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In April 2009, a novel influenza virus began to spread around the world. Early in the outbreak, public reports referred to the virus as "swine flu," which reflected the dominant genetic makeup of the unknown disease. At the end of April, the World Health Organization (WHO) formally named the disease and explained how the disease emerged: Pigs can be infected by avian (bird), human, and swine (pig) influenza (flu) viruses. When flu viruses from different species infect pigs simultaneously, the viruses can reassort (swap genes) and new viruses that are a mix of swine, human or avian flu viruses can emerge. This type of reassortment has already happened in pigs; avian and human genes have been circulating among swine in the United States since 1998. This type of reassortment can also occur in humans. The currently circulating influenza A (H1N1) virus is such a reassortment, composed of genes of swine, avian and human origin. This particular combination had not been seen in humans or in swine. The origin of this reassortment, and when and where it happened, is not known. This virus is now being transmitted from human to human in a sustained manner. The role of swine in the emergence of this virus is under investigation. WHO refers to the virus as Influenza A(H1N1). The U.S. Centers for Disease Control and Prevention (CDC) and other Administration officials refer to it as 2009 H1N1 flu. Throughout this report, the virus is referred to as H1N1. The virus does not appear to be as lethal as H5N1 avian influenza--which reemerged in 2005--but is slightly more lethal than seasonal flu. Although H1N1 has spread enough to be characterized as a pandemic, researchers are not yet sure how virulent the virus will become. On April 21, 2009, CDC reported that two children in California had recovered from a unique influenza strain, which contained gene segments from swine flu viruses. The children had not had contact with pigs. Two days later, CDC reported five more H1N1 cases, three in California and two in Texas. On April 24, 2009, Mexico's Health Ministry announced that a new strain of influenza was affecting the country, with just over 1,000 suspected cases. The Mexican government also announced that it was closing schools and canceling public gatherings such as sporting events and concerts in Mexico City and surrounding states through May 6, 2009. This was subsequently extended to all schools throughout the country. By April 27, 2009, WHO had reported that health officials in Canada and Spain had reported human cases with no deaths. Two days later, WHO Director-General Dr. Margaret Chan raised the influenza pandemic alert level from Phase 4 to Phase 5 ( Figure 1 ). According to WHO, Phase 4 is characterized by verified human-to-human transmission of an animal or human-animal influenza reassortant virus able to cause 'community-level outbreaks.' Phase 5 is characterized by human-to-human spread of the virus into at least two countries in one WHO region. While most countries will not be affected at this stage, the declaration of Phase 5 is a strong signal that a pandemic is imminent and that the time to finalize the organization, communication, and implementation of the planned mitigation measures is short. On June 11, 2009, WHO Director-General Margaret Chan raised the pandemic alert level to Phase 6, the highest level. On the date of the announcement, Dr. Chan characterized the virus as "moderately severe," though she warned the virus could become increasingly virulent at any time. Dr. Chan emphasized that the shift reflected the spread of the disease not a change in virulence. As of June 22, 2009, WHO reported that more than 50,000 human cases of H1N1 had been confirmed in more than 80 countries and territories, including 231 deaths ( Table A-1 and Figure A-1 ). It is important to note that more people than officially reported may have contracted H1N1; the number of cases reflects only cases confirmed by laboratory testing and reported to WHO by foreign health authorities. The United Nations Food and Agricultural Organization (FAO), the World Organization for Animal Health (OIE), and WHO agree that there is no risk of contracting the virus from consumption of well-cooked pork or pork products. WHO also advises that "limiting travel and imposing travel restrictions would have very little effect on stopping the virus from spreading, but would be highly disruptive to the global community." WHO does caution, however, that those who are ill should delay international travel. According to WHO, most people who have contracted H1N1 have experienced influenza-like symptoms, such as sore throat, cough, runny nose, fever, malaise, headache, and joint/muscle pain, and recovered without antiviral treatment. Drugs provided to H1N1 patients may reduce the symptoms and duration of illness, just as they do for seasonal influenza. They also may contribute to preventing severe disease and death. The strain of H1N1 circulating the globe is a new virus, and only a small number of people with the infection have been treated for it with antiviral drugs. WHO has tested those who received treatments in Mexico and the United States and found that older antiviral drugs have not been very effective against H1N1, though oseltamivir (brand name Tamiflu®️) and zanamivir (brand name Relenza®️) are. WHO has been maintaining a global stockpile of approximately 5 million adult treatment courses of oseltamivir that were donated by manufacturers and donor countries. This stockpile was initiated after the onset of H5N1 bird flu outbreaks. WHO has already distributed some of the treatments and is distributing 3 million adult treatment courses from the stockpile to developing countries in need. There is no available vaccine against the current strain of H1N1, though CDC, WHO, and others are working on developing one. Scientific evidence, though incomplete, suggests that currently available seasonal influenza vaccines will offer no protection against H1N1. WHO and CDC are preparing vaccine candidate viruses and estimate that once the strain is modified, it could take between five and six months to mass-produce a vaccine against H1N1. Once a vaccine is developed, WHO estimates that at least 1 to 2 billion vaccine doses could be produced annually. Once a vaccine is developed, Sanofi-Aventis announced that it would donate 100 million vaccine doses to WHO for distribution to poor countries in need. GlaxoSmithKline also reportedly plans to donate 50 million doses to WHO. Most countries, with the exception of China, have adhered to the WHO recommendation against banning international travel or closing borders. China has reportedly quarantined and prevented a number of Mexican nationals, including those living in China at the time of the outbreak, from traveling. Mexico reportedly responded by barring all flights to China until "concerns about discrimination were addressed." Though no other country has reportedly quarantined Mexican nationals or any other citizens from countries with outbreaks, some countries have warned against nonessential travel to the United States and Mexico. On April 27, 2009, the European Union Health Commissioner Androulla Vassiliou reportedly urged Europeans to postpone nonessential travel to the United States and Mexico. On the same day, the CDC recommended that U.S. travelers avoid all nonessential travel to Mexico. On May 15, 2009, it downgraded the recommendation to a "travel health precaution." In defending the decision not to close U.S. borders with Mexico, Homeland Security Secretary Janet Napolitano testified at an April 29, 2009, Senate Homeland Security Committee hearing that "closing the border [to Mexico] would yield only very marginal benefits; at the same time, closing the border has very high costs. The strain of the virus that was first detected in Mexico is already present throughout the United States, and there is no realistic opportunity to contain the virus through border closures, so our focus must now be on mitigating the virus." Closing U.S. borders could involve a series of legal and logistical issues. A number of countries have reportedly installed or are in the process of installing "thermal (temperature) scanners" in airports to detect the body temperature of travelers and further screen those whose body temperature exceed 100 degrees Fahrenheit. There is some debate, however, on the effectiveness of such measures. Several countries have instituted actions to prevent the spread of H1N1 among animals. Egypt is reportedly the first country to order the slaughter of pigs, though pigs have not yet been identified as a source of human transmission. Several countries have also banned the import of pork and pork products from the United States, Canada, and Mexico. On May 1, 2009, USAID established the Pandemic Influenza Response Management Team--composed of its Bureaus of Global Health and Democracy, Conflict, and Humanitarian Assistance--to coordinate the U.S. humanitarian response to H1N1 outbreaks. As of May 18, 2009, the United States has provided more than $16 million to assist countries in Latin America and the Caribbean respond to H1N1 outbreaks. U.S. aid focuses on H1N1 specifically, and builds on influenza pandemic preparedness efforts that began in earnest after the 2003 severe acute respiratory syndrome (SARS) outbreak. U.S. responses to global H1N1 outbreaks are conducted mostly by CDC and the U.S. Agency for International Development (USAID), though the Department of Defense (DOD) has also provided support ( Table 1 ). Foreign assistance efforts largely focus on commodity delivery and disease detection and surveillance. In addition to the support listed above, USAID announced on May 27, 2009, that it had donated "4,000 personal protection equipment (PPE) kits to Vietnam and 100 boxes of biodegradable powder--enough to produce over 20,000 liters of disinfectant to help animal health workers respond quickly to potential new outbreaks of avian or H1N1 influenza." The kits--valued at over $57,000--can be used in response to H5N1 bird flu or H1N1 outbreaks. CDC has been engaged in efforts to respond to H1N1 outbreaks since the virus was identified. As one of four WHO collaborating centers around the world, the CDC influenza laboratory in Atlanta routinely receives viral samples from many countries, including Mexico. CDC creates or develops reagents that are used to detect subtypes of influenza that are sent to national influenza centers around the world. Once the subtype of influenza is identified, CDC generates testing kits that are sent to public health laboratories worldwide at no cost. At the onset of the outbreak, CDC sent experts out to the field to help strengthen laboratory capacity and train health experts to control the spread of a virus. HHS Secretary Kathleen Sebelius announced on April 30, 2009, that the department "began moving 400,000 treatment courses--valued at $10 million--to Mexico, which represent less than 1% of the total American stockpile." In total, the Administration aims to distribute 2 million courses in Latin America and the Caribbean. In addition, CDC has deployed 16 staff to Mexico and one health expert to Guatemala, including experts in influenza epidemiology, laboratory, health communications, and emergency operations, including distribution of supplies and medications, information technology, and veterinary sciences. These teams work under the auspices of the WHO/Pan American Health Organization Global Outbreak Alert and Response Network and a trilateral team of Mexican, Canadian, and American experts. The teams aim to better understand the clinical illness severity and transmission patterns of H1N1 and improve laboratory capacity in Mexico. CDC's Emergency Operations Center also coordinates and collaborates with the European Centre for Disease Prevention and Control (ECDC) and the China CDC. In addition to efforts related to H1N1, CDC directly or indirectly supports pandemic influenza preparedness efforts in more than 50 countries. In some cases, CDC sends an expert to work with a WHO country office or foreign ministry of health. In other cases, CDC forms cooperative agreements with groups through which it provides funding for country efforts. USAID announced on April 28, 2009, that it would provide an additional $5 million to WHO and the Pan American Health Organization (PAHO) in support of efforts to respond to the H1N1 virus in the Latin America and the Caribbean, with particular emphasis placed on advanced disease surveillance and control measures. As of May 18, 2009, USAID has provided $6.1 million for international H1N1 assistance, with about $0.9 million directed at H1N1 response efforts in Mexico, $0.2 million in Panama, and $5 million to the region, as indicated above. The assistance includes support to FAO for animal surveillance efforts in Mexico and other parts of Latin America and the Caribbean and provision of commodities. In May 2009, it distributed more than 100,000 personal protection equipment (PPE) kits valued at more than $1 million from its avian and pandemic influenza stockpile to protect first responders in the region from contracting or spreading the disease. USAID also announced that it had already pre-positioned 400,000 PPE kits in 82 countries in preparation of a possible influenza pandemic. As part of its Humanitarian Pandemic Preparedness (H2P) Initiative, USAID held a three-day pandemic preparedness exercise at the end of April 2009 in Ethiopia. The exercise brought together stakeholders and national authorities from nine countries in East Africa: Burundi, Djibouti, Egypt, Ethiopia, Kenya, Rwanda, Sudan, Tanzania, and Uganda. Participants included civilian and military representatives who met to identify roles and responsibilities, establish coordination principles, develop a pandemic response action plan, and test existing ones. During the session, participants underwent a simulation exercise that allowed them to test their plans, identify their weaknesses, and improve and refine their preparedness plans. The exercises not only help governments prepare for any influenza virus that might cause a pandemic, whether it originates from pigs, birds, or any other source, but they also help governments address cross-border movement of populations. At the regional events, national leaders can interact with each other and identify some possible issues that might arise with an influenza outbreak, such as those that arose between the United States and Mexico. USAID plans to conduct similar exercises in South Africa in July 2009 and Asia in August 2009. USAID is also reportedly working with the Department of Defense (DOD) and its Pacific and African combatant commands--PACOM and AFRICOM--to provide direct military-to-military assistance in 30 countries across Africa and Asia aimed at ensuring that militaries are prepared to cooperate with civilian authorities and fully prepared and capable of executing their responsibilities during a pandemic. In May 2009, USAID also reportedly conducted a joint pandemic preparedness exercise with PACOM, AFRICOM, and the World Food Program (WFP), which involved 27 African and Asian countries and their military representatives. In FY2005, Congress provided emergency supplemental funds for U.S. technical assistance efforts related to global pandemic influenza preparedness and response. In each appropriation year since, Congress has funded U.S. efforts to train health workers in foreign countries to prepare for and respond to a pandemic that might occur from any influenza virus, including H5N1 avian flu and H1N1. The U.S. Department of State announced in October 2008 that since FY2005, the United States has pledged about $949 million for global avian and pandemic influenza efforts, accounting for 30.9% of overall international donor pledges of $3.07 billion. The United States is the largest single donor to global avian and pandemic preparedness efforts. The funds have been used to support international efforts in more than 100 nations and jurisdictions. The assistance focused on three areas: preparedness and communication, surveillance and detection, and response and containment. The $949 million was provided for the following efforts: $319 million for bilateral activities; $196 million for support to international organizations, including WHO, the U.N. Food and Agriculture Organization (FAO), the U.N. Development Program (UNDP), the International Federation of the Red Cross and Red Crescent Societies (IFRC), the U.N. System Influenza Coordinator (UNSIC), the World Organization for Animal Health (OIE), and the U.N. Children's Fund (UNICEF); $123 million for regional programs, including disease detection sites; $83 million for a global worldwide contingency, available to address the evolving nature of the threat; $77 million for international technical and humanitarian assistance and international coordination; $71 million for international influenza research (including vaccines and modeling of influenza outbreaks) and wild bird surveillance, including the U.S. launch of the Global Avian Influenza Network for Surveillance (GAINS) for wild birds, with a collection of tens of thousands of samples for H5N1 analysis; $67 million for stockpiles of non-pharmaceutical supplies, including over 1.6 million PPE kits, approximately 250 laboratory specimen collection kits and 15,000 decontamination kits for use in surveillance, outbreak investigation and emergency response and containment efforts; and $13 million for global communications and outreach. The cumulative pledge of $949 million consists of the following contributions by agency: USAID: $542 million. HHS, including CDC, the National Institutes of Health (NIH), and the Food and Drug Administration (FDA): $353 million. U.S. Department of Agriculture (USDA): $37 million. Department of Defense (DOD): $10 million. Department of State (DOS): $7 million. In addition, President Barack Obama has requested $1.5 billion in supplemental funding for U.S. domestic and international pandemic preparedness and response activities. It was not stated how much of these funds the President intended to spend on international efforts. On June 19, 2009, the 2009 Supplemental Appropriations ( H.R. 2346 ) was sent to the President for his signature. The bill made available $50 million for USAID pandemic preparedness activities and $200 million to CDC for domestic and international H1N1 activities. The conference report did not specify how much of the $200 million CDC should spend on international efforts. Infectious diseases are estimated to cause more than 25% of all deaths around the world. A number of infectious disease outbreaks over the past decade, such as H5N1 avian influenza and severe acute respiratory syndrome (SARS), have heightened concerns about how infectious diseases might threaten global security. Most recently, the emergence of influenza A H1N1 has demonstrated the threat that infectious diseases pose. It is important to note that about 75% of the diseases that have emerged over the past decades have originated from animals. As a result, effective responses to the growing threat of infectious diseases require a multidisciplinary approach that brings together stakeholders from a variety of sectors, including agricultural and animal health. Investments that the United States and other international players have made to prepare for a possible influenza pandemic, and to monitor the spread of other infectious diseases, have been applied to the most recent global response to H1N1. While health experts have made considerable gains against the disease--including developing strain specific tests that are capable of identifying H1N1, identifying and distributing effective treatments against the disease, and utilizing a global surveillance system--other questions remain. Some health experts are concerned that some of the poorer countries may not yet have the capacity to sufficiently monitor and respond to H1N1. Others warn that it is too early to become complacent about H1N1, as transmission of influenza viruses tend to accelerate in winter months. Countries in the Southern hemisphere are only beginning to enter their winter season and are beginning to report cases. Questions still remain about whether the virus could change or reassort its genes, particularly should outbreaks in countries simultaneously contending with H5N1 bird flu cases occur (such as