events that cause some foreign investors to adjust their portfolios likely would have short-run negative effects on U.S. interest rates and on the international exchange value of the dollar. However, should a large group of foreign investors make a permanent shift in their strategies to limit or to reduce their purchases of U.S. securities, such actions likely would complicate efforts to finance budget deficits. Given the current mix of economic policies, the loss of capital inflows would affect U.S. interest rates, domestic investment, and the long-term rate of growth of the economy unless there is an accompanying shift in the national rate of saving. Such a loss of capital inflows would be especially troublesome if it occurred during a time when concerns over the rate of growth in the economy were increasing. During periods when the rate of economic growth is slowing, the Federal Reserve generally resorts to reducing interest rates to stimulate the economy. However, the loss of capital inflows would tend to push the Federal Reserve to raise interest rates to attract more capital inflows. Congress likely would find itself embroiled in any such economic or financial crisis through its direct role in conducting fiscal policy and in its indirect role in the conduct of monetary policy through its supervisory responsibility over the Federal Reserve. Some observers are also concerned that the financial crisis has damaged the international financial system and raise concerns about the U.S. leadership role. The rapid expansion of market activity through the consolidation of equity exchanges and the development of complex financial instruments and hybrid securities that are traded across national borders has raised additional concerns that financial innovations have outpaced the efforts of regulators. Some observers argue that improvements in the financial system that arise from greater market efficiencies by spreading risk across national borders may be blunted, because the underlying risks of certain widely traded financial instruments have become more difficult to assess. Some also argue that the recent financial crisis demonstrate the risks that a domestic financial crisis pose for the global economy because such crises can spread across national borders due to the rapid internationalization of financial services. Others note that by expanding into financial activities that were not part of the original core business of financial services, providers have become exposed to new and additional types of risk for which they are not well prepared. According to the IMF, "there is little empirical evidence to date to determine whether cross-border diversification of financial institutions reduces or increases firm-specific or systemic vulnerabilities." Capital flows are highly liquid, can respond abruptly to changes in economic and financial conditions, and exercise a primary influence on exchange rates and through those rates onto global flows of goods and services. As indicated in Figure 1 , these capital inflows are composed of official inflows, primarily foreign governments' purchases of U.S. Treasury securities, and private inflows composed of portfolio investment, which includes foreigners' purchases of U.S. Treasury and corporate securities, financial liabilities, and direct investment in U.S. businesses and real estate. In 2004, 2006, 2007, 2009, and 2010, net official inflows exceeded net private inflows. Recently, private capital flows by U.S. citizens shifted from a net outflow of $1.4 trillion in 2007 to a net inflow of $866 billion in 2008, reflecting the financial turmoil during that period. Net private outflows by U.S. citizens, however, resumed in the 2009 to 2011 period. During the same period, U.S. official outflows increased from $22 billion in 2007 to $530 billion in 2008. In contrast, foreign private inflows of capital dropped from $1.6 trillion in 2007 to $47 billion in 2008. During the same period, foreign official inflows increased slightly from $481 billion in 2007 to $487 billion in 2008. As a result of these changes, net official flows, or the combination of U.S. and foreign officials flows dropped from a net outflow of $458 billion 2007 to a net inflow of $47 billion in 2008. In addition, net private flows increased from a net inflow of $199 billion in 2007 to a net inflow of $581 billion in 2008. In 2009, however, net private inflows dropped to a negative $774 billion, while net official inflows rose to nearly $1 trillion, as indicated in Table 1 Economists generally attribute the rise in foreign investment in the United States to comparatively favorable returns on investments relative to risk, a surplus of saving in other areas of the world, the well-developed U.S. financial system, and the overall stability of the U.S. economy. These net capital inflows (inflows net of outflows) bridge the gap in the United States between the amount of credit demanded and the domestic supply of funds, likely keeping U.S. interest rates below the level they would have reached without the foreign capital. These capital inflows also allow the United States to support expenditures exceeding its current output level and finance its trade deficit, because foreigners are willing to "lend" to the United States in the form of exchanging goods, represented by U.S. imports, for such U.S. assets as stocks, bonds, and U.S. Treasury securities. Such inflows, however, generally tends to put upward pressure on the dollar, which tends to push up the price of U.S. exports relative to its imports and to reduce the overall level of exports. Furthermore, foreign investment in the U.S. economy drains off some of the income earned on the foreign-owned assets that otherwise would accrue to the U.S. economy as foreign investors repatriate their earnings back home. Figure 2 shows the net flow of funds in the U.S. economy. The flow of funds accounts measure financial flows across sectors of the economy, tracking funds as they move from those sectors that supply the capital through intermediaries to sectors that use the capital to acquire physical and financial assets. The net flows show the overall financial position by sector, whether that sector is a net supplier or a net user of financial capital in the economy. Because the demand for funds in the economy as a whole must equal the supply of funds, a deficit in one sector must be offset by a surplus in another sector. Generally, the household sector, or individuals, provides funds to the economy, because individuals save part of their income, while the business sector uses those funds to invest in plant and equipment that, in turn, serve as the building blocks for the production of additional goods and services. The government sector (the combination of federal, state, and local governments) can be either a net supplier of funds or a net user, depending on whether the sector is running a surplus or a deficit, respectively. The interplay within the economy between saving and investment, or the supply and uses of funds, tends to affect domestic interest rates, which move to equate the demand and supply of funds. Shifts in the interest rate also tend to attract capital from abroad, denoted by the rest of the world (ROW) in Table 2 . As Table 2 indicates, from 1996 through 1998, the household sector ran a net surplus, or provided net savings to the economy. The business sector also provided net surplus funds in 1996, or businesses earned more in profits than they invested. The government sector, primarily the federal government, experienced net deficits, which decreased until 1998, when the federal government and state and local governments experienced financial surpluses. Capital inflows from the rest of the world rose and fell during this period, depending on the combination of household saving, business sector saving and investment, and the extent of the deficit or surplus in the government sector. Starting in 1999, the household sector began dissaving, as individuals spent more than they earned. Part of this dissaving was offset by the government sector, which experienced a surplus from 1998 to 2001. As a result of the large household dissaving, however, the economy as a whole experienced a gap between domestic saving and investment that was filled with large capital inflows. Those inflows were particularly large in nominal terms from 2000 to 2006, as household dissaving continued and as government sector surpluses turned to historically large deficits in nominal terms. Such inflows likely kept interest rates below the level they would have reached without the inflows, but they added to pressures on the international exchange value of the dollar. From 2007 through 2012, households saved at rates not experienced in recent periods as the financial crisis and economic recession spurred households to save and businesses to build up their balance sheets. This saving has been offset by the large deficits experienced by state, local, and the federal governments as the economic recession and the drop in property values reduced government revenue. Similarly, capital inflows have declined, reflecting the higher level of domestic saving. As the flow of funds data indicate, foreign capital inflows augment domestic U.S. sources of capital, which in turn keep U.S. interest rates lower than they would be without the foreign capital. Indeed, economists generally argue that it is this interplay between the demand for and the supply of credit in the economy that drives the broad inflows and outflows of capital. As U.S. demands for capital outstrip domestic sources of funds, domestic interest rates rise relative to those abroad, which tends to draw capital away from other countries to the United States. The United States also has benefitted from a surplus of saving over investment in many areas of the world that has provided a supply of funds and accommodated the overall shortfall of saving in the country. This surplus of saving has been available to the United States because foreigners have remained willing to loan that saving to the United States in the form of acquiring U.S. assets, which have accommodated the growing current account deficits. Over the past decade, the United States experienced a decline in its rate of saving and an increase in the rate of domestic investment. The large increase in the nation's current account deficit would not have been possible without the accommodating inflows of foreign capital. Foreign capital inflows, while important, do not fully replace or compensate for a lack of domestic sources of capital. Capital mobility has increased sharply over the last 20 years, but economic analysis shows that a nation's rate of capital formation, or domestic investment, seems to be linked primarily to its domestic rate of saving. This phenomenon was first presented in a paper published in 1980 by Martin Feldstein and Charles Horioka. The Feldstein-Horioka paper maintained that despite the dramatic growth in capital flows between nations, international capital mobility remains somewhat limited so that a nation's rate of domestic investment is linked to its domestic rate of saving. Liberalized capital flows and floating exchange rates have greatly expanded the amount of capital flows between countries. A large part of these capital transactions are undertaken in response to commercial incentives or political considerations that are independent of the