Egypt, Vietnam, and Indonesia). The section below raises some questions that health experts are considering about the global spread of H1N1. In May 2009, there was vigorous debate about whether WHO should maintain its pandemic influenza phase system, which reflects the spread of the virus and transmission patterns, not severity. Some argued that WHO should develop an alert system that is based on severity. Supporters of this idea asserted that the public might not understand that widespread death may not occur at the highest pandemic phase level. Critics of the system, including some European leaders, warned that if WHO raised the pandemic threat level to Phase 6, panic might ensue and considerable economic and social disruptions may occur. Other health experts maintained that recent cases of sustained human-to-human transmission of H1N1 in Japan justified raising the pandemic threat level to Phase 6. On June 11, 2009, WHO raised the pandemic phase level from 5 to 6. While announcing her decision, Director General Margaret Chan underscored that the shift did not reflect a change in severity. WHO also released a pandemic influenza preparedness and response guide that was updated and replaced its 2005 guide. Among other changes, the update "retained the six-phase structure, but regrouped and redefined the phases to more accurately reflect pandemic risk and the epidemiological situation based upon observable phenomena." The update also outlines steps governments should take in planning and preparing for an epidemic ( Table A-2 ). U.S. agencies have recognized the threat of infectious diseases, particularly zoonotic ones that have their origins in animals. USAID announced in April 2009 that it would launch a new five-year emerging pandemic threats program in October 2009. The program will be conducted in collaboration with CDC and USDA to support the development of a global early warning system for the threat posed by diseases of animal origin that infect humans, such as SARS, H5N1, and HIV/AIDS. USAID expects that a significant proportion of the funds will be used to invest in establishing a network of laboratories within Africa specifically intended to improve the ability to diagnose, both within animal and human populations, new emergent pathogens. USAID did not specify, however, how much will be provided for this effort or how extensive it will be. Some observers are concerned that South Africa is the only sub-Saharan country to have confirmed any cases human cases of H1N1 human cases. With the exception of South Africa (and to a certain extent Botswana), laboratory and surveillance systems in sub-Saharan Africa are in relatively poor condition. Some experts suggest that the absence of case reports from most African countries reflects limited public health and surveillance capacity, not a true absence of disease. Although there is consensus that laboratory and disease surveillance capacity is weak in most African countries, CDC, USAID, and other international health experts have been working to improve those systems. CDC has sent H1N1 testing kits to 237 laboratories in 107 countries, including 18 in Africa. Countries without the kits send viral samples to one of four WHO collaborating centers in Atlanta, Britain, Japan, and Australia. The ability of poor countries to purchase treatments and vaccines against diseases has been a debatable issue for some time. Arguments about access were raised when HIV/AIDS transmission was at its peak and many countries could not afford patented treatments. Discussions about access resurfaced at the peak of global H5N1 avian flu outbreaks. Indonesia intermittently sent viral samples to WHO, citing concerns that once a vaccine was developed, poorer countries would be unable to afford them or wealthier producing countries would hoard the vaccines. Some have raised similar concerns again with the recent H1N1 outbreaks. The link between access, poverty and health have been well-documented. USAID estimates that about 30% of the world's population lacks regular access to medicines and more than 50% of the poorest areas in Africa and Asia lack access. WHO estimates that more that 90% of the global capacity to develop influenza vaccines is located in Europe and in North America. With the bulk of capacity to develop and purchase treatments and vaccines concentrated in richer countries, poorer countries rely on the generosity of donor countries. Some are concerned that should a pandemic arise, richer countries will hoard treatments and vaccines for their populations. In addition to questions of access, others raise concern about the capacity of poorer countries to effectively administer mass vaccination and treatment campaigns. WHO reported that it would not conduct mass H1N1 vaccination campaigns should a vaccine be developed. Instead, the organization expects that national authorities will undertake such efforts. Some argue that countries that are already incapable of administering routine vaccines will be unlikely to successfully undertake such an effort. According to the most recent estimates compiled in 2002, some 1.4 million of deaths among children under five years of age were due to diseases that could have been prevented by routine vaccination. This represents 14% of total global mortality in children under five years of age. Health experts--including the WHO--are concerned that other factors could alter the severity of the H1N1 strain currently circulating the globe. One concern raised is the possibility of having strains of H5N1 bird flu and H1N1 circulating in the same area. This could allow the two flu strains to reassort (i.e., intermix their genes) to create yet another strain with the potential to cause human illness. Concerns about the likelihood that H5N1 might cause an influenza pandemic began in January 2004, when Thailand and Viet Nam reported their first human cases of avian influenza. Health experts were particularly concerned about H5N1 outbreaks, because all prerequisites for the start of a pandemic were met except one: efficient human-to-human transmission. The human cases were directly linked to historically unprecedented outbreaks of highly pathogenic H5N1 avian influenza in poultry that began in 2003 and rapidly affected eight Asian nations. By 2006, about 50 countries worldwide had confirmed outbreaks of H5N1 bird flu among its animal and human populations. In 2008 and 2009, six countries reported human H5N1 cases, though the disease has apparently become endemic in Asia. Health experts are closely watching whether countries contending with ongoing H5N1 cases begin to experience H1N1 cases. Of the six countries that reported human H5N1 cases in 2008 and 2009, only Indonesia and Cambodia have not reported H1N1 cases. H5N1 bird flu kills about 60% of humans who contract the virus. While H5N1 is more virulent than H1N1, it is not as easily transmissible. Most human deaths of H5N1 have occurred after direct contact with a sick bird, while animals have not yet been identified as a source of transmission for H1N1.

In April 2009, a novel influenza virus began to spread around the world. The World Health Organization (WHO) refers to the virus as Influenza A(H1N1). The U.S. Centers for Disease Control and Prevention (CDC) and other Administration officials refer to it as 2009 H1N1 flu. Throughout this report, the virus is referred to as H1N1. The virus does not appear to be as lethal as H5N1 avian influenza--which reemerged in 2005--but is slightly more lethal than seasonal flu. Although the virus has been characterized as a pandemic, researchers can not predict how virulent the virus will be ultimately. As of June 22, 2009, WHO confirmed that more than 50,000 human cases of H1N1 had occurred in more than 80 countries and territories, including 231 deaths. With the exception of Britain and Australia, all human deaths have occurred in the Americas. About 87% of all deaths have occurred in Mexico (49%) and the United States (38%). The United Nations Food and Agricultural Organization (FAO), the World Organization for Animal Health (OIE), and WHO agree that there is no risk of contracting the virus from consuming well-cooked pork or pork products. WHO asserts that limiting travel and imposing travel restrictions would minimally affect the spread of the virus, but would be highly disruptive to the global community. The strain of H1N1 circulating the globe is treatable with two antiviral drugs, oseltamivir (brand name Tamiflu®️) and zanamivir (brand name Relenza®️), though there is no available vaccine. WHO has been maintaining a global stockpile of approximately 5 million adult treatment courses of oseltamivir that were donated by manufacturers and donor countries. This stockpile was initiated after the onset of H5N1 bird flu outbreaks. WHO has already distributed some of the treatments through the WHO Regional Offices and is distributing 3 million treatment courses from the stockpile to developing countries in need. As of May 18, 2009, the United States had provided more than $16 million to assist countries respond to H1N1 outbreaks. Global responses by U.S. agencies to H1N1 are conducted primarily by CDC and the U.S. Agency for International Development (USAID), though DOD does provide some support to global aid. CDC has sent experts to Latin America and the Caribbean to help the countries strengthen laboratory capacity and train health experts. HHS has already sent 400,000 treatment courses to Mexico, accounting for less than 1% of the total American stockpile. In total, the Administration aims to provide 2 million courses to Mexico. USAID announced on April 28, 2009, that it would provide an additional $5 million to WHO and the Pan American Health Organization (PAHO) for interventions against H1N1 in Mexico and Central America. To date, USAID has provided $6.2 million for international H1N1 assistance. The assistance includes support to FAO for animal surveillance efforts in Mexico and other parts of Central America, and the provision of personal protection equipment (PPE) kits from its avian and pandemic influenza stockpile to prevent first responders from contracting or spreading the disease. In May 2009, it distributed more than 100,000 PPE kits in Mexico City and announced that it had already pre-positioned 400,000 PPE kits in 82 countries in preparation of a possible influenza pandemic. Investments that the United States and other stakeholders have made to prepare for a possible influenza pandemic, and to monitor the spread of other infectious diseases, have been applied to the most recent global response to H1N1. While health experts have made considerable gains against the disease, questions remain. Some health experts are concerned that poorer countries may not yet have the capacity to sufficiently monitor and respond to H1N1. Others warn that H1N1 transmission might accelerate in winter months. Questions still remain about whether the disease can change or reassort, particularly in countries simultaneously contending with H5N1 bird flu cases occur (such as Egypt, Vietnam, and Indonesia).

In health insurance, beneficiaries may face two types of out-of-pocket payments: (1) participation-related cost-sharing, typically in the form of monthly premiums, regardless of whether services are utilized, and (2) service-related cost-sharing, which consists of payments made directly to providers at the time of service delivery. Such beneficiary cost-sharing under Medicaid is described below. In order to obtain health insurance generally, enrollees may be required to pay monthly premiums and/or, less frequently, enrollment fees. Such charges are prohibited under traditional Medicaid for most eligibility groups. Nominal amounts set in regulations, ranging from $1 to $19 per month, depending on monthly family income and size, can be collected from (1) certain families moving from welfare to work who qualify for transitional assistance under Medicaid, and (2) pregnant women and infants with annual family income exceeding 150% of the federal poverty level (FPL), or, for example, about $19,800 for a family of two. Premiums and enrollment fees can exceed these nominal amounts for other specific groups. For example, for certain individuals who qualify for Medicaid due to high out-of-pocket medical expenses, states may implement a monthly fee as an alternative to meeting financial eligibility thresholds by deducting medical expenses from income (i.e., the "spend down" method). Cost-sharing is not capped for workers with disabilities and income up to 250% FPL. Premiums cannot exceed 7.5% of income for other workers with disabilities and income between 250% and 450% FPL. (If a state covers both groups, the same cost-sharing rules must apply.) Finally, some groups covered by Medicaid through certain waivers can be charged premiums that exceed nominal amounts. Under DRA authority, the general rules regarding applicable premiums are specified for three income ranges. For individuals with income under 100% FPL, and between 100% to 150% FPL, premiums are prohibited. Like traditional Medicaid, other specific groups (e.g., some children, pregnant women, individuals with special needs) are also exempt from paying premiums under the new DRA option. For persons with income above 150% FPL, DRA places no limits on the amount of premiums that may be charged. For the most part, premiums are not used under traditional Medicaid, except for workers with disabilities and waiver populations. Among the four states (Idaho, Kansas, Kentucky, and West Virginia) with approval for alternative DRA benefit packages, only Kentucky imposes monthly premiums: (1) $20/family with children with income over 150% FPL who are enrolled in the State Children's Health Insurance Program (SCHIP; additional details below), and (2) up to $30/family (not to exceed 3% of the adjusted, average monthly income) during the last six months of transitional Medicaid for working families with income over 100% FPL. Beneficiary out-of-pocket payments to providers at the time of service can take three forms. A deductible is a specified dollar amount paid for all services rendered during a specific time period (e.g., per month or year) before health insurance (e.g., Medicaid) begins to pay for care. Coinsurance is a specified percentage of the cost or charge for a specific service rendered. A copayment is a specified dollar amount for each item or service delivered. While deductibles and coinsurance are rarely used in traditional Medicaid, copayments are applied to some services and groups. The Appendix provides a comparison of the maximum charges allowed for service-related cost-sharing under traditional Medicaid, DRA, and SCHIP. SCHIP is a capped federal grant that allows states to cover low-income, uninsured children in families with income above Medicaid eligibility thresholds. Children may be enrolled in separate SCHIP programs for which SCHIP rules apply (shown in the Appendix ), or in Medicaid, for which traditional Medicaid or DRA rules apply. Some states (e.g., Kentucky) have both types of SCHIP programs (a Medicaid expansion and a separate SCHIP program), for which children with the highest income levels are enrolled in the separate program. Service-related cost-sharing under separate SCHIP programs generally parallels the rules under traditional Medicaid for lower-income subgroups; there are no limits specified for higher-income subgroups. Total SCHIP cost-sharing is capped at 5% of family income per eligibility period. Service-related cost-sharing under traditional Medicaid is prohibited for the following specific groups and services: (1) children under 18, (2) pregnant women for pregnancy-related services, (3) services provided to certain institutionalized individuals, (4) individuals receiving hospice care, (5) emergency services, and (6) family planning services and supplies. For most other groups and services, nominal amounts are allowed. For example, nominal copayments specified in regulations range from $0.50 to $3, depending on the payment for the item or service. These nominal amounts will be increased by medical inflation beginning in 2006 (regulations not yet released). Under the DRA option, certain groups and services are also exempt from the service-related cost-sharing provisions. These exemptions are nearly identical to those under traditional Medicaid. However, under traditional Medicaid, all children under 18 are exempt, while under DRA, only children covered under mandatory eligibility groups (the lowest income categories) and certain foster care/adoption assistance youth are exempt. Also, groups exempted from the general service-related cost-sharing provisions under DRA may nonetheless be subject to cost-sharing for non-emergency services provided in a hospital emergency room (ER), and/or for prescribed drugs (see the Appendix ). Under SCHIP, only American Indian and Alaskan Native children are exempt from cost-sharing, and cost-sharing is also prohibited for well-baby and well-child services. Among the four states with approval for alternative benefit packages via DRA, only Kentucky includes cost-sharing for participants, summarized in Table 1 . For many services across the four Kentucky plans, there is no cost-sharing for beneficiaries. When applicable, copayments for selected non-institutional services, acute inpatient hospital care, and for generic and preferred brand-name drugs are very similar to the maximums allowed under traditional Medicaid. For non-preferred brand-name drugs and for non-emergency care in an ER, a 5% coinsurance charge will be applicable in most cases. For all four Kentucky plans, the maximum annual out-of-pocket expense per member is $225 for health care services and $225 for prescriptions. Additionally, under DRA, the total aggregate amount of all cost-sharing (premiums plus service-related charges) cannot exceed 5% of family income applied on a monthly or quarterly basis as specified by the state. Under Kentucky's DRA SPA, this limit is applied on a quarterly basis. The rules governing consequences for failure to pay premiums differ somewhat under traditional Medicaid and DRA. Under traditional Medicaid, for certain groups of pregnant women and infants for whom monthly premiums may be charged, states cannot require prepayment, but may terminate Medicaid eligibility when failure to pay such premiums continues for at least 60 days. In contrast, under DRA, states may condition Medicaid coverage on the payment of premiums, but like traditional Medicaid, states may terminate Medicaid eligibility only when nonpayment continues for at least 60 days. States can apply this DRA provision to some or all applicable groups. Under both traditional Medicaid and DRA, states may waive premiums in cases of undue hardship. In Kentucky, benefits are terminated after two months of non-payment of premiums for children in the separate SCHIP program. Upon payment of a missed premium, re-enrollment is allowed. After 12 months of non-payment, payment of the missed premium is not required for re-enrollment. Also, working families with transitional Medicaid will lose coverage after two months of missed premiums unless good cause is established. There are more differences between traditional Medicaid and DRA with respect to rules for failure to pay service-related cost-sharing. Under traditional Medicaid, providers cannot deny care to beneficiaries due to an individual's inability to pay a cost-sharing charge. However, this requirement does not eliminate the beneficiary's liability for payment of such charges. In contrast, under DRA, states may allow providers to require payment of authorized cost-sharing as a condition of receiving services. Providers may be allowed to reduce or waive cost-sharing on a case-by-case basis. P.L. 109-432 exempts individuals in families with income below 100% FPL from the DRA failure to pay rules for both premiums and service-related cost-sharing. According to state regulations, Kentucky requires all providers to collect applicable cost-sharing from Medicaid beneficiaries at the time of service delivery or at a later date. No provider can waive cost-sharing, but only pharmacy providers can deny services for failure to pay (as per a state law). Finally, under SCHIP, states must specify consequences applicable to nonpayment of premiums and/or service-related cost-sharing, and must institute disenrollment protections (e.g., providing both reasonable notice and an opportunity to pay policies).