overall balance of payments or of particular accounts. As a result of these transactions, national economies have become more closely linked, the process some refer to as "globalization." The data in Table 3 provide selected indicators of the relative sizes of the various capital markets in various countries and regions and the relative importance of international foreign exchange markets. In 2011, these markets amounted to over $800 trillion, or more than 40 times the size of the U.S. economy. Worldwide, foreign exchange and interest rate derivatives, which are the most widely used hedges against movements in currencies, were valued at $567 trillion in 2011, twice the size of the combined total of all public and private bonds, equities, and bank assets. For the United States, such derivatives total three times as much as all U.S. bonds, equities, and bank assets. Another aspect of capital mobility and capital inflows is the impact such capital flows have on the international exchange value of the dollar. Demand for U.S. assets, such as financial securities, translates into demand for the dollar, because U.S. securities are denominated in dollars. As demand for the dollar rises or falls according to overall demand for dollar-denominated assets, the value of the dollar changes. These exchange rate changes, in turn, have secondary effects on the prices of U.S. and foreign goods, which tend to alter the U.S. trade balance. At times, foreign governments have moved aggressively in international capital markets to acquire the dollar directly or to acquire Treasury securities in order to strengthen the value of the dollar against particular currencies. Also, the dollar is heavily traded in financial markets around the globe and, at times, plays the role of a global currency. Disruptions in this role have important implications for the United States and for the smooth functioning of the international financial system. This prominent role means that the exchange value of the dollar often acts as a mechanism for transmitting economic and political news and events across national borders. While such a role helps facilitate a broad range of international economic and financial activities, it also means that the dollar's exchange value can vary greatly on a daily or weekly basis as it is buffeted by international events. A triennial survey of the world's leading central banks conducted by the Bank for International Settlements in April 2010 indicates that the daily trading of foreign currencies through traditional foreign exchange markets totals more than $4.0 trillion, up from the $3.3 trillion reported in the previous survey conducted in 2007. In addition to the traditional foreign exchange market, the over-the-counter (OTC) foreign exchange derivatives market reported that daily turnover of interest rate and non-traditional foreign exchange derivatives contracts reached $2.5 trillion in April 2010. The combined amount of $6.5 trillion for daily foreign exchange trading in the traditional and OTC markets is more than three times the annual amount of U.S. exports of goods and services. The data also indicate that 85% of the global foreign exchange turnover is in U.S. dollars, slightly lower than the 86.3% share reported in a similar survey conducted in 2007. In the U.S. foreign exchange market, the value of the dollar is followed closely by multinational firms, international banks, and investors who are attempting to offset some of the inherent risks involved with foreign exchange trading. On a daily basis, turnover in the U.S. foreign exchange market averages $817 billion; similar transactions in the U.S. foreign exchange derivative markets average $659 billion, slightly above the amount reported in a similar survey conducted in 2007. Foreigners also buy and sell U.S. corporate bonds and stocks and U.S. Treasury securities. Foreigners now own slightly less than 50% of the total amount of outstanding U.S. Treasury securities that are publicly held and traded. This section analyzes four possible strategies a single large foreign investor or a group of foreign investors could employ to reduce or withdraw entirely their holdings of financial assets in the United States. These strategies include a rapid liquidation of U.S. Treasury securities, a shift in the makeup of foreign investors' portfolios among various dollar-denominated assets, a rapid shift from dollar-denominated assets to assets denominated in other currencies, and a slow shift in the makeup of future accumulations of assets away from dollar-denominated assets to assets denominated in currencies other than the dollar. The large holdings of U.S. Treasury securities by foreign governments have led some observers to consider the prospect of a withdrawal from the U.S. Treasury securities market by a single foreign government. At the first hint that a foreign government was attempting to liquidate all or even a large part of its holdings of U.S. Treasury securities, the price of such Treasury securities likely would plummet in U.S. securities markets and the market rate of interest would rise, perhaps appreciably, in the first few hours or days. For instance, on November 7, 2007, a report, which was later repudiated, asserted that Chinese officials were considering shifting some of China's foreign currency reserves, reportedly worth $1.4 trillion, in dollars and in such dollar-denominated assets as Treasury securities, out of dollar-denominated securities. Acting on the report, investors sold securities and the dollar. As a result, the broad Dow Jones industrial average plunged 360 points in one day and the dollar sank against other major currencies. In response to the fall in the exchange value of the dollar, indexes of equities markets in Europe and Japan also fell. Such cross-border spillover effects are not new, but potentially have become more pervasive as a result of the broad linkages that have been forged among the once-disparate national financial systems. As an example, concerns in U.S. capital markets in early June 2006 over prospects that a rise in consumer prices and in the core inflation rate would push the Federal Reserve to raise key U.S. interest rates sparked a drop in prices in U.S. capital and equity markets where inflation concerns quickly spread to markets in Europe and Asia as equity prices fell in those markets as well. If a foreign investor with large U.S. holdings or a group of foreign investors attempted to launch a withdrawal from U.S. Treasury securities, investors and other market participants would calculate quickly the expected effects of those intended actions on market prices, interest rates, and the exchange value of the dollar and would then act swiftly on those anticipated effects. As a result, the prices of Treasury securities likely would drop sharply, while interest rates would rise, because the price of such securities is inversely related to the interest rate. In addition, the dollar likely would fall in value relative to other currencies, because the shift away from dollar-denominated assets would increase demand for and the prices of other currencies relative to the dollar. Consequently, the drop in the price of Treasury securities and the drop in the exchange value of the dollar would significantly discount the value of any Treasury securities that would be sold and sharply reduce the proceeds for any investor participating in such a sell-off. As a result, the potentially large financial losses that would attend an attempt to liquidate assets rapidly are likely to dissuade most investors from employing such a strategy. The drop in the prices of Treasury securities and the decline in the exchange value of the dollar, however, probably would be short-lived. Foreign investors selling Treasury Securities presumably would do so in order to acquire non-dollar-denominated assets. Such a shift in demand from U.S. Treasury securities to other foreign securities would drive up the prices of those securities and the exchange value of foreign currencies. As a result, the lower prices for Treasury securities and for the dollar would offer other investors arbitrage and investment opportunities to acquire assets that investors likely would deem to be temporarily undervalued. As a result, investors likely would move to acquire Treasury securities and the dollar, which means that demand would increase for both the low-priced Treasury securities and the lower-valued dollar, which would drive up the prices of both assets. Such a response could significantly blunt, or even entirely reverse, the initial drop in prices of the securities and of the dollar. Given the dynamic nature of finance and credit markets and the instantaneous communication of information, such actions likely would occur within a very short time frame. For instance, fears spread rapidly after the terrorist attacks on New York and Washington on September 11, 2001, that foreigners would curtail their purchases of U.S. financial assets and reduce the total inflow of capital into the U.S. economy. Following the attacks, foreign governments and private investors did reduce their purchases of Treasury securities from pre-attack levels and the value of the dollar fell relative to other major currencies. These effects were fully reversed within 30 days, however, as currency traders forged a short-lived agreement not to profit from the attacks and the Federal Reserve undertook actions on its own and in concert with central bankers and financial ministers around the globe to ensure the smooth operation of the international financial markets. Similarly, the Federal Reserve likely would not be expected to sit by idly while foreign investors attempted a coordinated withdrawal from U.S. equity markets, if those actions threatened to undermine the stability of the markets. The overall performance of the U.S. economy at the time of any attempted withdrawal would also influence the economic effect of the withdrawal. For instance, if the U.S. economy were experiencing a robust rate of economic growth, the impact of a withdrawal by foreign investors likely would be minimal, both in the short run and in the long run. However, if such a withdrawal were to occur at a time when the U.S. economy were not experiencing a robust rate of economic growth, or if the U.S. credit and financial markets were under duress, such a withdrawal may well have a more pervasive effect by undermining investors' confidence in the stability and performance of the markets and could result in higher interest rates and a lower exchange value of the dollar over the short run and prolong the adjustment process. In addition, actions that change foreign investors' assessment of the underlying risks of the financial system or that undermine foreign investors' confidence in the stability of the financial system could prod some foreign investors to reassess the composition of their portfolios. For instance, at the time of the rumored Chinese withdrawal from U.S. securities, U.S. financial markets already were strained by concerns over the impact of record oil prices and potentially large losses associated with sub-prime mortgaged-backed securities. As a result, the Dow Jones industrial average of U.S. stocks moved erratically through the end of November 2007. By the end of November 2007, the Dow was down nearly 290 points from where it had been following the loss of 360 points on November 7, 2007. Another possible course of action some foreign investors could pursue would be to diversify abruptly the composition of their portfolios by replacing a sizeable portion of their holdings of U.S. Treasury securities with other dollar-denominated assets. As foreign investors traded Treasury securities for other assets, the price of Treasury securities would decline and the prices of other assets would rise as demand shifted away from Treasury securities and toward other dollar-denominated assets. Because total demand for dollar-denominated assets would remain constant, there likely would be little movement in the exchange value of the dollar, but the shift of demand would alter the relative prices of various domestic assets. Such shifts in demand are not a rare occurrence, but happen frequently as investors change their evaluations of the relative value of corporate equities, corporate bonds, and Treasury securities and in response to changes in economic policies and actions by the Federal Reserve. If foreign investors attempt to alter abruptly the composition of their portfolios away from Treasury securities, the prices of such securities would fall and the prices of corporate bonds and equities would rise, reflecting the shift in demand. If investors perceived this shift in demand and, therefore, the shift in prices, as a one-time adjustment in the composition of foreign investors' portfolios, some investors likely would take advantage of the rise in prices in equities and bonds to sell their holdings and take their profits at what likely would be perceived to be overvalued prices and, conversely, buy Treasury securities at what they would view as temporarily undervalued prices. After these adjustments, market prices likely would settle at prices that would be close to or equal to those that had existed prior to the original shift in demand by foreign investors. Another course of action some foreign investors could pursue would be to pare down their holdings of dollar-denominated assets through a relatively swift liquidation of part of their holdings of dollar-denominated assets. In this case, a single foreign investor or a group of foreign investors would sell off part of their holdings of such dollar-denominated assets as corporate stocks and bonds or Treasury securities and possibly even direct investments (investments in U.S. businesses and real estate), although selling direct investments in this manner seems less likely given the generally long-run strategies investors use in acquiring them. If some foreign investors attempted to accomplish such a readjustment in their portfolios quickly by liquidating a portion of their holdings of corporate stocks and bonds and of Treasury securities, the prices of those assets would fall, given the current pervasive role foreign investors play in most U.S. financial markets. In addition, because foreign investors would be liquidating their dollar-denominated assets in order to acquire assets denominated in other currencies, the exchange value of the dollar would fall relative to the price of foreign currencies. The drop in the prices of dollar-denominated equities and bonds combined with the lower exchange value of the dollar would erode the expected profits of any investor selling such securities and likely would attract the interest of other foreign investors, who presumably could liquidate their now higher-priced foreign securities and leverage their now higher-valued foreign currency to acquire dollar-denominated assets. Furthermore, U.S. multinational firms may well take advantage of the higher-valued foreign currency to repatriate part of the profits of their foreign affiliates, which would boost the balance sheet of their U.S. parent company, possibly even using the repatriated profits to acquire their own stock. Such repatriated profits likely would put upward pressure on the exchange value of the dollar, because foreign earnings would have to be converted into dollars before they were repatriated. Similarly, foreign firms operating in the United States likely would retain their profits rather than suffering a loss in value by translating those profits into higher priced foreign currencies in order to repatriate their profits back to their foreign parent company. Presumably, such profits could be used to augment investments within the United States. Finally, some foreign investors could decide to shift away from dollar-denominated assets by engaging in a long-term shift in the rate at which they accumulate such assets. Such a strategy would have the benefit of avoiding the large short-run shifts in the prices of financial assets and in the exchange value of the dollar that would attend any attempt by a group of foreign investors to make a rapid adjustment in the composition of their portfolios. A decrease in the inflow of capital from abroad would reduce the domestic availability of capital and place upward pressure on credit and financial assets as interest rates would rise to equate the demand and supply of credit. For the U.S. economy as a whole, a long-term shift away from dollar-denominated assets by foreign investors could have a slightly negative impact on the economy over the long run given the current mix of economic policies. A reduction in the inflow of foreign investment would tend to push down the prices of stocks and bonds and push up interest rates since those wanting credit would be competing for a smaller pool of funds. The price of Treasury securities would fall as the Federal government would be required to raise interest rates in order to attract domestic and foreign investors to acquire Treasury securities, which would raise the cost of financing the Federal government's budget deficit. In addition, the shift from dollar-denominated assets would tend to push up the exchange value of foreign currencies relative to that of the dollar because an increase in demand for foreign assets would also raise demand for foreign currencies. The lower-valued dollar would raise the price of U.S. imports, particularly of raw materials and manufactured goods, which would put upward pressure on consumer and wholesale prices and tend to affect most negatively those sectors of the economy that are especially sensitive to movements in interest rates: the housing and automobile sectors. The decline in the international exchange value of the dollar also would tend to favor those industries and sectors of the economy that export. As long as the international exchange value of the dollar remained relatively low compared with other currencies, the exported goods sectors of the economy likely would expand by attracting more capital and labor and the imported goods sector of the economy would decline, assuming that all other things in the economy remained constant. It is not uncommon for investors to adjust the composition of their portfolios as economic and financial conditions change. Given the recent surge in foreign investors' accumulation of dollars and dollar-denominated assets, it is not unreasonable to expect that from time to time they will also attempt to adjust the composition of their portfolios between corporate stocks and bonds, U.S. Treasury securities, and direct investments in U.S. businesses and real estate. A long-term shift away from dollar-denominated assets, however, could have a negative effect on the long-term rate of investment, productively, and the rate of growth in the U.S. economy. Such a shift in the value of the dollar would tend over the long run to benefit the exported goods sector of the economy, but it could also complicate efforts to conduct domestic economic policies. Although there are numerous other currencies that might attract investors, the dollar continues to be the most widely traded currency around the globe, which means it likely will retain its desirability as an investment asset and as a medium of exchange for some time to come. Also, the vast and deep capital markets in the United States combined with the highly developed banking and legal systems continue to make investments in U.S. financial assets attractive to foreign investors, despite short-run changes in perceptions of risk or economic performance. Should a foreign investor with large financial holdings in the United States or a group of investors attempt to liquidate abruptly their holdings of assets such as Treasury securities, they would experience a severe loss in the value of those assets first as they attempted to sell their large holds in the market and then as they attempted to convert their dollar holdings into other currencies. As a result of these losses, it seems unlikely that a foreign investor with large holdings or a group of foreign investors would attempt to liquidate their securities quickly. A more likely course of action would be for foreign investors to adjust the composition of their portfolios slowly over time. If only one or a few foreign investors engaged in a strategy to liquidate part of their U.S. financial holdings, their actions alone are likely to have a limited impact on the economy over the short run, because market forces would be expected to adjust to attract other foreign investors to replace those who had withdrawn. However, if a broad range of foreign investors, for whatever reason, decided to reduce their holdings of dollar-denominated assets, interest rates in the United States likely would rise in response to market forces that would place them above the level where they would have been if the foreign capital inflows had remained at their higher levels. A higher level of interest rates would lead some firms to reduce their level of borrowing and investing and spur some households to curtail their consumption, especially of such interest sensitive products as housing and automobiles, which usually are financed over long periods of time. Over the long run, the lower level of investment by firms could be expected to result in a lower rate of growth in productivity and, therefore, in a lower rate of growth in the economy. In addition, if foreign investors were to attempt an abrupt adjustment to the composition of their portfolios that disrupted the financial markets or the broader economy, the Federal Reserve would not be expected to stand idly by on the sidelines. In such circumstances, the Federal Reserve has shown some agility in intervening on its own to stabilize credit markets and to move in coordination with other central banks. On December 11, 2007, for instance, the Federal Reserve decreased the federal funds rate and the discount rate on loans between banks by a quarter of a percentage point to ease credit conditions. Then, on December 12, 2007, the Federal Reserve announced that it would make $40 billion and perhaps more available to commercial banks in short-term loans to ease domestic liquidity issues and another $24 billion available to European central banks that had become so concerned about potential losses from U.S. mortgage-backed securities that they had begun to hoard cash and were unwilling to make loans to each other except at unusually high interest rate premiums. Such willingness on the part of the Federal Reserve to intervene in the financial markets to ensure stability likely makes a prolonged financial crisis arising from a liquidation of financial assets by one foreign investor or a group of foreign investors unlikely, even if those investors are foreign governments.