Under traditional Medicaid, states may require certain beneficiaries to share in the cost of Medicaid services, although there are limits on the amounts that states can impose, the beneficiary groups that can be required to pay, and the services for which cost-sharing can be charged. Prior to DRA, changes to these rules required a waiver. DRA provides states with new options for benefit packages and cost-sharing that may be implemented through Medicaid state plan amendments (SPAs) rather than waiver authority. These rules vary by beneficiary income level and for some types of service. The recently enacted P.L. 109-432 (Tax Relief and Health Care Act of 2006) modified the DRA cost-sharing rules. This report describes the new cost-sharing options and recent state actions to implement these provisions, and will be updated as additional activity warrants.

Historically, Congress has mandated programs to help U.S. exporters compete with subsidies provided by other countries, to assist with financing for exports where credit is a constraint, or to promote U.S. agricultural exports. Some in Congress have criticized programs that assist with exports as corporate welfare; others suggest that private entities could and should themselves finance export activities. The 2008 farm bill extends funding authority for credit guarantees and export market development through FY2012. The enacted farm law repeals legislative authority for the major export subsidy program, but extends authority for a smaller program that subsidizes dairy product exports. Funded by using the borrowing authority of the Commodity Credit Corporation (CCC), the farm bill agricultural export programs are administered by the Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture (USDA). CCC export credit guarantees assure payments for commercial financing of the sale of U.S. agricultural exports. If a foreign buyer defaults on the debt financing incurred, the CCC assumes the debt. In the 2002 farm bill ( P.L. 107-171 ) Congress authorized $5.5 billion (in export value, not cost to the Treasury) for such guarantees, plus an additional $1 billion to be made available to countries that are emerging markets. Four CCC export credit guarantee programs were authorized in the 2002 farm bill. GSM-102 guaranteed short-term (up to 3 years) financing of U.S. farm products; GSM-103 guaranteed longer-term (3-10 years) financing. The Supplier Credit Guarantee Program (SCGP) guaranteed very short-term (up to 1 year) financing of exports. The Facilities Financing Guarantee Program (FFGP) guaranteed financing of goods and services exported from the United States to improve or establish agriculture-related facilities in emerging markets. In 2006, FAS suspended operation of the GSM-103 program. The suspension was in response to a WTO dispute panel decision in a case brought by Brazil against U.S. cotton policy. The panel ruled that GSM programs were prohibited export subsidies because they did not recover their operating costs. Also FAS suspended the SCGP in FY2006, largely because of a high rate of defaulted obligations and evidence of fraud. In its farm bill proposals, the Administration requested that Congress formally repeal legislative authorities for GSM-103 and the SCGP. The Administration also requested that Congress lift the statutory 1% cap on loan origination fees for GSM-102,which the WTO cited as a subsidy element in the operation of the export credit guarantee programs. The 2008 farm bill repeals authority for the SCGP, the GSM-103 intermediate credit guarantee, and the 1% cap on loan origination fees for the GSM-102 program. The new farm bill caps the credit subsidy for the program at $40 million annually. The amount of GSM-102 credit that CCC must make available each year is set at not less than $5.5 billion, but the $40 million credit subsidy cap, according to the manager's statement accompanying the bill, is expected to finance $4 billion annually in export credit guarantees. The 2008 farm bill extends authority for the FFGP to FY2012. It also provides that the Secretary of Agriculture may waive requirements that U.S. goods be used in the construction of a facility under this program, if such goods are not available or their use is not practicable. The new law also permits the Secretary to provide a guarantee for this program for the term of the depreciation schedule for the facility, not to exceed 20 years. The 2002 farm bill authorized four programs to promote U.S. agricultural products in overseas markets, including the Market Access Program (MAP), the Foreign Market Development Program (FMDP), the Emerging Markets Program (EMP), and the Technical Assistance for Specialty Crops Program (TASC). Authorization of CCC funds for the market development programs expired with the 2002 farm bill in 2007. During the farm bill debate both the Administration and producers of fruits and vegetables advocated increased funding for export market development programs, targeted to specialty crops (fruits and vegetables). MAP assists primarily value-added products. Its purpose is to expand exports over the long term by undertaking activities such as consumer promotions, technical assistance, trade servicing, and market research. MAP projects are jointly funded by the federal government and industry groups. Trade organizations, nonprofit industry organizations, and private firms that are not represented by an industry group submit proposals for marketing activities to the USDA, which evaluates proposals and selects recipient organizations. The 2008 farm bill extends MAP through FY2012, makes organic produce eligible for the program, and keeps the funding level at the FY2007 level--$200 million--for each of the next five years (FY2008-FY2012). The 2002 farm bill reauthorized CCC funding for FMDP through FY2007 at an annual level of $34.5 million. FMDP, which resembles MAP in most major respects, mainly promotes generic or bulk commodity exports. The 2008 farm bill extends FMDP through FY2012 without change in the funding authorization. EMP provides funding for technical assistance activities intended to promote exports of U.S. agricultural commodities and products to emerging markets in all geographic regions, consistent with U.S. foreign policy. An emerging market is defined in the authorizing legislation (the 2002 farm bill) as any country that is taking steps toward a market-oriented economy through food, agricultural, or rural business sectors of the economy of the country. Additionally, an emerging market country must have the potential to provide a viable and significant market for U.S. agricultural commodities or products. The 2002 farm bill authorized funding at $10 million annually through FY2007. The 2008 farm bill reauthorizes the Emerging Markets Program through FY2012 without change. TASC aims to assist U.S. specialty crop exports by providing funds for projects that address sanitary, phytosanitary, and technical barriers that prohibit or threaten U.S. speciality crop exporters. The 2002 farm bill defined specialty crops as all cultivated plants, and the products thereof, produced in the United States, except wheat, feed grains, oilseeds, cotton, rice, peanuts, sugar, and tobacco. The types of activities covered include seminars and workshops, study tours, field surveys, pest and disease research, and pre-clearance programs. The 2002 farm bill authorized $2 million annually of CCC funds each fiscal year through FY2007 for the TASC program. The 2008 farm bill extends TASC through FY2012 and increases funding to $4 million in FY2008; $7 million in FY2009; $8 million in FY2010; and $9 million in each of FY20011 and FY2012. The 2002 farm bill authorized direct export subsidies of agricultural products through the Export Enhancement Program (EEP) and the Dairy Export Incentive Program (DEIP). Both programs subsidized agricultural exports when U.S. domestic prices were higher than world or international prices. EEP, which mainly subsidized exports of wheat and wheat flour (around 80% of EEP subsidies), has been little used as U.S. and world prices have moved closer together. The last year of significant EEP subsidies was 1995; there were no EEP subsidies during the five years of the 2002 farm bill. DEIP provided subsidies for dairy product exports; no DEIP subsidies have been provided since 2005. Agricultural export subsidies are a major issue in the Doha Round of multilateral trade negotiations, where preliminary agreement has been reached to eliminate them by 2013. The 2008 farm bill repeals legislative authority for EEP, but extends legislative authority for DEIP through December 31, 2012. (The DEIP authorization is in Title I, the Commodities title of the 2008 farm bill.) The 2008 farm bill requires the U.S. Agency for International Development (USAID) to make a contribution on behalf of the United States to the Global Crop Diversity Trust of up to $60 million over five years. U.S. contributions to the trust may not exceed one fourth of the total of funds contributed to the trust from all sources. The Global Diversity Trust is the funding mechanism for the International Treaty on Plant Genetic Resources for Food and Agriculture, which is an international agreement for the conservation, exploration, collection, characterization, evaluation and documentation of plant genetic resources for food and agriculture. The trust, administered by the United Nations Food and Agriculture Organization, (FAO), assists in funding the operation of gene banks held by the countries that are party to the treaty. The 2008 farm bill includes a provision that requires the Secretary of Agriculture, in cooperation with the Secretary of Labor, to develop standards that importers of agricultural products into the United States could choose to use to certify that those products were not produced with the use of abusive forms of child labor. The consultative group would develop recommendations on practices that would enable companies to monitor and verify whether the food products they import are made with the use of child or forced labor.

Agricultural exports, which are forecast by the U.S. Department of Agriculture to reach $108.5 billion in 2009, are an important source of employment, income, and purchasing power in the U.S. economy. Programs that deal with U.S. agricultural exports are a major focus of Title III, the trade title, in the new omnibus farm bill, the Food, Conservation, and Energy Act of 2008 (P.L. 110-246, H.R. 6124). The enacted farm bill repeals the major U.S. export subsidy program, and reauthorizes and changes a number of programs that assist with financing U.S. agricultural exports or that help develop markets overseas. Changes include modifying export credit guarantee programs to conform with U.S. commitments in the World Trade Organization (WTO), making organic products eligible for export market development programs, and increasing the funds available to address sanitary and phytosanitary barriers to U.S. specialty crop exports. International food aid programs are the other major focus of the farm bill trade title. For a discussion of farm bill changes in food aid programs, see CRS Report RS22900, International Food Aid Provisions of the 2008 Farm Bill.

Granting Russia permanent normal trade relations (PNTR) status requires a change in law because Russia is prohibited from receiving PNTR under Title IV of the Trade Act of 1974. The change would likely occur in the form of legislation to eliminate the application of Title IV to trade with Russia. Title IV includes the so-called Jackson-Vanik amendment free emigration requirements. Extension of PNTR has implications for Russia's accession to the World Trade Organization (WTO). The WTO requires its members to extend immediate and unconditional nondiscriminatory treatment to the goods and services of all other members. After 19 years of negotiations, Russia joined the WTO on August 22, 2012. On November 16, 2012, the House passed (365-43), and on December 6, 2012, the Senate passed (92-4) H.R. 6156 , which does just that, among other things. The legislation also included provisions--the Magnitsky Rule of Law Accountability Act of 2012--that impose sanctions on individuals linked to the incarceration and death of Russian lawyer Sergei Magnitsky. H.R. 6156 also authorized PNTR status for Moldova. President Obama signed the legislation into law on December 14, 2012. "Normal trade relations" (NTR), or "most-favored-nation" (MFN), trade status is used to denote nondiscriminatory treatment of a trading partner compared to that of other countries. Only two countries--Cuba and North Korea--do not have NTR status in trade with the United States. In practice, duties on the imports from a country which has been granted NTR status are set at lower rates than those from countries that do not receive such treatment. Thus, imports from a non-NTR country can be at a large price disadvantage compared with imports from NTR-status countries. Section 401 of Title IV of the Trade Act of 1974 requires the President to continue to deny NTR status to any country that was not receiving such treatment at the time of the law's enactment on January 3, 1975. In effect this meant all communist countries, except Poland and Yugoslavia. Section 402 of Title IV, the so-called Jackson-Vanik amendment, denies the countries eligibility for NTR status as well as access to U.S. government credit facilities, such as the Export-Import Bank, as long as the country denies its citizens the right of freedom of emigration. These restrictions can be removed if the President determines that the country is in full compliance with the freedom-of-emigration conditions set out under the Jackson-Vanik amendment. For a country to maintain that status, the President must reconfirm his determination of full compliance in a semiannual report (by June 30 and December 31) to Congress. His determination can be overturned by the enactment of a joint resolution of disapproval concerning the December 31 report. The Jackson-Vanik amendment also permits the President to waive the freedom-of-emigration requirements, if he determines that such a waiver would promote the objectives of the amendment, that is, encourage freedom of emigration. This waiver authority is subject to an annual renewal by the President and to congressional disapproval via a joint resolution. Before a country can receive NTR treatment under either the presidential determination of full compliance or the presidential waiver, it and the United States must have concluded and enacted a bilateral agreement that provides for, among other things, reciprocal extension of NTR or MFN treatment. The agreement and a presidential proclamation extending NTR status cannot go into effect until a congressional joint resolution approving the agreement is enacted. In 1990, the United States and the Soviet Union signed a bilateral trade agreement as required under Title IV of the Trade Act of 1974. The agreement was subsequently applied to U.S.-Russian trade relations, and the United States signed similar but legally separate agreements with the other former non-Baltic Soviet states. The United States extended NTR treatment to Russia under the presidential waiver authority beginning in June 1992. Since September 1994, Russia has received NTR status under the full compliance provision. Presidential extensions of NTR status to Russia have met with virtually no congressional opposition. Russian leaders continually pressed the United States to "graduate" Russia from Jackson-Vanik coverage entirely. They saw the amendment as a Cold War relic that did not reflect Russia's new stature as a fledgling democracy and market economy. Moreover, Russian leaders argued that Russia implemented freedom-of-emigration policies since the fall of the communist government, making the Jackson-Vanik conditions inappropriate and unnecessary. While Russia remained subject to the Jackson-Vanik amendment, some of the other former Soviet republics have been granted permanent and unconditional NTR. For example, Kyrgyzstan and Georgia received PNTR in 2000, and Armenia received PNTR in January 2005. Perhaps what has irked Russian leaders greatly is that the United States granted permanent and unconditional NTR status to Ukraine in 2006. As with these other countries, extending PNTR to Russia involved legislation that would remove the application of Title IV of the Trade Act of 1974 as it applied to Russia. It authorized the President to grant PNTR by proclamation. On November 16, 2012, the House passed (365-43), and on December 6, 2012, the Senate passed (92-4) H.R. 6156 , which did just that, among other things. President Obama signed the legislation into law on December 14, 2012. During the Cold War, U.S.-Soviet economic ties were very limited. They were constrained by national security and foreign policy restrictions, including the Jackson-Vanik amendment restrictions. They were also limited by Soviet economic policies of central planning that prohibited foreign investment and tightly controlled foreign trade. With the collapse of the Soviet Union, successive Russian leaders have been dismantling the central economic planning system. This has included the liberalization of foreign trade and investment. U.S.-Russian economic relations have expanded, but the flow of trade and investment remains very low, as reflected in Table 1 , which contains data on U.S. merchandise trade with Russia since 2001. The table indicates that U.S.-Russian trade, at least U.S. imports, has grown appreciably. The surge in the value of imports is largely attributable to the rise in the world prices of oil and other natural resources--which comprise most of U.S. imports from Russia--and not to an increase in the volume of imports. U.S. exports span a range of products including meat, machinery parts, and aircraft parts. U.S. imports increased more than 244%, from $7.8 billion to $26.8 billion from 2000 to 2008, and U.S. exports rose 343%, from $2.1 billion to $9.3 billion. However, U.S. exports and imports with Russia declined substantially in 2009, as a result of the global financial crisis and economic downturn, but increased in 2010 and 2011 as both countries have shown signs of recovery. Exports continued to increase in 2012 while imports decreased somewhat. Russia was the 28th -largest export market and 16 th -largest source of imports for the United States in 2012. U.S. exports to and imports from Russia are heavily concentrated in a few commodity categories. The top five 2-digit Harmonized System (HS) categories of imports accounted for about 70% of total U.S. imports from Russia and consisted of precious stones and metals, inorganic chemicals, mineral fuels, aluminum, iron and steel, and fish and other seafood. About 60% of U.S. exports to Russia consisted of products in three 2-digit HS categories: aircraft, machinery (mostly parts for oil and gas production equipment), and meat (beef, pork, and poultry). Russia's treatment of imports of U.S. meats--poultry, pork, and beef--is one of the most sensitive issues in U.S.