This report provides an overview of the role foreign investment plays in the U.S. economy and an assessment of possible actions a foreign investor or a group of foreign investors might choose to take to liquidate their investments in the United States. Concerns over the potential impact of disinvestment have grown as national governments have become more active investors in the U.S. economy and as innovation in creating financial instruments has increased volatility in financial markets. Such concerns seem out of step with the experience of the 2008-2009 financial crisis, during which the dollar became the preferred safe haven investment for foreign investors. If some foreign investors were to liquidate their holdings, these actions could affect the U.S. economy in a number of ways due to the role foreign investment plays in the United States and due to the current mix of economic policies the United States has chosen. The impact of any such action on the economy would also depend on the overall condition and performance of the economy and the financial markets. If the economy were experiencing a strong rate of economic growth, the impact of a foreign withdrawal likely would be minimal, especially given the dynamic nature of credit markets. If a withdrawal occurred when the economy was not experiencing a robust rate of growth or if credit financial markets were under duress, the withdrawal could have a stronger effect on economic activity. The particular course of action foreign investors might choose to take and the overall strength and performance of the economy at the time of their actions could affect the economy in different ways. Congress likely would become involved as a result of its direct role in making economic policy and its oversight role over the Federal Reserve. In addition, the actions of foreign investors could complicate domestic economic policymaking. Foreign investors who decide to liquidate their holdings of one particular type of investment would normally need to look for other types of assets to acquire. While there are a multitude of possible strategies foreign investors could pursue, this analysis assesses the impact of four of the most likely strategies a single large foreign investor or a group of foreign investors could choose to employ to reduce or withdraw entirely their holdings of U.S. financial assets: A rapid liquidation of U.S. Treasury securities. A shift in the makeup of foreign investors' portfolios among various dollar-denominated assets. A rapid shift from dollar-denominated assets to assets denominated in other currencies. A slow shift in the makeup of future accumulations of assets away from dollar-denominated assets to assets denominated in currencies other than the dollar.

T he Office of the Architect of the Capitol (AOC) is responsible "for the operations and care of more than 18.4 million square feet of facilities, 570 acres of grounds and thousands of works of art." This includes the House and Senate office buildings, the Capitol, the Capitol Visitor Center, the Library of Congress buildings, the Supreme Court building, the U.S. Botanic Garden, the Capitol Power Plant, and other facilities. The AOC carries out its bicameral, nonpartisan responsibilities using both its own staff and contracting authority for architectural, engineering, and other professional services. Since 1989, the Architect has been filled through appointment by the President, with the advice and consent of the Senate, following the forwarding of recommendations to the President from a bicameral commission consisting of Members of Congress. The Architect is appointed for a 10-year term and may be reappointed. The position was vacant for more than three years following the retirement of Alan Hantman on February 4, 2007. On February 24, 2010, President Barack Obama nominated Stephen T. Ayers, who had been serving in an acting capacity during the vacancy, to a 10-year term. The nomination was referred to the Senate Committee on Rules and Administration, which held a hearing on April 15, 2010. The Senators in attendance at the hearing praised Mr. Ayers and congratulated him on the nomination. Mr. Ayers was confirmed by voice vote in the Senate on May 12, 2010. Mr. Ayers announced his intention to retire on November 23, 2018. Upon his retirement, Christine Merdon, the Deputy Architect of the Capitol/Chief Operating Officer, became the Acting Architect of the Capitol. The appointment of the Architect has been a subject of periodic consideration for at least 60 years. It is a topic that has received increased attention during periods in which there has been a vacancy in the position and periods of congressional dissatisfaction with either the work of the incumbent or the involvement of the President in what some Members view as an internal legislative branch matter. This report discusses the history of the selection of the Architect and recent legislation. For additional information and a comparison of appointments in the legislative branch, see CRS Report R42072, Legislative Branch Agency Appointments: History, Processes, and Recent Actions , by Ida A. Brudnick. The Architect is "appointed by the President by and with the advice and consent of the Senate for a term of 10 years." This procedure was established by the Legislative Branch Appropriations Act, 1990, which also created a congressional commission responsible for recommending at least three individuals to the President for the position of Architect of the Capitol. The commission originally consisted of 10 Members (including the Speaker of the House of Representatives, the President pro tempore of the Senate, the majority and minority leaders o f the House of Representatives and the Senate, and the chairs and the ranking minority members of the Committee on House Administration of the House of Representatives and the Committee on Rules and Administration of the Senate). In considering the FY1990 Legislative Branch Appropriations Act, the Senate Appropriations Committee proposed revising the process by having the President nominate the Architect for a 10-year term, subject to the advice and consent of the Senate. Previously, the position did not require Senate confirmation. In the report accompanying H.R. 3014 , the Senate Appropriations Committee stated the following: These changes will conform the process of the appointment of the Architect more closely to the appointment procedure followed for other officers of similar stature. The Committee believes this will accord proper recognition to the importance of the functions of this office and help to promote greater accountability in their performance. During the brief Senate debate on the provision, Senator Harry Reid, then-chairman of the Legislative Branch Appropriations Subcommittee, declared that the committee's amendment "better reflects the institutional status of the Architect as an officer of the legislative branch and should make the lines of accountability in the performance of his duties much less ambiguous." Senator Don Nickles, then-ranking member of the subcommittee, noted the fixed term of the Architect would be similar to that of the Comptroller General, who is appointed for a single 15-year term. The legislative history does not appear to indicate why the shorter term was chosen for the Architect. In conference, House and Senate negotiators agreed to a compromise that reflected the absence in the Senate proposal of any formal role for the House in the selection of a future Architect. The compromise expanded the Senate's language by providing for a bicameral congressional advisory commission. The conference report does not provide additional information on this decision or any other options considered. The compromise was accepted in both houses without debate and the measure was signed into law on November 21, 1989. The commission was expanded in 1995 to include the chairs and ranking minority members of the House and Senate Appropriations Committees. A commission process is also used for filling vacancies in the position of Comptroller General, who leads the Government Accountability Office (GAO). The commission procedure for GAO, which also calls for a recommendation to the President of at least three individuals, was established in 1980. Prior to 1989, the Architect was selected by the President for an unlimited term without any formal involvement of Congress. Paul Rundquist, congressional scholar and former specialist at the Congressional Research Service, noted in testimony before the Senate Rules and Administration Committee in 1996 that "the fact that the Architect of the Capitol was a congressional agent nominated by the President without confirmation by the Senate does not seem to have troubled Congress until recent years." Bills related to the qualifications and appointment of the Architect have been periodically introduced since at least the 1950s; however, little action was taken on these proposals until the 1980s. Appendix A provides information on these bills. Bills proposing a new appointment process have taken various approaches. Two changes ultimately enacted include requiring the advice and consent of the Senate and establishing a commission to recommend names to the President. Other bills proposed making the Architect a congressional appointee. These included proposals to make the Architect subject to a joint appointment by the Speaker and President pro tempore; alternating appointment between the Speaker and President pro tempore; and a commission of Members recommending candidates to the Speaker and President pro tempore, with ratification by the chambers. The introduced bills also varyingly addressed the term of office, eligibility for reappointment, procedure for removal, and procedures following early vacancies. Whereas some of these bills focused only on the Architect, many of the bills introduced from the early 1970s forward also addressed the appointment of the other presidential appointees in the legislative branch, including the Librarian of Congress, the Comptroller General and the Deputy Comptroller, and the Public Printer. Questions have previously been raised about the authority of Congress to vest itself, or more specifically congressional leadership, with the power to appoint the Architect. These questions generally relate to whether the AOC's nonlegislative functions--including facility responsibilities for the Supreme Court and the Thurgood Marshall Federal Judiciary Building and membership on several nonlegislative governing or advisory bodies --make the Architect an "Officer of the United States" such that his or her appointment cannot be made by Congress consistent with the requirements of the Appointments Clause (Clause) of the Constitution. Under the Clause, "officers of the United States," defined primarily as officials that exercise "significant authority" in a "continuing" office, must either be appointed by the President with the advice and consent of the Senate, or, in the case of "inferior officers," by the "President alone, [] the Courts of Law, or [] the Heads of Departments." Whether the functions and responsibilities exercised by a government official rise to the level of "significant authority" is not easily determined. Consistent with this ambiguity, it does not appear that Congress has adopted a uniform interpretation of the Clause's applicability to the Architect. Nonetheless, the executive branch has previously concluded that "functions simply involving the management of governmental property" are generally not considered significant for purposes of the Clause. Thus, to the extent that concerns over congressional appointment of the Architect relate to his management of nonlegislative property, it would appear that such functions may not, on their own, prevent Congress from choosing to retain the power of appointment for itself. Since the enactment of the new procedure in 1989, a few bills have been introduced to change the process of appointing the Architect. These proposals would shift the Architect appointment responsibility from the President to specified Members of Congress. As with earlier bills, statements in the Congressional Record by bill sponsors have cited an interest in using the appointment process to protect the prerogatives of, and ensure accountability to, the legislative branch. Some discussions also have addressed the appropriate role of the House of Representatives, which does not play a formal role in the confirmation of presidential nominees. The only change enacted since 1989, as stated above, occurred in 1995, when the commission charged with recommending names to the President expanded to include the chairs and ranking minority members of the House and Senate Appropriations Committees. Table 1 compares the Members involved in appointment under current law and bills introduced since the 1989 act. During the 109 th Congress, one bill ( H.R. 4446 ) was introduced to establish a uniform appointment process and 10-year term of service for the Architect, the Comptroller General, and the Librarian of Congress. This proposal provided for joint appointment by four Members, including the Speaker, the majority leader of the Senate, and the minority leaders of the House of Representatives and Senate. No further action was taken. A bill ( H.R. 6656 ), which would provide for a 12-member congressional appointing panel, was introduced in the 110 th Congress and referred to two committees, although no further action was taken. In the 111 th Congress, two measures ( H.R. 2185 and H.R. 2843 ) were introduced to remove the President from the Architect appointment process and shift it to the congressional leaders and chairs and ranking members of specific congressional committees. Under both measures, the Architect would still be appointed for a 10-year term. Under H.R. 2185 , which was introduced on April 30, 2009, and referred to the Committee on House Administration and Committee on Transportation and Infrastructure, the Architect would be appointed by a 12-member congressional appointing panel. No further action was taken during the 111 th Congress. Under H.R. 2843 , as reported, the Architect would be appointed jointly by the same 14-member panel that currently is responsible for recommending candidates to the President. This bill was reported by the Committee on House Administration ( H.Rept. 111-372 ), and the Committee on Transportation and Infrastructure was discharged from further consideration of the bill. The House agreed to the bill, as amended to include 18 rather than 14 Members of Congress (see Table 1 ), by voice vote. It was received in the Senate and referred to the Committee on Rules and Administration, and no further action was taken during the 111 th Congress. The Legislative Branch Appropriations Act, 1990, which established the current appointment procedure, did not address the possibility of the removal of an Architect. The Architect, then, presumably serves at the pleasure of the President. A few of the bills introduced over the last 50 years providing for appointment by Members of Congress have contained provisions specifically addressing removal. H.R. 8616 (94 th Congress) proposed that the Architect could be removed by concurrent resolution. S. 2205 (94 th Congress) provided for removal by resolution in either the House or Senate. Statutes related to the selection of two legislative branch agency heads also address removal. Like the Architect of the Capitol, the Comptroller General (CG) is appointed by the President for a fixed term of office (for the CG, this term is 15 years) with the advice and consent of the Senate. The CG may be removed only by "(A) impeachment; or (B) joint resolution of Congress, after notice and an opportunity for a hearing" and only by reason of permanent disability; inefficiency; neglect of duty; malfeasance; or a felony or conduct involving moral turpitude. The Director of the Congressional Budget Office, who is appointed by the Speaker of the House of Representatives and the President pro tempore of the Senate after considering recommendations received from the Committees on the Budget of the House and the Senate, "may be removed by either House by resolution." Following the decision of George White, who served as Architect from January 27, 1971, until November 21, 1995, not to seek reappointment under the new process, Alan Hantman was nominated under the new procedure to a 10-year term by President Clinton on January 6, 1997. Following a hearing on January 28, 1997, the Senate Committee on Rules and Administration favorably reported his nomination. Mr. Hantman was confirmed by the Senate by voice vote on January 30, 1997. Declining to seek reappointment, Mr. Hantman retired on February 4, 2007, and Stephen T. Ayers, then-Deputy Architect, began service as the Acting Architect of the Capitol. As discussed above, Mr. Ayers was confirmed and appointed as Architect three years later, in 2010. Between the announcement that Mr. Hantman would retire and the nomination and confirmation of Mr. Ayers, few congressional announcements were made regarding the status of the Architect vacancy and the submission of the recommendations to the President. During a hearing on the FY2008 appropriations request on April 24, 2007, before the House Legislative Branch Appropriations Subcommittee, Acting Architect Stephen Ayers responded to a question about the status from ranking member Representative Zach Wamp: I did speak to the [Senate] Rules Committee about the selection process.... They have told me that their executive recruiter is currently interviewing potential candidates, and I surmise that they would give them that list of potential candidates in a month or two. So that is about the extent of my knowledge of that. Although the list of names was reportedly transmitted to President George W. Bush in summer 2007, the identity of the candidates was not publicly released by the commission. In its activities report on the 110 th Congress (2007-2008), the Committee on House Administration summarized congressional actions and indicated concern about the current process: Although the commission forwarded three candidates [to the President], complex circumstances prevented final selection and confirmation of the Architect. The Committee anticipates completion of the appointment process in the 111 th Congress, but in the meantime is reviewing whether the process is simply broken and requires new legislation. The three-year period following the retirement of the former Architect was also noted in the February 3, 2010, debate in the House on passage of the H.R. 2843 (111 th Congress), the Architect of the Capitol Appointment Act . Mr. Ayers was confirmed by the Senate on May 12, 2010. The initial selection process, as well as the recent search for a successor, have raised a number of potential issues for consideration. These issues, which are discussed below, include the length of the commission's work and the potential for extended vacancies in the position; the operation of the commission; and what would happen in the event an incumbent seeks reappointment as Architect. Although the commission may transmit names whenever there is a vacancy, it is not clear from either the statute or the legislative history exactly when the commission proceeds. The act does not address the possibility of the bicameral congressional commission beginning its work before an incumbent's departure. In addition, the statute is silent on any time frame for the commission's forwarding of recommendations following a retirement, presidential action on the commission's recommendation, or congressional action once a nomination has been received. From the retirement of George White until the Senate confirmation of Alan Hantman, 436 days elapsed. Some 1,193 days elapsed from the retirement of Alan Hantman until the Senate confirmation of his successor, Stephen T. Ayers. This period included a change in presidential Administration. The statute provides no guidance on how the commission should operate. If the commission has rules of procedure or criteria for choosing potential nominees, they have not been made public nor would they be binding for a future selection. In comparison, the statute establishing a commission to recommend individuals to serve as Comptroller General similarly does not address commission procedure. Questions about the commission remain regarding who presides over its meetings; where and how meetings are called; how many members of the commission constitute a quorum; what constitutes agreement by Members of the commission regarding nominees, including whether nominees need approval of a majority or all of the Members; and how the commission receives administrative or financial support (i.e., any staffing expenses, travel expenses, or other expenses related to the search and evaluation of candidates). When former Architect Alan Hantman was chosen, press reports were the only source of information that he was among the candidates whose names were forwarded to President Clinton for consideration. One press account indicated that "Hantman is the 'primary choice' of the 14-Members of Congress appointed to find the Capitol's tenth Architect." This same press account reported the following: "According to a letter from the chairman of the Senate Rules and Administration Committee Chairman John Warner (R-VA), Hantman was the first choice of the Members 'by a substantial margin.'" The account quotes an aide as reporting that "all 14 commission members voted either by ballot or proxy for the nominees," although the votes were not published. As stated above, following Mr. Hantman's term of office, the commission reportedly forwarded a list of names to President George W. Bush in August 2007. President Bush did not forward a nomination to the Senate prior to the end of his term. This period also encompassed the end of the 110 th Congress, with resultant changes in membership of the commission at the start of the 111 th Congress. The 1989 act does not address a change in the membership of the commission while there is a vacancy in the position. There are also unresolved questions should an incumbent Architect decide to seek reappointment under the current process established in 1989. It is not clear if or when the commission would form under this circumstance or if the incumbent Architect would need to be chosen again among at least two other potential candidates. Should the President choose not to reappoint the incumbent, it is unclear if formal notification would be required before the commission could begin its work or how this would be accomplished. Many of the introduced bills and congressional hearings related to appointment have addressed the fact that not all of those who have held the position of Architect of the Capitol have been trained architects. Some proposed legislation in the 1950s and 1960s would have required all future nominees to be trained architects. Alternatively, at least one bill--introduced in 1968 during a period of congressional concern over plans for the expansion of the west front of the Capitol--sought to change the title of the office to "Superintendent of the Capitol Buildings and Grounds" to reflect the fact the then-Architect did not have this training. When Architect White announced his retirement in 1995, concerns were voiced within Congress, the media, and professional groups about the necessary qualifications for any successor. There was considerable discussion about the necessity of the new Architect being a licensed architect and the type of professional management training and experience needed for the position. The American Institute of Architects (AIA) expressed its preference for a licensed architect with experience in management, procurement, and historic restoration. In 1995, the AIA sent congressional leaders a list of nine potential Architect nominees for consideration. The following year, Raj Barr-Kumar, the president-elect and a fellow of the American Institute of Architects, described the process by which the AIA arrived at these names and qualifications and responsibilities it identified in a February 29, 1996, hearing of the Senate Rules and Administration Committee. To fill the most recent Architect vacancy, the AIA again urged the selection of a licensed architect. Others, including some Members of Congress, emphasized a background in management because the job responsibilities, particularly with the opening of the Capitol Visitor Center, are broader than building design and construction and include some duties not necessarily associated with typical architectural practice. Appendix A. Legislation to Alter the Architect of the Capitol Appointment Process Appendix B. Architects of the Capitol Since 1793 Since 1793, 11 persons have held the position currently known as the Architect of the Capitol. Of these, two served for more than three decades and two others served for more than two decades. As stated above, pursuant to the 1989 act, any subsequent appointments would be for a term of 10 years, with the possibility of reappointment. Table B-1 lists the individuals who have served as Architect, including names, dates of service, and links to biographical information.