-Russian trade relations. Russia's agricultural sector, particularly meat production, has not been very competitive, and domestic producers have not been able to fulfill Russia's expanding demand for meat, especially as the rise of Russian incomes has led to a rise in demand for meat in the Russian diet. U.S. producers, especially of poultry, have been able to take advantage and have become major sources of meat to the Russian market. At the same time, Russia has become an important market for U.S. exports of meat. For example, in 2009, Russia was the largest market for U.S. poultry meat exports. On January 1, 2010, the Russian government implemented new regulations on imports of poultry, claiming that the chlorine wash that U.S. poultry producers use in the preparation of chickens violates Russian standards and is unsafe. These regulations effectively halted U.S. exports of poultry to Russia. The United States claimed that the wash is effective and safe and that Russian restrictions are not scientifically based. U.S. and Russian officials conducted discussions to resolve the issue. At their June 24, 2010, press conference that closed a bilateral summit meeting, President Obama and then-President Medvedev announced that the dispute over poultry trade had been resolved and that U.S. shipments of poultry to Russia would resume. However, the full resumption of shipments was delayed over Russian demands to inspect U.S. poultry processing plants before they can be certified for shipping to Russia. On September 30, 2010, the two countries reportedly reached a compromise on this issue whereby Russian inspectors would examine and certify U.S. plants on an expedited basis. However, as a result of the Russian restrictions, U.S. exports of poultry to Russia plummeted almost 70% by the end 2011 compared to 2009. The lack of adequate intellectual property rights (IPR) protection in Russia has tainted the business climate in Russia for U.S. investors for some time. The Office of the United States Trade Representative (USTR) consistently identifies Russia in its Special 301 Report as a "priority watch list" country, as it did in its latest (April 30, 2012) report. The USTR report acknowledges improvements in IPR protection and cites steps taken to fulfill its commitments to improve IPR protection made as part of the 2006 bilateral agreement that was reached as part of Russia's WTO accession process. It also finds that Russia has problems with weak enforcement of IPR in some areas, including internet piracy. Russian economic policies and regulations have been a source of concerns. The United States and the U.S. business community have asserted that structural problems and inefficient government regulations and policies have been a major cause of the low levels of trade and investment with the United States. U.S. exporters have also cited problems with Russian customs regulations that are complicated and time-consuming. PNTR for Russia is closely tied to Russia's efforts to join the WTO. The WTO requires its members to extend immediate and unconditional nondiscriminatory treatment to the goods and services of all other members. To fulfill that commitment, the United States would have to extend PNTR to Russia. Russia first applied to join the General Agreement on Tariffs and Trade (GATT--now the World Trade Organization [WTO]) in 1993. Russia completed negotiations with a WTO Working Party (WP), which includes representatives from about 60 WTO members, including the United States and the European Union (EU). WP members raised concerns about Russia's IPR enforcement policies and practices, sanitary and phytosanitary (SPS) regulations that may be blocking imports of agricultural products unnecessarily, and Russia's demand to keep its large subsidies for its agricultural sector. The United States also raised issues regarding the role of state-owned enterprises (SOEs) in the Russian economy and Russian impediments to imports of U.S. products containing encryption technology. Prime Minister Putin's June 9, 2009, announcement that Russia would be abandoning its application to join the WTO as a single entity and would instead pursue it with Belarus and Kazakhstan as a customs union seemed to set back the accession process. However, after meeting resistance from WTO officials, Russia and the other two countries decided to pursue accession separately. On June 24, 2010, during their meeting in Washington, DC, President Obama and President Medvedev pledged to resolve the remaining issues regarding Russia's accession to the WTO by September 30. The United States also pledged to provide technical assistance to Russia to speed up the process of Russia's accession taking into account its customs union with Belarus and Kazakhstan. On October 1, 2010, the USTR announced that "the United States and Russia have reached agreement on the substance of a number of Russian commitments." He noted that Russia had enacted amendments to laws related to the protection of IPR and that the United States "looks to the effective implementation of these laws." Russia completed its bilateral negotiations and negotiations with the Working Party. On November 10, 2011, the members of the Working Party approved the accession package and sent it on for consideration by the Ministerial Conference. The Ministerial Conference approved the package and, on December 16, 2011, formally invited Russia to join the WTO. The lower house of the Russian parliament--the State Duma--and the upper house--the Federal Council--approved the protocol of accession on July 10 and July 18, 2012, respectively. President Putin signed the measure into law on July 21, and Russia formally joined the WTO on August 22, 2012. PNTR was a major issue in Russia's accession to the WTO. Because Title IV still applied to Russia at the time of its WTO accession, the United States invoked nonapplication of WTO rules, procedures, and agreements in its trade with Russia. As a result, many of the commitments that Russia made in joining the WTO might not have applied to the United States. (Under the 1992 U.S.-Russia bilateral trade agreement, Russia was obligated to apply nondiscriminatory tariff treatment to imports from the United States.) On November 16, and on December 6, 2012, respectively, the House passed (365-43) and the Senate passed (92-4) H.R. 6156 (365-43). The President signed the bill into law on December 14, 2012. The law removed the application of Title IV to trade with Russia and authorized the President to grant PNTR to Russia by proclamation. It also contained other provisions that required: the USTR report annually to the Senate Finance Committee and the House Ways and Means Committee on Russia's implementation of its WTO commitments, including sanitary and phytosanitary (SPS) standards and IPR protection and on acceding to the WTO plurilateral agreements on government procurement and information technology; the USTR report to the two committees within 180 days and annually thereafter on USTR actions to enforce Russia's compliance with its WTO commitments; the USTR and the Secretary of State report annually on measures that they have taken and results they have achieved to promote the rule of law in Russia and to support U.S. trade and investment by strengthening investor protections in Russia; the Secretary of Commerce to take specific measures against bribery and corruption in Russia, including establishing a hotline and website for U.S. investors to report instances of bribery and corruption; a description of Russian government policies, practices, and laws that adversely affect U.S. digital trade be included in the USTR's annual trade barriers report (required under Section 181 of the Trade Act of 1974); and the negotiation of a bilateral agreement with Russia on equivalency of SPS measures. The law also authorizes PNTR for Moldova. In addition, it contained the Magnitsky Rule of Law Accountability Act of 2012, which imposes sanctions on individuals linked to the incarceration and death of Russian lawyer Sergei Magnitsky.

U.S.-Russian trade is governed by Title IV of the Trade Act of 1974, which sets conditions on Russia's normal trade relations (NTR), or nondiscriminatory, status, including the "freedom-of-emigration" requirements of the Jackson-Vanik amendment (Section 402). Changing Russia's trade status to unconditional NTR or "permanent normal trade relations status (PNTR)" requires legislation to lift the restrictions of Title IV as they apply to Russia and authorize the President to grant Russia PNTR by proclamation. On November 16, 2012, the House passed (365-43), and on December 6, 2012, the Senate passed (92-4) H.R. 6156, which does just that, among other things. The legislation also included provisions--the Magnitsky Rule of Law Accountability Act of 2012--that impose sanctions on individuals linked to the incarceration and death of Russian lawyer Sergei Magnitsky. H.R. 6156 also authorized PNTR status for Moldova. President Obama signed the legislation into law on December 14, 2012. PNTR for Russia became an issue for the 112th Congress because, on August 22, 2012, Russia joined the WTO after having completed a 19-year accession process. The WTO requires each member to accord newly acceding members "immediate and unconditional" most-favored-nation (MFN) status, or PNTR. In order to comply with WTO rules, the United States had to extend PNTR to Russia.

Disaster-damaged roads and public transportation systems are eligible for federal assistance under two U.S. Department of Transportation (DOT) programs, the Emergency Relief (ER) Program administered by the Federal Highway Administration (FHWA) and the Public Transportation ER Program administered by the Federal Transit Administration (FTA). The two programs have different histories and legal and regulatory authorities, but they share a similar intent and face some of the same issues. For example, there are concerns with both programs about the extent to which federally funded activities should go beyond restoring infrastructure to predisaster conditions, including so-called resilience projects. This report begins by discussing FHWA assistance for the repair and reconstruction of highways and bridges damaged by disasters (such as the 2017 Hurricanes Harvey, Irma, and Maria) or catastrophic failures (such as the collapse of the Skagit River Bridge in Washington State in 2013). This includes information on the use of ER funds on disaster-damaged federally owned public-use roadways, such as National Park Service roads and U.S. Forest Service roads, under an affiliated program, the Emergency Relief for Federally Owned Roads Program. This is followed by a discussion of FTA's assistance program, established in 2012, which has provided assistance to public transportation systems on two occasions, once after Hurricane Sandy in 2012 and again after the 2017 hurricanes. For over 80 years, federal aid has been available for the emergency repair and restoration of disaster-damaged roads. The first legislation authorizing such use of federal funds was the Hayden-Cartwright Act of 1934 (48 Stat. 993). This act, however, provided no separate funds, and states subject to disasters had to divert their regularly apportioned federal highway funds from other uses to repairing disaster-damaged roads. The Federal-Aid Highway and Highway Revenue Act of 1956 (70 Stat. 374 and 70 Stat. 387) was the first act that authorized separate funds for the ER program. From 1956 through 1978, funding for the program was drawn 40% from the Treasury's general fund revenues and 60% from the Highway Trust Fund (HTF). The HTF is supported primarily by taxes paid by highway users, mainly on gasoline and diesel fuel. Starting in 1979, the ER program was funded 100% from the HTF. In 1998 Congress made the annual $100 million HTF authorization permanent. However, beginning in 2005, while Congress continued the $100 million permanent authorization from the HTF, it authorized supplemental appropriations from the general fund. On December 4, 2015, the ER program was reauthorized through FY2020 in the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94 ). ER funds may be used for the repair and reconstruction of federal-aid highways and roads on federally owned lands that have suffered serious damage as a result of either (1) a natural disaster over a wide area, such as a flood, hurricane, tidal wave, earthquake, tornado, severe storm, or landslide; or (2) a catastrophic failure from any external cause (for example, the collapse of a bridge that is struck by a barge). Historically, however, the vast majority of ER funds have gone for repair and reconstruction following natural disasters. As is true with most other FHWA programs, the ER program is administered through state departments of transportation in close coordination with FHWA's division offices in each state. The decision to seek financial assistance under the program is made by state departments of transportation, not by the federal government. Local officials who wish to seek ER funding must do so through their state departments of transportation; they do not deal directly with FHWA. As state departments of transportation normally deal with FHWA division office staff on many matters, they typically have working relationships that facilitate a quick coordinated response to disasters. For roads and bridges on federally owned lands, ER assistance is managed via a related program, called Emergency Relief for Federally Owned Roads. This program addresses disaster damage to facilities such as National Park Service roads, U.S. Forest Service roads, and tribal transportation facilities. FHWA dispenses these funds through the various federal land management agencies, not the states. Aid is restricted to facilities that are open to the general public for use with a standard passenger vehicle. FHWA pays 100% of the cost of approved repairs, but the program is designed to pay for unusually heavy expenses and to supplement the agencies' repair programs, not to cover all repair costs. Tribal, state, and other government entities that have the authority to repair or reconstruct eligible facilities must apply through a federal land management agency. The program is managed by FHWA's Office of Federal Lands Highways. The ER program has a permanent annual authorization of $100 million in contract authority to be derived from the HTF. These funds are not subject to the annual obligation limitation placed on most highway funding by appropriators, which generally means the entire $100 million is available each year, although the funding could be subject to sequester. Because the costs of road repair and reconstruction following disasters typically exceed the $100 million annual authorization, the FAST Act authorizes the appropriation of additional funds on a "such sums as may be necessary" basis, generally accomplished in either annual or emergency supplemental appropriations legislation. For a listing of ER appropriations since 1998, see the Appendix . These funds are available until expended. As is true with other FHWA programs, ER is a reimbursable program. A state receives payment only after making repairs and submitting vouchers to FHWA for reimbursement of the federal share. However, once the state's eligibility for ER funds has been confirmed by FHWA, it can incur obligations knowing that it will receive reimbursement. The ER funding structure of having a modest annual authorization supplemented by appropriations addressed the fact that small disaster events occur every year but large disasters do not. However, the $100 million annual authorization has not changed since 1972. To equal the current purchasing power of $100 million in FY1972 would require an authorization in the neighborhood of $500 million to $600 million. Because the value of the $100 million permanent authorization has diminished over time, the program has become increasingly dependent on supplemental appropriations. Over the last 10 fiscal years, $7.3 billion in supplemental appropriations have been provided in six appropriations acts. Roughly 12% of the total amount made available was provided by the permanent annual authorization; the other 88% was provided in appropriations acts. Consequently, an issue for Congress in the upcoming reauthorization of the FAST Act, which expires in FY2020, is whether to raise the permanent annual authorization to account for its loss of value since 1972 or to continue to rely heavily on supplemental appropriations to fund emergency repairs to highways. Emergency repairs to restore essential travel, minimize the extent of damage, or protect remaining facilities, if accomplished within 180 days after the disaster, may be reimbursed with a 100% federal share. Permanent repair projects, such as rebuilding a bridge or a segment of damaged road, are reimbursed at the same federal share that would normally apply to the federal-aid highway facility. For Interstate System highways the federal share would be 90%, and for most other highways, including Federal Lands Access Program facilities, the share would be 80%. If the total expenses a state incurs to deal with disaster-damaged roads in a fiscal year exceed the state's total federal-aid highway formula funds for that year, the share becomes "up to 90%" for any federal-aid road. The requirement that the state provide a share of the funding for permanent repairs applies whether or not the repairs are completed during the first 180 days after the disaster. Congress has on occasion authorized FHWA to pay 100% of ER program expenses for repair and reconstruction projects related to particular disasters. Legislation for that purpose was enacted following the 2005 Gulf Coast hurricanes and the collapse of the I-35W Bridge in Minneapolis in 2007. More recently, a provision in the Bipartisan Budget Act of 2018 ( P.L. 115-123 ) provided for a 100% federal share for damage caused by Hurricanes Irma and Maria in Puerto Rico in 2017. The ER program divides all repair work into two categories: emergency repairs and permanent repairs. Only repairs on federal-aid highways or federally owned roads and bridges that have suffered damage during a declared disaster or catastrophic failure are eligible for ER assistance. The intent of ER assistance is to restore highway facilities to conditions comparable to those before the disaster, not to increase capacity or fix non-disaster-related deficiencies. However, current law broadly defines "comparable facility" as one that "meets the current geometric and construction standards required for the types and volume of traffic that the facility will carry over its design life." Thus, for example, ER funds could be used to rebuild an older disaster-damaged road or bridge that had narrow lanes with wider lanes that meet current FHWA guidelines. FHWA's ER handbook also directs that "design and construction of repairs should consider the long-term resilience of the facility." FHWA defines resilience as the "capability to anticipate, prepare for, respond to, and recover from significant multi-hazard threats with minimum damage to social well-being, the economy, and the environment." In regard to bridges, ER funds are not to be used if the construction phase of a replacement structure has already been included in the state's approved transportation improvement program at the time of the disaster or if the bridge had been permanently closed to vehicular traffic prior to the disaster. Contracts supported by ER funding must meet all conditions required by 23 C.F.R. Part 633A, which regulates highway contracts involving federal funding. All contractors receiving ER funds must pay prevailing wages as required under the Davis-Bacon Act. ER-funded contracts must abide by Disadvantaged Business Enterprises requirements, Americans With Disability Act requirements, "Buy America" regulations, and prohibitions against the use of convict labor (23 U.S.C. SS114). Repair projects funded under the ER program are subject to the requirements of the National Environmental Policy Act (NEPA) of 1969. The impact, however, is generally limited because work funded by the ER program generally must occur within the federal-aid highway right-of-way. This means that emergency repairs are normally classified as categorical exclusions under 23 C.F.R. Section 771.117 (c)(9), as are projects to permanently restore an existing facility "in kind" to its predisaster condition. "Betterments" (e.g., added protective features, added lanes, added access control) may, in some cases, require NEPA review. States must apply and provide a comprehensive list of all eligible project sites and repair costs within two years of the disaster or catastrophic event. State and local transportation agencies can begin emergency repairs during or immediately following a disaster to meet the program goals to "restore essential traffic, to minimize the extent of damage, or to protect the remaining facilities." Prior approval from FHWA is not required. Once the FHWA division administrator finds that the disaster work is eligible, properly documented costs can be reimbursed retrospectively. To be eligible for a 100% federal share, emergency repair work must be completed within 180 days of the disaster, although FHWA may extend this time period if there is a delay in access to the damaged areas, for example due to flooding. Examples of emergency repairs are regrading roads, removal of landslides, construction of temporary road detours, erection of temporary detour bridges, and use of ferries as an interim substitute for highway or bridge service. Debris removal is generally the responsibility of the Federal Emergency Management Agency (FEMA). Debris removal from tribal transportation facilities, federal land transportation facilities, and on other federally owned roads open to public travel is eligible for funding under the Emergency Relief for Federally Owned Roads program. The emergency repair provisions in the ER