According to its website, the Architect of the Capitol (AOC) is responsible "for the operations and care of more than 18.4 million square feet of facilities, 570 acres of grounds and thousands of works of art." Pursuant to the Legislative Branch Appropriations Act, 1990, the Architect is appointed by the President with the advice and consent of the Senate. Prior to the enactment of this law, the President appointed the Architect for an unlimited term with no formal role for Congress. The act also established a 10-year term for the Architect as well as a bicameral, bipartisan congressional commission to recommend candidates to the President. As subsequently amended in 1995, this law provides for a commission consisting of 14 Members of Congress, including the Speaker of the House, the President pro tempore of the Senate, the House and Senate majority and minority leaders, and the chair and ranking minority members of the Committee on House Administration, the Senate Committee on Rules and Administration, and the House and Senate Committees on Appropriations. An Architect may be reappointed. Alan M. Hantman was the first Architect appointed under the revised appointment procedure. He declined to seek reappointment and served from January 30, 1997, to February 4, 2007. Stephen T. Ayers, who served as Acting Architect of the Capitol following Mr. Hantman's retirement, was nominated by President Obama on February 24, 2010, for a 10-year term. The nomination was referred to the Senate Committee on Rules and Administration. The committee held a hearing on April 15, 2010, during which the chair and ranking member praised Mr. Ayers for his work as acting Architect and congratulated him on the nomination. Mr. Ayers was confirmed by voice vote in the Senate on May 12, 2010. Upon the retirement of Mr. Ayers on November 23, 2018, Christine Merdon, the Deputy Architect of the Capitol/Chief Operating Officer, became the Acting Architect of the Capitol. Since at least the 1950s, multiple bills have been introduced that would alter the AOC appointment process and require the appointment to be made by the leadership of Congress rather than the President. Some of the Architect's current duties, however, may potentially raise a question as to whether the Architect is an "Officer of the United States" such that his or her appointment must comply with the requirements of the Appointments Clause of the Constitution. For additional information and a comparison of appointments in the legislative branch, see CRS Report R42072, Legislative Branch Agency Appointments: History, Processes, and Recent Actions, by Ida A. Brudnick.

This report explains the Clean Air Act requirement that federal departments and agencies demonstrate that their activities--including projects that they fund--"conform" to state plans for achieving air quality standards. The report explains the statutory requirements, reviews the recent history of their implementation, and examines how conformity requirements might affect areas designated "nonattainment" for a revised ozone air quality standard. The Environmental Protection Agency (EPA) proposed such a revision in December 2014, and is under court order to finalize its review by October 1, 2015. Transportation conformity, which is required by Section 176(c) of the Clean Air Act (CAA), was established by Congress as a means of insuring that federal actions, including the provision of federal funds for transportation projects, not undermine air quality in areas that have not attained national ambient air quality standards (NAAQS) and in areas that were nonattainment, but have been redesignated as maintenance areas under CAA Section 175A. By potentially withholding federal funds for non-conforming projects, conformity serves as an important stimulus for state and local governments to assess potential air quality impacts of projects and, if necessary, modify them to assure that they not interfere with progress toward or maintenance of clean air. Under Section 176(c), departments and agencies of the federal government are prohibited from engaging in, supporting or providing financial assistance for, licensing, permitting, or approving any activity that does not conform to a State Implementation Plan (SIP) after such a plan has been submitted and approved. SIPs are a key element in achieving CAA standards. Under the act, depending on the NAAQS and the classification of the nonattainment area, states are required to develop SIPs within 18 months to four years of EPA's designation of an area as nonattainment. In general, in areas that have not attained one or more of the six NAAQS established by EPA (currently more than 100 areas with a combined population of 143 million ) the state must develop a SIP providing for implementation, maintenance, and enforcement of the NAAQS. In most cases, a SIP contains an inventory of existing emissions, projections of future emissions (generally including a motor vehicle emissions budget), and an identification of measures that will be taken to reduce the emissions in order to reach attainment by the statutory deadline. Deadlines vary, depending on the severity of the pollution, but generally a nonattainment area must demonstrate that it is making annual emission reductions sufficient to reach attainment. (For a more extended discussion of the requirements for nonattainment areas, see CRS Report RL30853, Clean Air Act: A Summary of the Act and Its Major Requirements .) Once an area has attained the NAAQS, it can be redesignated as a "maintenance" area if it revises its SIP to demonstrate how it will maintain compliance over a 20-year period. Conformity requirements apply to both nonattainment and maintenance areas. The act contains seven pages of detail regarding what constitutes a conforming project, and the requirements are further elaborated in the Code of Federal Regulations at 40 C.F.R. Part 93. In general, conformity to a SIP means that a proposed project or program "will not produce new air quality violations, worsen existing violations, or delay timely attainment of the national ambient air quality standards or delay interim milestones." Although a wide range of federal funding and programs is subject to conformity, it is transportation planning (and ultimately highway funding) that is most commonly affected. Transportation makes a substantial contribution to ambient concentrations of four of the six NAAQS pollutants: ozone, carbon monoxide, nitrogen dioxide, and particulate matter. Before a new transportation plan or transportation improvement program (TIP) can be approved by the Federal Highway Administration or Federal Transit Administration or a new non-exempt project can receive federal funding, a regional emissions analysis must generally demonstrate that the emissions of these pollutants or their precursors projected from the entire transportation system, including the new projects, are consistent with the emissions ceilings established in the SIP. Conformity must be demonstrated for the period ending on either the final year of the area's long range transportation plan, or at the election of the metropolitan planning organization (MPO), after consultation with the air pollution control agency, the longest of: the first 10 years of the transportation plan; the latest year in the SIP that contains a motor vehicle emissions budget; or the year after completion of a regionally significant project. Conducting this analysis can involve federal, state, regional, and local transportation and environmental planners. Ultimately, the Federal Highway Administration and Federal Transit Administration make conformity determinations for the transportation plan, TIP, and/or project. The conformity determinations are based on the most recent estimates of emissions, population, employment, travel, and traffic congestion provided by a variety of agencies. Combining these data, the MPO or state DOT must estimate vehicle miles traveled and emissions, generally by using an approved EPA mobile source emissions model. These models are periodically updated to reflect the current mix of vehicles and their emission characteristics. To reflect the changing nature of both economic and environmental inputs, both the statute and the regulations require that a nonattainment area's long-range Transportation Plan and its TIP demonstrate conformity at least every four years. The statute and regulations also require that MPOs re-determine conformity of transportation plans and programs not later than two years after approval of a new State Implementation Plan or motor vehicle emissions budget. In practice, many urban areas obtain a new determination that their TIP conforms on an annual basis. In the absence of conformity, the regulations provide that a limited set of exempt projects can go forward. The list includes 20 categories of highway safety projects, rehabilitation and reconstruction of transit facilities, purchase of replacement buses and rail cars, noise attenuation projects, and pedestrian and bicycle facilities. It does not include most new transit or highway projects, however. EPA's Office of Transportation and Air Quality (OTAQ) defined the exempt projects as those that are "air quality neutral"--that is, they neither improve nor degrade air quality. In addition to projects that are exempt by regulation, projects that were already approved and funded in the previous TIP may continue to be funded during a conformity lapse, provided that approval is not sought for a new phase of the project. Phases of a project include, among others, determination of environmental impacts under the National Environmental Policy Act, right-of-way acquisition, final design, and construction. Activities within each of those phases can continue for projects that were found to conform in the previous TIP. Transportation Control Measures (TCMs) listed in an approved State Implementation Plan are also allowed to proceed during a conformity lapse. These projects can include programs for improved public transit, construction of HOV (high occupancy vehicle) lanes, traffic flow improvement programs, fringe parking, idling reduction programs, and pedestrian facilities. In general, the statute and regulations assume that projects requiring a conformity determination will be located in urban or suburban areas, because most nonattainment areas have