program are designed to permit work to start immediately, ahead of a finding of eligibility and programming of a project. In some instances, state departments of transportation have been able to let initial ER-funded contracts on the day of a disaster event. Permanent repairs go beyond the restoration of essential traffic and are intended to restore damaged bridges and roads to conditions and capabilities comparable to those before the event. Generally, where the damaged parts of the road can be repaired without replacement or reconstruction, this is done. Current law includes a limitation that the total cost of an ER project cannot exceed the cost of repair or reconstruction of a comparable facility. ER funds may be used for temporary or permanent repair of a repairable bridge or tunnel. If a bridge is destroyed or repair is not feasible, then ER funds may participate in building a new, comparable bridge to current design standards and to accommodate traffic volume projected over its design life. In some cases betterments may be eligible, but they must be shown to be economically justified based on a cost/benefit analysis of the future savings in recurring repair costs. Permanent repair and reconstruction contracts not classified as emergency repairs must meet competitive bidding requirements. A number of techniques are available to accelerate projects, including design-build contracting, abbreviated plans, shortened advertisement periods for bids, and cost-plus-time (A+B) bidding that includes monetary incentive/disincentive clauses designed to encourage contractors to complete projects ahead of time. For example, the contract for the replacement of the I-35W Bridge in Minneapolis, which collapsed in August 2007, used incentives for early completion. The new bridge was built in 11 months and was completed three months ahead of schedule. Because the program is funded primarily through supplemental appropriations the amounts available for distribution can vary greatly from year to year. The amount available at any one time, however, is limited. FHWA manages the distribution of these limited funds through a process of allocations and withdrawals as well as procedures to manage funding shortfalls. There are two processes used to apply for ER funds following a disaster: quick release and the standard method. Allocations for quick-release funding often occur individually, whereas standard allocations are periodically distributed to all eligible states nationwide at one time. The FHWA Emergency Relief Manual describes the "quick release" method for developing and processing a state request for ER funding as a method that provides limited, initial ER funds for large disasters quickly. Quick Release applications are processed based on preliminary assessment of damage and a damage survey typically does not accompany the application. Quick release funds are intended as a "down payment" to immediately provide funds for emergency operations until the standard application may be submitted and approved. A total of $140 million of quick-release funding has been allocated for road damage from Hurricanes Harvey, Irma, and Maria,; see Table 1 . Other examples of quick-release allocations include the $1 million Wisconsin received on July 2, 2018; the $2 million Michigan received on July 3, 2018; and the $3 million Kentucky received, on July 16, 2018, all for repairs to flood-damaged roads. FHWA holds some funding in reserve to assure that there will always be funds available for quick-release needs. The amount reserved is at the discretion of the FHWA Administrator with the concurrence of the Secretary of Transportation. The standard application method is more deliberate, requiring site inspections and a damage survey summary report be submitted to the division office. This process is mostly used for permanent repairs. The standard allocations address both recent and backlogged project needs from past disasters. Money is usually allocated twice each fiscal year. In FY2018, FHWA released two nationwide allocations of ER funds totaling $1.35 billion, in addition to $226 million for disaster-damaged roads on federal lands. Allocations to repair damage from the 2017 hurricanes appear in Table 1 . In the wake of the 2017 hurricanes, the Bipartisan Budget Act of 2018 provided a supplemental appropriation of $1.4 billion for the ER program. The language providing additional appropriations did not specify which disasters the funds were to be used for. The act did include a special provision raising the federal share to 100% for ER funds made available to Puerto Rico to respond to damage cause by Hurricanes Irma and Maria. Table 1 presents the allocations of ER funding attributable to these disaster events through June 8, 2018. Once funding is allocated for a disaster event, FHWA can enter into project agreements and incur obligations (which legally commit the federal government to pay the federal share). If funds are unavailable, the request is added to a list of nationwide unfunded requests. Typically, requests for allocations exceed the available ER funding. For example, as of August 12, 2018, FHWA had an unallocated balance of $831 million available to respond to unfunded requests of $2.5 billion. Because FHWA may not commit to funding beyond its authorized and appropriated amounts, FHWA adjusts the distribution of funds to stay within the program's means. When the unallocated balance is insufficient to cover the reserved quick release funds and the upcoming biannual nationwide distribution, the distributions are provided on a proportional basis. Each state's allocation would be computed based on a ratio of total available funding to total needs. FHWA cannot make the allocations whole unless Congress makes additional ER funding available. FHWA also has the option of skipping or delaying a standard nationwide distribution, allowing time for its funds to be replenished via the annual $100 million authorization or further supplemental appropriations. During a funding shortfall, ER projects can be funded using a state's regular formula funds under the Federal-Aid Highway Program. That funding would then be reimbursed when and if ER funds become available. This, however, could lead to delays in the funding of other planned projects as the state awaits reimbursement from ER funds. FHWA reviews the unobligated and unexpended balances of funds that have been allocated on a monthly basis and coordinates the withdrawal of excess ER funds. Withdrawn funds are then available for reallocation. The agency also tracks recovery of insurance proceeds every six months. These proceeds are then available for allocation. Government Accountability Office (GAO) reports in 2007 and 2011 expressed concern about the financial sustainability of the ER program. Both reports found that the scope of the ER program had expanded beyond its original goal of restoring damaged facilities to predisaster conditions, described as "mission creep." The reports also raised questions about FHWA's ability to recapture unused funds that it had allocated to states. More recently, a 2012 GAO report found that FHWA officials in some states were reluctant to recoup funds from inactive ER highway projects over concerns about "harming their partnership with the state." In addition, "FHWA has shown a lack of independence in decisions, putting its partners' interests above federal interests," GAO said. A broader issue, which may influence the states' reluctance to agree with the withdrawal of unused allocations, is the "available until expended" nature of the ER funding. Federal-Aid Highway formula funds are generally available for obligation for only four years. This difference could encourage some states to commit their limited matching state funds to non-ER projects first for fear of having their Federal-Aid Highway funding expire. For states with constrained transportation budgets, delaying ER-funded projects could make sense from a budgetary perspective. Congress could consider placing a time limit on the availability of ER funds for obligation to encourage states to prioritize the obligation of funds to ER projects. Since the release of the reports, legal and procedural changes have mitigated some of GAO's concerns. FHWA has updated the Emergency Relief Manual to clarify eligibility and procedural issues. States' applications for ER funding must now include a comprehensive list of all eligible project sites and repair costs by not later than two years after the event. The definition of "comparable facility" has broadened and clarified the non-betterment repairs that are eligible for ER funding. In 2016, FHWA issued an order, "Emergency Relief Program Responsibilities," providing procedures for administration of the ER program, to further "strengthen the administration and oversight of the ER program to ensure the effective use of limited ER funding for eligible projects." The effectiveness of these changes could be of congressional oversight interest. The resilience of U.S. highway infrastructure has been a growing issue both within the context of broad concerns about the impacts of climate change as well as regional concerns such as fears of an earthquake generating a tsunami in the Cascadia subduction zone, off the Pacific Northwest coast. The existing ER program is primarily a reactive program. Resilience measures on damaged facilities are eligible for ER funding if they are consistent with current standards and are not considered betterments or intended to save the program money in the long run. The ER Manual states that "while ER funds are primarily provided for repair activities following a disaster; design and construction of repairs should consider the long term resilience of the facility." The current program does not allow expenditure of emergency relief funds to improve the resilience of facilities not damaged by a natural disaster or catastrophic event. States may, however, also use their regularly apportioned federal-aid highway funds for resilience projects on undamaged facilities or to upgrade projects that do not meet the ER program economic justification criteria. If it wished, Congress could also encourage attention to surface transportation infrastructure resilience in a number of ways, including the following: Retaining the current programmatic structure, but broadening "betterment" eligibilities to allow for more funding for resilience measures than allowed under current law, perhaps by considering benefits other than direct savings to the ER program. Congress could provide additional funds through the appropriations process to facilitate increased resilience measures following disasters. Expanding the resilience mission and funding of the two existing ER programs. The mission could, for example, be expanded to more fully cover climate change risk to undamaged surface transportation infrastructure. The additional amounts could be made available in annual or supplemental appropriations bills as needed. This could, however, increase demands for ER funds and again raise concerns about "mission creep." Creating a stand-alone program dedicated to preventive retrofitting or rebuilding of at-risk road and transit infrastructure. The program could be authorized permanently or as part of the normal surface transportation authorization of funds from the HTF. This could, however, widen the existing gap between HTF revenues and outlays. Encouraging the states to use their federal formula funds for resilience efforts by providing an increased federal share for resilience projects. In January 2018, the Department of Transportation Office of Inspector General (IG) released a review of FHWA's "guidance and processes for incorporating resilience improvement into emergency relief projects to rebuild damaged highway infrastructure." The report found that FHWA's ER program guidance did not define "resilience improvement" or inform states how to incorporate resilience improvements into ER-funded projects. The report also found that FHWA had no process to track efforts by state transportation departments to include resilience improvements in their ER-funded projects. The IG recommended that FHWA 1. revise the ER Manual to include a definition of "resilience improvement" and to identify procedures states should use to incorporate resilience into ER projects; 2. develop best practices for improving the resilience of ER projects and share them with the Division Offices and the state departments of transportation; and 3. develop and implement a process to track the consideration of resilience improvements for ER projects and their costs. FHWA concurred with recommendations 1 and 2. With respect to recommendation 3, FHWA agreed to track the consideration of resilience improvements but argued against a requirement that resilience costs be tracked, given that such improvements might be incorporated as part of a project's design and construction standards, making resilience improvement costs hard to separate out. Implementation of the recommendations could be of oversight interest to Congress. The Public Transportation Emergency Relief Program (49 U.S.C. SS5324; 49 C.F.R. SS602), established in Section 20017 of the Moving Ahead for Progress in the 21 st Century (MAP-21; P.L. 112-141 ), is administered by the Federal Transit Administration (FTA) and is similar in intent to FHWA's ER program. FTA's program provides federal funding on a reimbursement basis to states, territories, local government authorities, Indian tribes, and public transportation agencies for damage to public transportation facilities or operations as a result of a natural disaster or other emergency and to protect assets from future damage. In the past, funding for these purposes was provided by FEMA or through appropriations administered by FTA following a specific disaster. For example, in response to the September 11, 2001, terrorist attacks, which caused severe damage to rapid transit lines in New York City, about $4.7 billion was provided in emergency supplemental appropriations for transit, some of which was administered by FTA. The Public Transportation ER program provides federal support for both capital and operating expenses. Capital expenses include projects for repairing and replacing transit facilities that have been damaged, as well as projects to protect facilities from future damage, known as resilience projects. Sometimes a capital project can involve both damage restoration and resilience elements. Operating expenses include evacuation activities, rescue operations, and temporary transit service before, during, or after an emergency event. Operating costs are eligible for reimbursement for one year beginning on the date a disaster is declared, although the Secretary of Transportation may extend that period to two years after determining a compelling need. Unlike the FHWA's ER program, FTA's ER program does not have a permanent annual authorization. All funds are authorized on a "such sums as necessary" basis and require an appropriation from the Treasury's general fund. The federal share for most capital and operating projects under the program is 80%, but the Secretary of Transportation may increase this share up to 100%. Emergency funding will not be provided when project costs are reimbursed by another federal agency, such as FEMA, have been funded through insurance proceeds, or are already funded in an existing FTA grant. Since its enactment in 2012, there have been two appropriations to the Public Transportation ER program. Funds were appropriated as part of the Disaster Relief Appropriations Act ( P.L. 113-2 ) in January 2013 in response to Hurricane Sandy, which struck the United States in October 2012. Funds were also appropriated as part of the Bipartisan Budget Act of 2018 ( P.L. 115-123 ) in response to Hurricane Harvey, which struck the United States in August 2017, and Hurricanes Irma and Maria, which struck the United States in September 2017. Hurricane Sandy affected 12 states and the District of Columbia; New York and New Jersey, states with some of the largest public transportation systems in the country, were the hardest hit. The Disaster Relief Appropriations Act of 2013 provided $10.9 billion for FTA's Public Transportation ER Program for recovery, relief, and resilience projects and activities in areas impacted by Hurricane Sandy. Approximately $10.4 billion remained available after sequestration under the Budget Control Act of 2011 ( P.L. 112-25 ), and $185 million was transferred from FTA to the Federal Railroad Administration. FTA allocated the remaining approximately $10.2 billion according to several funding categories: $5.2 billion for response, recovery, and rebuilding costs incurred by affected agencies; $1.3 billion for locally prioritized resilience projects at designated transportation agencies in the New York metropolitan area; $3.6 billion for competitive resilience projects that will protect or otherwise increase the resilience of public transportation equipment and facilities to future hurricanes and storms in the areas affected by Hurricane Sandy; and $76 million for oversight and administration. According to FTA, approximately $7.1 billion of the Hurricane Sandy funding had been obligated by March 31, 2018. Congress appropriated $330 million for FTA's Public Transportation ER Program in response to Hurricanes Harvey, Irma, and Maria on February 9, 2018. Damage to transit systems associated with Hurricane Harvey was concentrated in Texas, particularly flooding in Houston, and the damage associated with Hurricane Irma was concentrated in Puerto Rico and Florida. Hurricane Maria's effects on transit systems were concentrated in Puerto Rico. On May 31, 2018, FTA announced its allocation of these funds by purpose and location ( Table 2 ) . Because the Public Transportation ER program does not have a permanent annual authorization, FTA cannot provide funding immediately after a disaster or emergency. Transit agencies, therefore, typically rely on FEMA for funding their immediate needs. GAO observes that this could make it more difficult for some transit agencies to respond immediately after a disaster, and that the reliance on FEMA can cause transit agencies to be confused about which agency to approach for help if FTA funds do later become available. An existing memorandum of understanding between FEMA and FTA seeks to coordinate their roles and responsibilities, but FTA cannot define its role with certainty ahead of an appropriation. Consequently, as GAO has noted, "FTA and FEMA will have to determine their specific roles and responsibilities on a per-incident basis." Adding a quick-release mechanism to FTA's ER program, similar to that in FHWA's ER program, would allow FTA funds to be approved and distributed within a few days of a disaster. FHWA's ER program has an annual authorization of funds from the HTF, and FTA's program could similarly be authorized an amount from the mass transit account of the fund. Such an authorization, however, would place a new claim on resources of the HTF, adding to the current gap between revenues and outlays. GAO has observed that FTA's ER program has fewer limits and more flexibility than the emergency relief programs administered by FEMA and, to some extent, FHWA. The FTA's ER program, for example, does not have a limit on the amount that can be spent on resilience projects, and it also allows damaged assets to be replaced with those that are improved or upgraded. As FTA notes, "it may not always be feasible or advisable to replace damaged assets with identical facilities, vehicles, or equipment. As a result, projects to repair, replace, or reconstruct assets may include improvements and upgrades as necessary to meet current safety and design standards." Although there may be advantages to including upgrades and resilience with Public Transportation ER funds, including these elements requires Congress to appropriate larger amounts than might otherwise be necessary. It could also be a way for transit agencies to fund betterments and new facilities that have little direct connection to the goals of repairing damages and making the transit systems resilient to future storm events. GAO found that some Hurricane Sandy funding awards were for projects that were probably outside the scope of the program. Consequently, GAO recommended a better alignment of program purposes with project evaluation and selection, and an examination of funded projects for duplication with other efforts to improve resilience.

The U.S. Department of Transportation (DOT) provides federal assistance for disaster-damaged roads and public transportation systems through two programs: the Emergency Relief Program (ER) administered by the Federal Highway Administration (FHWA) and the Public Transportation Emergency Relief Program administered by the Federal Transit Administration (FTA). These programs are funded mainly by appropriations that have varied considerably from year to year. Over time the amounts are substantial. Since 2012, the Highway ER Program has received $5.4 billion; FTA's ER program has received $10.7 billion, all but $330 million of which was in response to Hurricane Sandy. Roads and bridges that are federal-aid highways or are public-use roads on federal lands are eligible for assistance under FHWA's ER Program. Following natural disasters (such as Hurricanes Harvey, Irma, and Maria in 2017, which damaged highways in Florida, Texas, Puerto Rico, and the U.S. Virgin Islands), or catastrophic failures (such as the 2013 collapse of the Skagit River Bridge in Washington State), ER funds are made available for both emergency repairs and restoration of eligible facilities to conditions comparable to those before the disaster. Although emergency relief for highways is a federal program, the decision to seek ER funding is made by a state government or by a federal land management agency. Local governments are not eligible to apply. The program is funded by a permanent annual authorization of $100 million from the Highway Trust Fund (HTF) along with general fund appropriations provided by Congress on a "such sums as necessary" basis. Appropriated ER funds have averaged roughly $730 million annually since FY2009. FHWA pays 100% of the cost of emergency repairs done to minimize the extent of damage, to protect remaining facilities, and to restore essential traffic during or immediately after a disaster. Emergency repairs must be completed within 180 days of the disaster event. Permanent repairs go beyond the restoration of essential traffic and are intended to restore damaged bridges and roads to conditions and capabilities comparable to those before the event. The federal share for permanent repairs is generally 80% for non-Interstate roads and 90% for Interstate Highways. All ER funding is distributed through state departments of transportation or federal land management agencies such as the National Park Service. Certain "quick release" funds are allocated to help with initial emergency repair costs and may be released prior to completion of detailed damage inspections and cost estimates. Other allocations to the states follow a more deliberate process of completing detailed damage reports, developing cost estimates, and processing competitive bids. Unlike the long-standing ER program in highways, the Public Transportation ER Program dates to 2012. The Public Transportation ER program provides federal funding on a reimbursement basis to public transportation agencies, states, and other government authorities for damage to public transportation facilities or operations as a result of a natural disaster or other emergency and to protect assets from future damage. The Public Transportation ER program provides federal support for both capital and operating expenses. Unlike the FHWA's ER program, FTA's ER program does not have a permanent annual authorization. All funds are authorized on a "such sums as necessary" basis and are available only pursuant to an appropriation from the general fund of the U.S. Treasury. In the absence of an appropriation, transit agencies must rely on funds from the Federal Emergency Management Agency (FEMA). Since its creation in 2012, there have been two appropriations to the Public Transportation ER program. More than $10 billion was appropriated in 2013 to respond to Hurricane Sandy and $330 million was appropriated in 2018 to respond to Hurricanes Harvey, Irma, and Maria. Two recurring issues drawing congressional attention are funding levels and funding of activities that go beyond restoring transportation facilities to predisaster conditions, such as making damaged highways more resilient to natural disasters. FTA's ER program has fewer limits and more flexibility than the emergency relief programs administered by FEMA and FHWA; thus it too faces questions about expenditures that go beyond repairing damage from a disaster. The lack of a permanent annual authorization for FTA means FTA cannot provide funding immediately after a disaster or emergency, and transit agencies must rely on FEMA for a quick response.

Child welfare programs are intended to prevent child abuse and neglect, and to protect and improve the lives of children who have experienced maltreatment. As the U.S. Constitution has been interpreted, states exercise the greatest responsibility for administering these services. At the same time, the federal government plays a significant role in shaping these services by providing funding for services and by linking those federal funds to certain requirements. For FY2007, Congress provided more than $7.6 billion in funding dedicated to child welfare purposes and the bulk of this federal child welfare funding (98% or $6.5 billion of the funds made available for FY2007) was provided for state child welfare agencies. These funds are distributed based on the amount of eligible foster care or adoption assistance claims submitted by states (under Title IV-E of the Social Security Act), or via statutory formula for child welfare-related activities, including screening and investigation of child abuse and neglect reports; family support, preservation, and reunification services; adoption promotion and support services; and independent living services and other support for current and former foster care youths. (A portion of the funds are also made available to the highest court in each state to fund improvements in the handling of child welfare-related court proceedings.) Child welfare funds distributed to all states are administered by the Children's Bureau, within the Administration for Children and Families (ACF) of the Department of Health and Human Services (HHS). In addition to providing non-federal matching funds, states must meet a set of program requirements in order to receive these federal child welfare dollars. Viewed together, these statutory program requirements comprise federal child welfare policy, and are the fundamental basis on which state compliance with federal child welfare requirements rests. State compliance with the majority of these requirements is checked as part of the Child and Family Services Review (CFSR), which was designed by HHS to meet the conformity review requirements mandated by Congress in 1994 ( P.L. 103-432 , as enacted at Section 1123A of the Social Security Act). The 109 th Congress enacted six bills that amended federal child welfare policies included in Title IV-B or Title IV-E of the Social Security Act. Most of these included changes to state plan requirements. The amendments made by these bills are briefly discussed below. (The bills are listed in order of their enactment.) As enacted, this bill ( S. 1894 , P.L. 109-113 ) permits states to claim Title IV-E foster care support on behalf of otherwise eligible foster children whose foster care maintenance payments are provided to foster parents or institutional foster care providers via a for-profit foster care placement agency. Prior law stipulated that if a state sought to claim federal Title IV-E support on behalf of a foster child, the child's maintenance payments could only be made by a public or non-profit agency. This omnibus budget reconciliation measure ( S. 1932 , P.L. 109-171 ) includes changes intended to clarify which children are eligible for federal foster care and adoption assistance support. It also places certain limitations on the ability of states to make claims for federal reimbursement of the costs of administering the foster care program (including limits on the length of time a child may be considered a "candidate" for foster care and new rules or restrictions on administrative claims related to foster children placed in unlicensed relative homes or other settings that are "ineligible" under Title IV-E). Separately, the legislation raised the mandatory funding authorization for the Promoting Safe and Stable Families program (Title IV-B, Subpart 2 of the Social Security Act), and authorized two new grants intended to improve court handling of child welfare proceedings and appropriated $100 million ($20 million in each of FY2006-FY2010) for those grants. This bill ( H.R. 5403 , P.L. 109-239 ) amended Title IV-B and Title IV-E to encourage the expedited placement of foster children into safe and permanent homes across state lines. The law establishes a federal 60-day deadline for completing an interstate home study (necessary to determine the suitability and safety of the home) and a 14-day deadline for a state that requests this interstate home study to act on the information in the study. (For any home study begun before October 1, 2008, states may have up to 75 days to complete the study if they can document certain circumstances beyond their control that prevented a study's completion in 60 days.) The new law also authorizes $10 million in each of FY2007-FY2010, for incentive payments (valued at $1,500 each) to states for every interstate home study that is completed in 30 days. (As of August 2007, no funds have yet been appropriated for these payments.) Further, the law prohibits states from restricting the ability of a state agency to contract with a private agency to conduct interstate home studies, and for children who will not be reunited with their parents, it encourages (or in some cases requires) identification and consideration of both in-state and out-of-state placement options as part of currently required case review and planning activities for children in foster care. Separately, the bill requires courts (as a condition of receiving certain funding intended to improve their handling of child welfare proceedings) to notify any foster parent, pre-adoptive parent, or relative caregiver of a foster child of any proceedings to be held regarding the child, and emphasizes the right of these individuals to be heard at permanency planning proceedings. Finally, it would require that youth leaving foster care custody because they have reached the age of majority must be given a free copy of their health and education record. This omnibus bill ( H.R. 4472 , P.L. 109-248 ) establishes additional federal requirements related to criminal background checks of prospective foster and adoptive parents and also requires states to check child abuse and neglect registries for information about prospective foster or adoptive parents. The criminal records checks must include a check of national crime databases (i.e., an FBI check), and must be done before the placement of any foster child can be finally approved with prospective foster or adoptive parents. Under prior law, the kind of criminal record check (for example, state vs. FBI vs. local) was not specified, and the federal requirement for these checks extended only to children for whom a state intended to make federal Title IV-E foster care or adoption assistance claims. As was true with prior law, if a criminal record check reveals certain felony convictions of a prospective foster or adoptive parent, a state may not claim Title IV-E foster care or adoption assistance for a foster child placed in his or her home. However, this does not prohibit the state from placing a foster child in this same home if the state does not make Title IV-E claims on the child's behalf. For most states, these criminal record check requirements became effective with the first day of FY2007. However, prior law allowed states to "opt out" of the federal criminal records check procedures, and P.L. 109-248 permits those "opt out states" to have until the first day of FY2009 to come into compliance with the new requirements. As of July 2006, HHS reported that there were eight opt-out states: Idaho, Oklahoma, Oregon, California, New York, Massachusetts, Ohio, and Arizona. Many child abuse and neglect cases are not the subject of criminal court proceedings, and information on these cases does not appear in a criminal records check. As of the first day of FY2007, P.L. 109-248 requires all states to check any child abuse and neglect registry they maintain for information about a prospective foster or adoptive parent (and any adult living in their household). The check must be made before approving placement of a foster child in the home (and without regard to whether the state plans to claim Title IV-E support for the child). States must also request (and all states must comply with) information from any other state's child abuse and neglect registry where the prospective foster or adoptive parent, or other adult, has lived in the past five years. There are no federal stipulations about how states must use the information from these registries. Finally, P.L. 109-248 requires HHS, in consultation with the Justice Department, to create a national registry of substantiated cases of child abuse or neglect. Information in this national registry is to be accessible only to public entities (or agencies of those public entities) that needs the information "to carry out its responsibilities under law to protect children from child abuse and neglect." Separately, the law requires HHS to "conduct a study on the feasibility of establishing data collection standards for a national child abuse and neglect registry" and to make recommendations and findings on the costs and benefits of such data collection standards; data collection standards currently employed by states, tribes or other political subdivisions; and data collection standards that should be considered to establish a model of promising practices. The law authorized $500,000 in appropriations to carry out the study. (As of August 2007, no funds have been specifically appropriated for this purpose.) A report of this study is to be submitted to Congress by the end of July 2007. This bill ( S. 3525 , P.L. 109-288 ) extends, through FY2011, annual funding authorization of $545 million for the Promoting Safe and Stable Families Program (Title IV-B, Subpart 2). For each of FY2006-FY2011 it provides that no less than $40 million of those funds are to be used for two purposes: to support monthly caseworker visits and to improve outcomes for children affected by methamphetamine or other substance abuse. Further the new law requires states to report on their actual use of funds under Title IV-B of the Social Security Act, increases the funding set-aside from the Safe and Stable Families program for tribal child and family services, and allows access to these funds for more tribes. Separately, the bill amended the Child Welfare Services program (Title IV-B, Subpart 1 of the Social Security Act) to re-organize and update its provisions and to limit funding authorization for the program to FY2007-FY2011. Beginning with FY2008 the law limits the use of program funds for administrative purposes and also provides new restriction on the amount of these program funds that states may use for foster care maintenance payments, adoption assistance payments, or child care. Among several new state plan requirements for this program, P.L. 109-288 requires states to establish standards for the content and frequency of caseworker visits of children in foster care (providing that within a specified time frame 90% of children in foster care must be visited at least monthly and that most of these visits must occur in the place where the child lives). Additionally states are required to have procedures to respond to and maintain child welfare services in the wake of a disaster and must also describe in their state plan how they consult with medical professionals to assess the health of and provide medical treatment to children in foster care. P.L. 109-288 also extended the authorization for five years (FY2007-FY2011) of the Mentoring Children of Prisoners program and includes authority for a project to demonstrate the effectiveness of vouchers as a method of delivering these services. Further it extends for the same five years grants to eligible state highest courts to assess and improve their handling of child welfare proceedings (under the Court Improvement Program). This omnibus ( H.R. 6111 , P.L. 109-432 ) makes several changes related to new provisions enacted in the Deficit Reduction Act of 2005 ( P.L. 109-171 ) and which are related to foster care and Medicaid. Section 6036 of P.L. 109-171 generally prohibited a state from receiving federal Medicaid reimbursement for individuals who do not provide satisfactory documentary evidence of citizenship or nationality. Section 405(c) of P.L. 109-432 specifically exempts foster children (both Title IV-E eligible and those who are not eligible) from the Medicaid documentation requirement. This change is made effective as if it was included in the Deficit Reduction Act ( P.L. 109-171 ) which was enacted in February 2006. P.L. 109-432 also amended Title IV-E to require states to have in effect procedures for verifying the citizenship or immigration status of each child in foster care (whether or not the state claims Title IV-E support for the child). Finally, P.L. 109-432 also amended Section 1123A of the Social Security Act to specifically require that state compliance with this new federal requirement be checked as part of periodic conformity reviews (e.g. the Child and Family Services Review). These changes are to be effective as of June 20, 2007 (6 months after the enactment of P.L. 109-432 ). State plan requirements generally apply to the state, or the state administering/supervising agency, and usually are contained in the statute as a list of items that must be included in the state's program plan. The plan requirements vary a great deal in their scope and kind and are difficult to categorize consistently. In this report they are grouped within a specific program (or section of the law) and by a rough kind/subject division. This division is somewhat arbitrary and not a part of federal statute. However, it is used in this report as a way to group basic concerns of federal child welfare policy and to better understand what is required of states. The kind/subject divisions used are: Planning Services: Administration, Organization and Coordination --requirements that direct how the state must administer, coordinate, or organize the program (e.g., what state agency must administer the program, and with what other programs it must be coordinated). Data Collection and Reporting-- requirements specifying the nature of data to be collected and/or reported to the federal government, and those related to cooperation with program evaluations or audits. Ensuring Safe and Appropriate Placement Options-- requirements designed to ensure diversity of prospective foster and adoptive parents, prohibit discrimination in placements, allow for cross-jurisdictional placements and otherwise serve to ensure safe and appropriate placements for children. Child Protections, Services, and Programs to Be Provided --requirements that specify treatment of each child, and services and programs to be provided. This report lists state eligibility requirements for federally funded child welfare programs within these kind/subject divisions. Three of these programs are authorized under the Child Abuse Prevention and Treatment Act (CAPTA): Basic State Grants, Community-Based Grants for the Prevention of Child Abuse and Neglect, and Children's Justice Act Grants. The remaining programs are a part of the Social Security Act: Child Welfare Services, the Promoting Safe and Stable Families Program, Foster Care and Adoption Assistance, the John Chafee Foster Care Independence Program, and Education and Training Vouchers (for youth who age out of or are expected to age out of foster care). Some of the state plan elements are simply given in the statute as requirements for the state to meet (e.g., describe services to be offered); others ask that the state assure or provide the Governor's certification that it is meeting a certain requirement (e.g., federal funds are not used to supplant existing non-federal funds for services with purpose similar to the federal program). This report does not distinguish between these different forms of requirement. Federal funds for child welfare programs under the Social Security Act and for CAPTA's Basic State Grants and Community-Based Grants for the Prevention of Child Abuse and Neglect are administered by the Children's Bureau within the U.S. Department of Health and Human Services (HHS). The Children's Bureau at HHS also awards CAPTA's Children Justice Act grants but does so in consultation with the Department of Justice. Tables 1 , 2 , and 3 list elements required of states seeking Basic State Grants, Children's Justice Act Grants, or Community-Based Grants for the Prevention of Child Abuse and Neglect under CAPTA. Tables 4, 5, 6 , and 7 contain state plan requirements for child welfare programs authorized under the Social Security Act. Finally, Table 8 contains definitions critical to understanding state plan requirements for child welfare