an urban or suburban core. But there are some nonattainment areas that are not urban or suburban. These areas would only need to demonstrate conformity if they had a non-exempt project that required federal funding or approval--a rare occurrence. Unlike areas with MPOs, they are not required to demonstrate conformity every four years. For the few rural areas that may have a federally funded project, EPA has developed separate procedures in 40 C.F.R. 93.109(f) that may deal with conformity. The section, which addresses "areas with insignificant motor vehicle emissions," states: ... an area is not required to satisfy a regional emissions analysis ... for a given pollutant/precursor and NAAQS, if EPA finds through the adequacy or approval process that a SIP demonstrates that regional motor vehicle emissions are an insignificant contributor to the air quality problem for that pollutant/precursor and NAAQS. The SIP would have to demonstrate that it would be unreasonable to expect that such an area would experience enough motor vehicle emissions growth in that pollutant/precursor for a NAAQS violation to occur. Such a finding would be based on a number of factors, including the percentage of motor vehicle emissions in the context of the total SIP inventory, the current state of air quality as determined by monitoring data for that NAAQS, the absence of SIP motor vehicle control measures, and historical trends and future projections of the growth of motor vehicle emissions. Most rural areas are unlikely to need to demonstrate conformity: the absence of monitoring data will mean that EPA cannot designate a rural area nonattainment in most cases. A nonattainment designation is based on the availability of three years of quality-controlled data from EPA-certified monitors. Approximately 814 U.S. counties (26% of the total) had ozone monitors reporting data to EPA in 2013; 2330 counties (74%), generally in less-populated areas, had no ozone monitoring. As a result, the majority of the nation's counties are termed "unclassifiable" by EPA, and are not subject to conformity. Nonattainment areas that have not demonstrated conformity by the applicable deadline fall into one of two groups: those in a grace period, and those in a conformity lapse. In the 2005 surface transportation law, Congress amended Section 176(c) of the Clean Air Act to provide that areas that do not make a conformity determination for a transportation plan or TIP by the applicable deadline are given a 12-month grace period to demonstrate compliance before conformity will lapse. As shown in Table 1 , since 2007, 34 areas in 18 states have used this grace period. As a result of this, as well as cooperation between air quality and transportation planners, all but seven areas in six states ( Table 2 ) have been able to demonstrate conformity without incurring a lapse. The experience of areas in the last decade was a marked change from the experience of areas prior to the 2005 amendments. From 1997 to 2003, 63 areas in 29 states and Puerto Rico had experienced a lapse, according to EPA. With a few notable exceptions, these areas were either medium-size cities or they were suburban areas near some of the nation's largest cities. Both before and after the addition of grace periods, most of the lapsed areas have returned to conformity quickly. Since 2007, only two areas (Huntington-Ashland, KY, and Beaumont, TX) have been in a lapse for more than six months. In the 1997-2003 period, of the 63 areas that experienced a lapse, 40 conformed within six months. Of the areas that lapsed for more than a year, few were major urban areas. The Government Accountability Office (GAO), citing EPA conformity program managers, reported that "most of these areas did not have pending new projects and, therefore, were not under time pressures to resolve their lapse." None of the lapsed areas actually lost transportation funding. DOT does not reduce the amount of funding a state receives, but without a conforming TIP, only exempt projects, TCMs, and project phases approved and begun in an earlier conforming TIP may be funded. Ultimately, when an area develops a new conforming TIP, the projects in that TIP will become eligible to receive funds. Aside from the observations noted above, it is difficult to generalize about the experiences of these areas. Each has, or had, its own special set of circumstances leading to the conformity lapse, and the transportation agencies and EPA responded in numerous, often unique ways. Many of the areas were allowed to demonstrate conformity by adopting additional emission reduction measures, by using a newer approved emissions model, by updating data used in the models, or by modifying the list of projects included in their TIP. In a 2003 survey, GAO found that, over the previous six years, only five metropolitan areas had to change transportation plans in order to resolve a conformity lapse. In general, until a March 1999 court decision, state and federal transportation agencies followed a less stringent interpretation of the act's requirements that allowed numerous projects to be funded and to continue through design and construction on the grounds that they had been approved and thus "grandfathered" prior to the lapse. In March 1999, however, the U.S. Court of Appeals for the D.C. Circuit struck down the grandfather clause. Since then, EPA and DOT have implemented more stringent requirements, through revised regulations. Atlanta is generally considered the "poster-child" for the most extreme effects of a lapse in conformity. Atlanta was classified as a Serious ozone nonattainment area under the one-hour ozone standard that EPA promulgated in 1979. While it had implemented numerous controls to reduce emissions and improve air quality, it continued to exceed the 1979 ozone standard as of the late 1990s. The Atlanta area is considered a prime example of sprawl development. In a 2001 report, the Atlanta Regional Commission (ARC), the federally designated MPO, found that, among 66 urban areas with populations greater than 500,000, Atlanta ranked 4 th in land area, but 56 th in population density. In large measure because of this sprawl, the Atlanta area also ranked 4 th in the nation in vehicle miles traveled per capita. Vehicle emissions were, therefore, major contributors to the area's ozone nonattainment. At the time of the D.C. Circuit's March 1999 conformity decision, the Atlanta metropolitan area was already in the second year of a conformity lapse. (The lapse began January 17, 1998, and lasted until July 26, 2000.) Initially, U.S. DOT had allowed the continued funding of numerous highway projects in Atlanta, despite the lapse in conformity, on the grounds that they were grandfathered. In January 1999, the Sierra Club and two local environmental groups filed suit, however, challenging 61 of the grandfathered projects, contending that they should not have been allowed to proceed except as part of a conforming TIP. In light of the D.C. Circuit opinion, the parties reached a settlement agreement in June 1999, under which many of the grandfathered projects were halted, but 17 were allowed to go forward. The heart of the Atlanta settlement was a new Interim Transportation Improvement Program (or ITIP). When conformity lapsed in January 1998, ARC had developed and received approval for an ITIP, which included the various grandfathered projects. In light of the litigation and D.C. Circuit decision, ARC developed a second (and ultimately a third) ITIP that the state and federal transportation departments, and EPA, as well as the environmental groups that had filed suit agreed could go forward during the lapse of conformity. Because they followed the D.C. Circuit decision and were themselves the product of settlement negotiations in a separate suit, the second and third Atlanta ITIPs are the best examples of what is allowed during a conformity lapse. These ITIPs, according to ARC, included only three kinds of projects: projects that were exempt under 40 CFR 93.126 (discussed above, on page 3); Transportation Control Measures; and a small group of projects that had received necessary approvals or funding and were allowed to continue to the completion of the phase that they were in. In all, about $700 million in projects that would have expanded highway capacity were stopped. Ultimately, in July 2000, ARC received approval for a new Transportation Improvement Program. The new program de-emphasized new highway capacity. Instead, 40% of its funds were dedicated to transit, 10% to bicycle and pedestrian facilities, 21% to safety measures and bridge and intersection improvements, and 26% to highway capacity. Besides the new TIP, an important result of Atlanta's conformity lapse was the development of the Georgia Regional Transportation Authority, whose Board included the heads of six state agencies as well as nine members appointed by the Governor. The authority was widely credited with improving coordination among transportation, planning, and environmental officials. Thus, although conformity requirements disrupted Atlanta's transportation planning, they appear to have served their intended function, forcing transportation and environmental officials to confer regarding the environmental impacts of transportation programs before and during major planning, design, and construction decision points and reorienting the area's transportation planning to a more multi-modal approach than the previous one, which relied heavily on new highway capacity. Not all parties were happy with these results, of course, but it would be hard to argue that the revisions violated the intent of the conformity requirements. When CRS wrote on transportation conformity in 2004, the report stated that the impact of conformity requirements might be expected to grow in the next few years for several reasons. First, the growth of emissions from sport utility vehicles and other light trucks and greater than expected increases in vehicle miles traveled appeared to be making it more difficult to demonstrate conformity. Second, recent court decisions (noted above) had tightened the conformity rules, making it more difficult to grandfather new projects. And third, the implementation of more stringent air quality standards for ozone and particulate matter (PM) in 2004 would mean that additional areas would be subject