programs under the Social Security Act. For instance, a state is required to have a "case plan" for each child and to operate a "case review system." These and other related terms are given detailed definition in the law. Terms appearing in boldface in Tables 4, 5, 6 and 7 are defined by the statute and the term, and its definition, are included in Table 8 . The information included in this report is intended as an accessible reference guide to state requirements, rather than a legal interpretation of those requirements. Requirements are believed to be current through changes made by the 109 th Congress. Table 1 lists state plan requirements to receive CAPTA's Basic State Grants. Section 106 of CAPTA provides grants to states for improvements to public child protective services. Funding is authorized on a discretionary basis. No matching funds are required. FY2007 funding: $27 million . Table 2 lists requirements related to Children's Justice Act Grants. The program authority for these grants is included in Section 107 of CAPTA, however funding for the grants is made available via a set-aside from the Crime Victims' Fund. Grants are made to help states (and tribes) improve the handling, investigation and prosecution of child abuse and neglect cases--particularly those involving child sexual abuse and exploitation--and to improve the handling of cases of suspected child maltreatment related deaths, and, finally, (as added by P.L. 108-36 ) to improve handling of those cases involving children with disabilities or serious health-related problems who are victims of child maltreatment. No matching funds required. FY2007 funding: $20 million . Table 3 shows requirements related to CAPTA's Community-Based Grants for the Prevention of Child Abuse and Neglect. Title II of CAPTA authorizes grants (1) to support community-based efforts aimed at the prevention of child abuse and neglect, including support of networks of coordinated resources and activities that strengthen and support families; and (2) to foster an understanding and knowledge of diverse populations to be effective in preventing and treating child abuse and neglect. States must designate a lead entity to administer this money (which may or may not be a public agency) by making grants to community-based programs. Funding is authorized on a discretionary basis and a state must match at least 20% of the federal allotment under this program with non-federal dollars. The size of a state's program allotment is determined, in part, by the amount of non-federal funds obtained (leveraged) for these purposes by the lead entity. FY2007 funding: $42 million . Table 4 lists requirements related to funding of Child Welfare Services authorized under Title IV-B, Subpart 1 of the Social Security Act. The program provides matching grants to states (75% federal share) for (as amended by P.L. 109-288 ) five broad purposes: (1) to protect and promote the welfare of all children; (2) to prevent the neglect, abuse, or exploitation of children; (3) to support at-risk families through services which allow children, where appropriate to remain safely with their families or return to their families in a timely manner; (4) to promote safety, permanence, and well-being of children in foster care and adoptive families; and (5) to provide training, professional development and support to ensure a well-qualified child welfare workforce. Funds are authorized on a discretionary basis (through FY2011) at $325 million annually. FY2007 funding: $287 million . Table 5 lists requirements for funding under Title IV-B, Subpart 2 of the Social Security Act, the Promoting Safe and Stable Families Program. The program authorizes matching grants to states (75% federal share) for four kinds of services: family preservation, family support, time-limited family reunification, and adoption promotion and support. The statute also provides that certain amounts of the funds provided for this program are to be set aside each year to support tribal child and family services, grants to highest state courts to assess and improve their handling of child welfare proceedings, and funds for research, evaluation and technical assistance related to the service or activities funded by the program. In addition, P.L. 109-288 stipulates that for each of six years (FY2006-FY2011) $40 million of the funds are to be reserved for formula grants to states to support monthly caseworker visits of children in foster care and to provide discretionary grants to eligible applicants (regional partnerships, which much include the state child welfare agency) to respond to child welfare issues raised by parental/caretaker abuse of methamphetamine (or other substances). Program funds are authorized both on a discretionary basis (up to $200 million annually) and as a capped entitlement ($345 million annually) through FY2011. FY2007 funding: $434 million . Table 6 lists requirements under Title IV-E of the Social Security Act related to foster care maintenance payments and adoption assistance. These programs are authorized as open-ended entitlements; states may seek reimbursement for a specified percentage of the foster care maintenance payments, adoption assistance costs, and eligible administrative, training, and data collection costs for all eligible children. FY2007 appropriations: $6.5 billion (of which $4.5 billion is for foster care and $2.0 billion is for adoption assistance) . Table 7 lists requirements related to funding for foster care independence services authorized under Title IV-E of the Social Security Act. These include a variety of services designed to enable youth who are expected to "age-out" of foster care and those who have recently aged out of foster care to make a successful transition from state foster care custody to independent living. Funds for a wide variety of services to these youth (including education and training) are authorized as a capped entitlement; funds specifically provided for education and training vouchers only are authorized on a discretionary basis. The federal government provides funds under these programs on a matching basis (80% federal share). FY2007 CFCIP: $140 million; FY2007 vouchers: $46 million . Table 8 includes definitions critical to understanding state responsibilities to children in its care. Most of these definitions are included in Section 475 of the Social Security Act and apply to both Title IV-E and Title IV-B child welfare programs. For instance, children in state-supervised foster care, who are receiving services under Title IV-B or Title IV-E, must be part of a state operated case review system and have their own case plan . These, and related terms, are given detailed definition in the statute. Please note that some of the terms included below are defined within the extensive definition given to case review system. They are listed separately in Table 8 for clarity and ease of reference.

States have primary responsibility for administering child welfare funds. However, the federal government provides substantial child welfare funding that is contingent on states meeting certain program requirements. The greatest part of federal assistance dedicated to child welfare is included in Title IV-B and Title IV-E of the Social Security Act. Programs authorized under these parts of the law provide funds for a range of child welfare services, from family support and preservation to foster care, adoption support and independent living. State compliance with the plan requirements of Title IV-E and Title IV-B is determined primarily via the Child and Family Services Review, (which is authorized by Section 1123A of the Social Security Act). Separately, under the Child Abuse Prevention and Treatment Act (CAPTA), states receive funds to improve their child protective service systems; to develop and support community-based programs that support and strengthen families to prevent child abuse and neglect; and to improve the handling, investigation, and prosecution of child maltreatment cases. The 109 th Congress saw the enactment of six bills that amended federal child welfare policies in Title IV-B or Title IV-E of the Social Security Act. S. 1894 ( P.L. 109-113 ) and S. 1932 ( P.L. 109-171 ) changed program eligibility rules for the federal Title IV-E foster care and adoption assistance programs. Each of the remaining bills added to or otherwise amended the Title IV-B or Title IV-E state plan requirements. Under the Title IV-B programs, states are now required (or will be on a specified effective date) to (1) develop standards for the frequency and content of caseworker visits to children in foster care; (2) limit total funds spent for administrative purposes to no more than 10% of the program spending; (3) describe how they consult with medical professionals to assess the health and well-being of foster children and determine their appropriate treatment; (4) have procedures in place to respond to a disaster and to maintain child welfare services at such a time; and (5) to report on the actual use of federal funds received under Title IV-B ( S. 3525 , P.L. 109-288 ). Changes made to the Title IV-E Foster Care and Adoption Assistance programs require all states to (1) establish procedures for the "orderly and timely interstate placement of children," including compliance with specific time frames for conducting home studies requested prior to an interstate placement and for making a decision about the placement ( H.R. 5403 , P.L. 109-239 ); (2) comply with expanded federal procedures to check the criminal records of prospective foster or adoptive parents (as well as primarily civil child abuse and neglect registries) before approving placement of any foster child in a home ( H.R. 4472 , P.L. 109-248 ); and (3) have procedures for verifying the citizenship or immigration status of all children in foster care ( H.R. 6111 , P.L. 109-432 ). This report summarizes changes made in the 109 th Congress and then categorizes and describes state program requirements (and related definitions) linked to dedicated federal child welfare funds. As a whole, these program requirements constitute federal child welfare policy, and are the fundamental basis on which state conformity with federal law is based. This report will be updated as significant program requirement changes are enacted.

First filed in 1996, Cobell v. Salazar involved the Department of the Interior's (DOI's) management of several money accounts. These money accounts, known as IIMs (an abbreviation for Individual Indian Monies) are monies which the federal government holds for the benefit of individual Indians rather than property held for the benefit of an Indian tribe. The conflict in the case emanated from the federal government's trust responsibility with respect to American Indians. One of the earliest formulations of the concept of the federal government as trustee for Indian tribes came from the U.S. Supreme Court in 1831, likening the relationship to that of "a ward to its guardian." In the capacity of trustee, the United States holds title to much of Indian tribal land and land allotted to individual Indians. Receipts from leases, timber sales, or mineral royalties are paid to the federal government for disbursement to the appropriate Indian property owners. The United States has fiduciary responsibilities to manage Indian monies and assets which have been derived from these lands and are held in trust. The case was premised on statutory duties imposed upon the federal agencies handling Indian monies as well as on the existence of property rights in funds and assets held in trust for Indians. The courts have recognized broad powers of Congress with respect to Indian affairs legislation and Indian property, but have also recognized that Indian property may not be taken for a public purpose without just compensation. This case was not a claim for just compensation; it was a claim for an accounting by the trustee (i.e., the United States) for receipts and disbursements representing the trust corpus held for the benefit of individual Indians. The Cobell litigation sprang out of the federal government's trust responsibility with respect to three groups of money accounts held in trust for individual Indian beneficiaries. These accounts are commonly referred to as the Individual Indian Money (IIM) accounts. They include (1) Land-based Accounts--established to receive revenues derived from the approximately 11 million acres held in trust by the U.S. for individual Indians; (2) Special Deposit Accounts (SDAs)--intended to be temporary accounts to hold funds that could not be immediately credited to the proper IIM account holder; and (3) Judgment and Per Capita Accounts--established to receive funds from tribal distributions of litigation settlements and tribal revenues. Congress has delegated to the Secretary of the Interior and the Secretary of the Treasury its responsibilities as trustee with regard to the IIM accounts. The Bureau of Indian Affairs (BIA) has general responsibility for trust land management and income collection. The BIA, Office of Trust Funds Management, and the Office of the Special Trustee all have trust obligations relating to IIM accounts. Most transactions involving IIM accounts require BIA approval. Therefore, one of BIA's most important duties is managing IIM funds derived from income-producing activities on allotment land, including grazing leases, timber leases, timber sales, oil and gas production, mineral production, and rights-of-way. The Office of Trust Fund Management (OTFM) is responsible for BIA's fiduciary duty to keep accurate financial records of these activities. OTFM also shares the banking aspect of DOI's trust responsibility with the Treasury Department. OTFM and BIA officers collect payments and deposit them into local banks where there is a Treasury General Account. The Treasury Department maintains a single "IIM account" for all IIM funds, rather than individual accounts, while OTFM is responsible for maintaining accounting records for the individual funds. Treasury also invests the funds at the direction of DOI. Finally the Office of the Special Trustee for American Indians is responsible for "trust reform efforts" as established under the Trust Fund Management Reform Act. The federal government--as holder of these accounts in trust for the Indian beneficiaries--has fiduciary obligations to administer the trust lands and funds arising from them for the benefit of the beneficiaries. The federal government has stipulated, however, that it does not know the exact number of IIM trust accounts that it is supposed to administer; nor does DOI know the correct balances for each IIM account. DOI has conceded that it is unable to provide an accurate accounting for a majority of IIM trust beneficiaries. The Treasury Department also has problems with trust fund management procedures. First, the Treasury Department has permitted the destruction of documents over six years and seven months old, and made no effort to ensure that documents related to accounting for IIM accounts are preserved. In addition, there can be a time lapse between the deposit of funds with the Treasury Department and the investment of those funds. There can also be a time lapse between the issuance of a check and when the payee presents the check, resulting in lost interest. Congressional oversight committees became concerned with IIM mismanagement in the late 1980s and began holding oversight hearings regarding the IIM accounts in 1988. Four years later, the House Committee on Government Operations produced a report highly critical of the Interior Department. In 1994, Congress enacted the Indian Trust Fund Management Reform Act (the Reform Act), recognizing the federal government's pre-existing trust responsibilities and further identifying some of the Interior Secretary's trust fund responsibilities, such as providing adequate accounting for trust fund balances; providing adequate controls over receipts and disbursements; providing accurate and timely reconciliations; preparing and supplying periodic statements of account performance and balances to account holders; and establishing consistent, written policies and procedures for trust fund management. Significantly, the original House bill ( H.R. 1846 ) would have made the accounting duty prospective only. When another similar bill was introduced to replace H.R. 1846 , that provision was left out. This new bill became the Reform Act, and the courts interpreting it in the Cobell litigation have determined that DOI owes a historical accounting duty going back to June 24, 1938. As the U.S. Court of Appeals for the D.C. Circuit (D.C. Circuit) stated, "the 1994 Act identified a portion of the government's specific obligations and created additional means to ensure that the obligations would be carried out." The Cobell litigation began in 1996, and its docket enumerated over 3,600 documents and over 20 federal district court and court of appeals opinions. The following attempts to distill the history of this litigation so that it focuses on the substantive issues regarding the IIM accounts. In 1996, a group of IIM account holders filed a class action suit to compel performance of trust obligations, alleging that the Secretaries of the Interior and the Treasury--as delegatees of the federal government's trust responsibilities--had breached the fiduciary duties owed to plaintiffs by mismanaging the IIM accounts. Two years later, the district court judge bifurcated the trial into two phases, with Phase 1 to focus on reforming the management and accounting of the IIM trust funds, and Phase 2 to address the historical accounting of those accounts. In 1999, United States District Judge Royce C. Lamberth issued a ruling as to Phase 1, holding that the Treasury and Interior Secretaries had breached their fiduciary duties to the IIM account holders. The transition to Phase 2 proved difficult because the defendants were unable to submit--in forms acceptable to the court--plans for reforming the account-management system and for providing a historical accounting. Two specific issues made it particularly difficult for DOI to provide an accounting in the Cobell litigation. The first of these issues was the fractionation of interests in many of the allotment lands. These interests have been fractionated over the years as they have been divided among the heirs of the original allottees, increasing exponentially with each generation and leading to incredibly small interests that are difficult to track. DOI estimates that there are currently over 1.4 million fractional interests subdividing 58,000 tracts of land. While DOI has stated that it can perform a transaction-by-transaction accounting of the judgment and per capita accounts and the SDAs, the problems presented by the land-based accounts have proven very difficult to resolve. DOI has argued that it should be able to use statistical sampling with respect to some of these accounts. The second difficult question is determining how far into the past a historical accounting should go. At various points in the litigation, the different parties argued for an accounting of transactions as far back as 1887 (date of the Allotment Act), 1938 (creation of the Secretary's authority to deposit tribal trust funds), and 1994 (date of the Reform Act). Resolving this problem would likely encompass a choice between what is fair and what is possible. One could have very different answers to these two questions, mainly because, as the litigation showed, DOI and Treasury records relating to the IIM accounts are at best incomplete. In January 2003, DOI provided a new historical accounting plan to Judge Lamberth that would cover all accounts open as of October 25, 1994, when the Reform Act was enacted. After reviewing DOI's plan, Judge Lamberth in September 2003 issued a controversial structural injunction giving the court broad oversight authority to ensure that (1) DOI carries out the accounting (the court adopted what is essentially a modified version of DOI's historical accounting plan, but did not allow DOI to use statistical sampling with respect to the land-based accounts); and (2) DOI reforms its system for managing the IIM accounts. Judge Lamberth also appointed a monitor to ensure compliance with the injunction order. One month later, Congress passed an appropriations rider stating that "nothing in [the Reform Act] or in any other statute, and no principle of common law, shall be construed or applied to require the Department of the Interior to commence or continue historical accounting activities with respect to the [IIM] Trust" until 2005 or when Congress more clearly delineates DOI's accounting obligations under the Reform Act. Congress took this action in direct response to Judge Lamberth's structural injunction order, stating that compliance could cost upwards of $6 billion and that diverting that amount of resources could be "devastating to Indian country." Two subsequent appropriations bills limited the funds available to DOI for the historical accounting to $58 million for FY2005 and FY2006. On December 10, 2004, the D.C. Circuit issued an opinion striking down almost all of Judge Lamberth's injunction. The court first held that, pursuant to Congress's directive contained in the aforementioned