to conformity, many for the first time. Thus, the report concluded, numerous metropolitan areas would face a temporary suspension of highway and transit funds unless they imposed sharp reductions in vehicle, industrial, or other emissions. CRS was not alone in this expectation: about one-third of local transportation planners responding to a GAO survey expected to have difficulty demonstrating conformity in the future. Instead, in the time period since then, for a variety of reasons, conformity appears to have been a routine matter in most areas. What happened? A combination of higher fuel cost and the economic recession led to a reduction in vehicle miles traveled and a smaller share of new vehicle sales in the SUV and light truck categories. New emission control requirements for motor vehicles, power plants, and other sources also kicked in, substantially reducing emissions of ozone-forming compounds. Air quality data from before and after the promulgation of EPA's 2008 ozone NAAQS show the effect of these factors (see Table 3 ). In July 2007, when EPA proposed lowering the ozone NAAQS from what was effectively 84 parts per billion (ppb) to 75 ppb, the agency identified 398 counties with monitoring data exceeding the proposed standard, based on the most recent three years of data (2003-2005). The Regulatory Impact Analysis that accompanied the final standard in March 2008, using data for 2004-2006, identified 345 counties exceeding the 75 ppb NAAQS. By May 2012, when the nonattainment areas were actually designated, the number of counties in nonattainment had fallen to 232, based mostly on data for 2008-2010. As EPA stated in 2012, in the materials accompanying the formal designations: Air quality continues to improve across the nation as a result of successful federal, state and local pollution reduction efforts. EPA designated 113 areas as not meeting the 1997 ozone standards set at 84 parts per billion. Less than half that number are not meeting the 2008 standards. In addition, many of the areas designated today cover a smaller geographic area than the previous standards.... Only three areas in two states (California and Wyoming) have not been nonattainment for previous ozone standards. Wyoming is the only state that has not previously had an area designated nonattainment for ozone. EPA is currently considering a more stringent NAAQS for ozone again: a revised NAAQS was proposed in December 2014, and EPA is under court order to make a final decision by October 1, 2015. During the public comment period on the proposed rule, concerns regarding the extent of ozone nonattainment and thus the burden of demonstrating conformity have been raised, much as they were when EPA proposed previous NAAQS revisions. In the support documents that accompanied the December 2014 proposal, EPA identified 358 counties currently exceeding a proposed 70 ppb standard, using data for 2011-2013--or 558 counties if the NAAQS is set at 65 ppb. Because of continuing air quality improvements, the number of counties with monitors exceeding the standard is almost certain to decline before the nonattainment areas are formally designated. At the earliest, designation of nonattainment areas will occur in late 2017. By that time, new (Tier 3) standards for motor vehicles and their fuels will have taken effect. In promulgating Tier 3 last year, EPA estimated that Tier 3 alone would reduce ozone-forming emissions of NOx from motor vehicles by 10% in 2018. Beginning in 2015, power plants are required to reduce ozone-forming NOx emissions, as a result of implementation of the Cross-State Air Pollution Rule (CSAPR). The oil and gas industry, whose emissions of NOx doubled and whose VOC emissions increased fivefold between 2005 and 2013, are now subject to New Source Performance Standards that will reduce their emissions of ozone-forming volatile organic compounds (VOCs). Standards for stationary engines used for irrigation pumps and backup power supplies, which went into effect in 2013, will reduce emissions of both VOCs and NOx. These and other emission standards are likely to reduce the number of counties with ambient concentrations above the proposed new ozone standard (as compared to the list based on 2011-2013 monitoring data that was included in the support documents for EPA's proposed rule). In areas that will be formally designated nonattainment, the emission standards cited above will facilitate the demonstration of conformity. EPA's analysis projects the effects of these standards on ozone nonattainment areas. The agency's modeling shows only nine counties outside of California exceeding a 70 ppb ozone NAAQS in 2025, without any emission control measures additional to those already promulgated. A 65 ppb standard imposes a somewhat greater burden, but in that case, too, the modeling shows most areas reaching attainment without additional controls. This would seem to imply that EPA expects most areas would not have difficulty demonstrating conformity despite a more stringent ozone standard. If Congress were to consider legislation to amend the transportation conformity requirements, the most likely vehicle for doing so would be legislation reauthorizing the surface transportation program. Funding expires at the end of May 2015. As of this writing (mid-May), reauthorization legislation had not begun to move, although there has been much talk of a temporary extension of funding. It is generally thought that any short-term extension would not include policy provisions. It is unclear, at this time, when Congress may consider broader reauthorization legislation. The following bills have been introduced that would have indirect effects on conformity determinations for ozone nonattainment areas by modifying the dimensions of nonattainment areas or preventing or delaying EPA's proposed strengthening of the ozone NAAQS: H.R. 1044 would require each state to revise the boundaries of ozone and carbon monoxide nonattainment areas that include entire metropolitan or consolidated metropolitan statistical areas, to exclude counties that are not in violation of the NAAQS, as determined by air quality monitoring; H.R. 1327 / S. 640 would delay the review and revision of the ozone NAAQS for three years and require future reviews at 10-year rather than 5-year intervals; H.R. 1388 / S. 751 would prohibit a more stringent standard until at least 85% of the counties in nonattainment areas as of July 2, 2014, attained the current standard, and would require EPA to consider feasibility and cost in setting an ozone NAAQS, among other provisions; and H.R. 2111 would provide that no funds made available under any act may be used by EPA to implement any ozone standard promulgated after its date of enactment.

Under the Clean Air Act, areas that have not attained one or more of the six National Ambient Air Quality Standards (currently more than 100 areas with a combined population of 143 million) must develop State Implementation Plans (SIPs) providing for implementation, maintenance, and enforcement of the NAAQS. The act requires that, in these areas, federal agencies not engage in, approve, permit, or provide financial support for activities that do not "conform" to the area's SIP. Although a wide range of federal funding and programs is subject to conformity, it is transportation planning (and ultimately highway funding) that is most commonly affected. Before a new transportation plan or transportation improvement program (TIP) can be approved by the Federal Highway Administration or Federal Transit Administration or a new non-exempt project can receive federal funding in a nonattainment area, a regional emissions analysis must generally demonstrate that the projected emissions from the entire transportation system, including the new projects, are consistent with the emissions ceilings established in the SIP. While some express concern at the potential impact of these conformity determinations in delaying or altering new highway projects, others note that the process simply obligates the federal government to support rather than undermine the legally adopted state plans for achieving air quality. In the late 1990s and early 2000s, there were numerous lapses of conformity: 63 areas, in 29 states and Puerto Rico, had lapses between 1997 and 2003. In 2005, however, Congress amended the Clean Air Act to provide a 12-month grace period to demonstrate compliance following an area's designation as nonattainment before conformity will lapse. Since 2007, only seven areas have experienced a conformity lapse, despite the imposition of more stringent ambient air quality standards for both ozone and particulate matter. All but one of the lapses since 2007 were resolved within a year. As Congress considers reauthorization of surface transportation programs this year, questions have again been raised regarding the impact of conformity requirements, and whether the Environmental Protection Agency's (EPA's) current proposal to strengthen the ambient air quality standard for ozone will affect the number of areas required to make conformity determinations. Particular concern has been expressed for rural areas that may never have been classified nonattainment for an air quality standard before. The number of areas ultimately affected will depend on numerous factors, including the level at which EPA sets the final ozone standard and trends in emissions and weather in the period before EPA designates any new nonattainment areas. Although these factors introduce elements of uncertainty in future projections, most rural areas are unlikely to be designated nonattainment for the ozone standard, because they do not have ozone monitors in place. In the few rural areas that have been designated nonattainment, conformity needs only to be determined if there is a non-exempt transportation project that depends on federal funding or approval--a rare occurrence. In addition, EPA's conformity regulations provide exceptions for areas with insignificant motor vehicle emissions, which may facilitate the demonstration of conformity in any rural areas that will be designated nonattainment. This report explains the statutory conformity requirements, reviews the recent history of their implementation, and examines how conformity requirements might affect areas designated nonattainment for a revised ozone air quality standard.