appropriations rider, DOI could not be compelled to perform any historical accounting. The court noted, however, that the directive would sunset on December 31, 2004, and the judges pointed out that they could not "address the issues that would be relevant if the district court [after December 31, 2004] reissued those provisions [compelling a historical accounting]." The court next largely overturned Judge Lamberth's injunction as to DOI's systemic reform. Looking to Supreme Court precedent, the D.C. Circuit held that judicial review under the Administrative Procedure Act (APA) is limited to specific agency actions, and that such review cannot be extended to "claims of broad programmatic failure." The court held that Judge Lamberth, in issuing his injunction, had impermissibly wandered into this latter area, which is more properly reserved for executive or legislative action. While the D.C. Circuit upheld Judge Lamberth's requirement that DOI submit a plan laying out how it will come into compliance with its fiduciary obligations, the court found that the other elements of Lamberth's order (e.g., the appointment of a monitor, the listing of and compliance with tribal laws) were not tied to specific findings of wrongdoing and suggested greater, and inappropriate, judicial intrusion into agency discretion. On February 23, 2005, Judge Lamberth--noting that the deadline contained in the appropriations rider had passed--issued another structural injunction with respect to the historical accounting. Once again, he adopted a modified version of DOI's historical accounting plan, but prohibited the use of statistical sampling and required an accounting going back to the Allotment Act of 1887. He refused to stay the order pending appeal, citing the plaintiffs' nine-year wait and "a delay directed by Congress in a bizarre and futile attempt at legislating a settlement in this case." On November 15, 2005, the D.C. Circuit vacated Judge Lamberth's injunction and historical accounting order and directed that, on remand, the district court, in evaluating DOI's plan for a statistical sampling to accomplish the accounting, should not ignore the general language of the Reform Act and subsequent congressional limitations on funding, suggesting that the Reform Act should not be seen as mandating "the best available accounting without regard to cost." The court of appeals would later remove Judge Lamberth from this case for abuse of discretion and bias. On January 30, 2008, Judge James Robertson, assigned to the case in December 2006, rejected DOI's historical accounting plan not because of its use of statistical sampling methodology, but on the basis of finding its scope legally inadequate in terms of years and accounts or funds to be covered. He then held that DOI's accounting for the funds was impossible "as a conclusion of law" because DOI could not "achieve an accounting that passes muster as a trust accounting" due to the inadequacy of funding provided by Congress. Judge Robertson ordered a hearing to develop a process for determining an appropriate remedy. On August 7, 2008, Judge Robertson issued a decision on the remedy issue in which he awarded plaintiffs $455.6 million in restitution. The figure represents the amount to be restored to plaintiffs as receipts not credited to their accounts. Claims for damages for funds which never were collected or for mismanagement of assets are not included in the figure and were not before the court in Cobell . To determine the amount of restitution, the court had to examine the models the parties had set forth for determining the difference between what Treasury had posted as receipts to the IIM accounts and what had been disbursed to individual accounts or account holders. Information accumulated from the years of attempts at arriving at a satisfactory and reliable means of reconstructing the records at DOI and Treasury aided the court in evaluating the models offered by the parties. The court, in formulating its remedy, decided not to accord plaintiffs the full benefit of evidentiary presumptions in their favor. This led the court to apply a modified burden of proof on the government's statistical model for calculating data that it could not produce. DOI had shown that only 77% of the monies collected for the IIM system had been posted to IIM accounts. Accepting the government's calculation of receipts but using their own formula for calculating a disbursement rate for each year, the plaintiffs claimed a shortfall of $3.6 billion over 122 years. To this they proposed adding approximately $43.4 billion as "benefit to the government" based on a formula they had devised which assumed that whatever was not disbursed to the account holders was available for general governmental expenses, relieving the government of a need to issue and pay interest on Treasury bonds. The government produced evidence explaining some of the shortfall between receipts and disbursements. A DOI expert testified that the discrepancy reflected the fact that not all the funds received into Treasury's IIM account are intended to be credited to individual Indian trust fund accounts. Some, such as tribal trust fund receipts or bid or lease deposits, are to be funneled on a pass-through basis to other recipients. Having admitted that 23% of IIM receipts had not been posted to IIM accounts and faced with the plaintiffs' charge that approximately $4 billion had not been disbursed to account holders, the government was required to explain the shortfall and put a figure on it. The explanation was essentially that the individual Indian trust beneficiaries were not entitled to all of the funds that Treasury deposited in the IIM account. The government attempted to demonstrate this point by using a statistical model that employed a "multiple imputation" technique to account for the multiplicity of variables imputed to the large range of missing data with respect to the accounts. With both the plaintiffs' and defendant's statistical models before him, Judge Robertson not only found the model offered by the plaintiffs to be defective, he also criticized their failure to offer specific evidence to discredit the defendant's model. According to his opinion, the plaintiffs' model could not be considered, among other reasons, because it was inconsistent in accepting the government's estimate of receipts, but not of disbursements, which reflected "a super-strong interpretation of the presumption against the breaching trustee that cannot be equitably applied to the trusts at issue here." Accordingly, Judge Robertson accepted the government's model, but provided a certain evidentiary advantage to the plaintiffs by selecting the "maximally conservative" estimate. Therefore, using the maximally conservative estimate as established by the government model, the court concluded that $455.6 million was the amount missing in the IIM trust and that only that amount would be awarded in restitution. The July 24, 2009, decision issued by the U.S. Court of Appeals for the District of Columbia vacated the holding in Judge Robertson's January 2008 decision that DOI did not have to conduct an accounting due to impossibility and remanded the case to the district court for further proceedings. The court of appeals concluded that the district court was correct to grant deference to DOI's methodology in conducting the accounting because "it 'a[rose] out of an administrative balancing of cost, time, and accuracy.'" However, the court of appeals also found that the district court's conclusion that "the proper scope of the accounting obligation ... is the result ... of a legal interpretation of the 1994 Act and other statutes governing the IIM trust" was not completely correct. Although the district court correctly concluded that the extent of the scope of the accounting is derived from statutory law, the court of appeals concluded that "the unique nature of this trust requires the district court to exercise equitable powers in resolving the paradox between classical accounting and limited government resources." Thus, the court of appeals concluded that the district court was incorrect in assuming it could not adjust the scope of the accounting in order to provide the best accounting possible with the limited resources made available by Congress. Rather, "the district court sitting in equity must do everything it can to ensure that Interior provides them an equitable accounting. The district court's holding of impossibility contradicts the requirement of an equitable accounting--one that makes most efficient use of limited government resources." After holding that DOI must conduct the best accounting possible with the money Congress appropriated for the task, the court of appeals then provided some guidance to the district court in order to help establish the proper scope of the accounting. The court of appeals first noted that "the district court should exercise its equitable power to ensure that Interior allocates its limited resources in rough proportion to the estimated dollar value of payments due to class members." The court of appeals also recommended that the district court "consider low-cost statistical methods of estimating benefits across class sub-groups." Finally, the court of appeals concluded that the district court erred in ordering an accounting for accounts closed before the 1994 Reform Act was passed because the act only contemplated an accounting of funds held in trust by the United States at the time of the act's passage. On December 7, 2009, the Secretaries of the Interior and Treasury reached a settlement agreement with the plaintiffs' class. However, under its own terms, the settlement would not be effective until authorized by Congress. The settlement agreement originally called for Congress to authorize it legislatively by December 31, 2009. The deadline, however, was extended eight times to February 28, 2010, April 16, May 25, June 15, July 9, August 6, October 15, and finally to January 7, 2011. After a number of failed attempts to approve the settlement, Congress finally authorized the settlement through the Claims Resolution Act of 2010 (CRA), which was signed by President Obama on December 8, 2010. The settlement agreement addressed the claims of two separate classes. One class, the "Historical Accounting Class," is defined as those Indian beneficiaries who had an open IIM account between October 25, 1994, and September 30, 2009, in which there was at least one cash transaction credited to it. The "Trust Administration Class" is defined as those individual Indian beneficiaries alive as of September 30, 2009, who have or had IIM accounts between roughly 1985 to the present (the time period when IIM accounts were kept in electronic databases) and individual Indians who, as of September 30, 2009, had recorded or other demonstrable ownership interest in land held in trust or restricted status, regardless of the existence of an IIM account or proceeds generated from the land. The settlement agreement released the federal government from claims related to the mismanagement of the IIM accounts of both the Historical Accounting Class and the Trust Administration Class. However, the settlement also specifically excluded from the release (1) claims related to the payment of the account balances of existing IIM accounts; (2) claims related to the payment of existing amounts in special deposits accounts, tribal accounts, or judgment fund accounts; (3) claims related to the breaching of trust or alleged wrongs after September 30, 2009; (4) claims for damages to the environment other than those claims expressly identified as Land Administration Claims; (5) claims for trespass; (6) claims against tribes, contractors, and other third parties; (7) equitable, injunctive, or non-monetary claims for boundary correction and appraisal errors; (8) money damages arising from boundary or appraisal errors that occur after September 30, 2009; (9) claims arising out of leases, easements, rights-of-way, and similar encumbrances existing as of September 30, 2009; (10) claims related to failure to assert water rights and quantification; and (11) health and mortality claims. The settlement also stated that no further monetary obligations shall attach to the federal government after the funds agreed upon in the settlement are dispensed. In return for this release of liability, the settlement established two funds. The first fund would receive $1.412 billion from the Judgment Fund and will be called the "Accounting/Trust Administration Fund." From this fund, each member of the Historical Accounting Class shall receive $1,000. After this payment is made, the next stage involves establishing the identities of the members of the Trust Administration Class and paying each member a pro rata amount. This amount involves a $500 base payment. In addition, each member of the class will receive a pro rata amount of the remaining monies in the Accounting/Trust Administration Fund. Any money remaining in this fund will be used to finance a program called "Funds for Indian Education Scholarships," which provides for the cost of post-secondary education for Indian students. The second fund, called the "Trust Land Consolidation Fund," would receive $2 billion. This fund, which will terminate in 10 years, will be used to acquire fractional interests in trust or restricted land pursuant to 25 U.S.C. SS2201 et seq., which authorizes the Land Consolidation program. This program is the principal vehicle by which the federal government consolidates fractionated trust and restricted lands. Monies from this account will also be made available for the "Funds for Indian Education Scholarships." The CRA excludes amounts received by individual Indians pursuant to the settlement from inclusion as gross income for federal tax purposes. The settlement and CRA also left for the district court's consideration the amount of attorneys' fees and the amount of the incentive award for the named plaintiffs of the class. The district court approved the settlement on July 27, 2012. A few members of the class appealed the settlement to the U.S. Court of Appeals for the D.C. Circuit, which upheld the fairness of the settlement. After the Supreme Court denied a petition for certiorari and the appeal period expired, the settlement became final on November 24, 2012.

The settlement reached in Cobell v. Salazar was authorized by the Claims Resolution Act of 2010 on December 8, 2010. Under the terms of the settlement, the United States government will pay $1.4 billion to members of the class who sought to have a historical accounting of their IIM accounts (an abbreviation for Individual Indian Monies). An additional $2 billion will be provided by the government for the purpose of consolidating fractionated trust and restricted lands. First filed in 1996, Cobell v. Salazar involved the Department of the Interior's (DOI's) management of several money accounts. These money accounts, or IIMs, as distinguished from tribal trust funds, are monies which the federal government holds for the benefit of individual Indians. The conflict in the case traced to the federal government's trust responsibility with respect to American Indians. In the capacity of trustee, the United States holds title to much of Indian tribal land and land allotted to individual Indians. Receipts from leases, timber sales, or mineral royalties are paid to the federal government for disbursement to the appropriate Indian property owners. The United States has fiduciary responsibilities to manage Indian monies and assets which have been derived from these lands and are held in trust. However, several of the beneficiaries of these trust funds alleged that DOI mismanaged these funds and filed suit in order to obtain a proper accounting of these funds and to receive damages if warranted. After more than a decade of litigation over obligations associated with the management of the IIM accounts--consisting of over 3,600 documents and over 20 federal district court and court of appeals opinions--the parties ultimately reached a settlement on December 7, 2009. However, the settlement, which by its terms would create a Trust Administration Fund and a Land Consolidation Fund, required congressional authorization before it could go into effect. A year later, Congress authorized the settlement through the Claims Resolution Act of 2010 (CRA), which was signed by President Obama on December 8, 2010. The district court approved the settlement on July 27, 2011. After appeals to the U.S. Court of Appeals for the D.C. Circuit and petitions for certiorari to the Supreme Court were denied, the settlement became final on November 24, 2012.

Cuban migration to the United States is a topic of long-standing congressional interest. U.S. immigration policy toward Cuba is the product of a unique set of circumstances and is unlike U.S. immigration policy toward any other nation in the world. Efforts by the Obama Administration to normalize relations with Cuba following President Obama's December 2014 announcement of a major policy shift toward that country focused increased attention on migration issues, leading some policymakers to reexamine the policies on immigration and federal assistance that apply to Cuban migrants. The November 2016 death of Cuba's Fidel Castro may spur a broader reexamination of these policies. At the same time, concern among some in Cuba about possible changes to current U.S. migration policy is seen as a key factor behind recent upticks in Cuban arrivals to the United States. "Normal" immigration from Cuba to the United States has not existed since the Cuban Revolution of 1959 brought Fidel Castro to power. For more than 50 years, the majority of Cubans who have entered the United States have done so through special humanitarian provisions of federal law. For example, between 1962 and 1979 hundreds of thousands of Cubans entered the United States under the parole provision in the Immigration and Nationality Act (INA). The INA parole provision authorizes the Attorney General (now the Secretary of Homeland Security) "to parole into the United States temporarily under such conditions as he may prescribe only on a case-by-case basis for urgent humanitarian reasons or significant public benefit any alien applying for admission to the United States." Although the Cubans who arrived in the United States after the Cuban Revolution were paroled in, they were considered to be refugees fleeing persecution. At the time, the INA did not contain the current definition of a refugee or the provisions on refugee admissions and asylum; these were added by the Refugee Act of 1980. In 1980, the INA parole provision was again used when a mass migration of asylum seekers--known as the Mariel Boatlift--brought approximately 125,000 Cubans (and 25,000 Haitians) to South Florida over a six-month period. The Carter Administration described these arrivals as "Cuban-Haitian entrants." The INA parole provision continues to be used today by executive discretion to allow some Cubans to enter the United States. U.S. policy on Cuban migration has been shaped by a 1966 law, as amended, and migration agreements between the United States and Cuba, operating in conjunction with the INA. The 1966 law commonly known as the Cuban Adjustment Act (CAA), as amended, enables Cubans who have been present in the United States for at least one year to adjust to lawful permanent resident status (becoming lawful permanent residents (LPRs) of the United States) provided they are eligible to receive an immigrant visa and are admissible to the United States for permanent residence. Unlike most other applicants for adjustment to LPR status, Cuban nationals do not have to be sponsored by an eligible family member or employer. The CAA concerns Cubans who are already present in the United States and, as such, is distinct from U.S. policy on Cuban migrants attempting to reach the United States (see " Migration Agreements of 1994 and 1995 " and " Wet Foot/Dry Foot Policy "). Under the CAA: [T]he status of any alien who is a native or citizen of Cuba and who has been inspected and admitted or paroled into the United States subsequent to January 1, 1959 and has been physically present in the United States for at least one year, may be adjusted by the Attorney General [now the Secretary of Homeland Security], in his discretion and under such regulations as he may prescribe, to that of an alien lawfully admitted for permanent residence if the alien makes an application for such adjustment, and the alien is eligible to receive an immigrant visa and is admissible to the United States for permanent residence. In FY2014, the most recent year for which data are available, about 40,000 Cubans and their dependents adjusted to LPR status under the CAA. The CAA, which predated the Refugee Act of 1980, arguably reflected a belief that Cuban migrants to the United States were refugees under international law. The treatment of Cuban arrivals as refugees is a recurring theme in U.S. immigration policy toward Cuba. There have been legislative efforts over the years to sunset or repeal the CAA. In 1996, a provision was enacted as part of the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) that provides for the repeal of the CAA "effective only upon a determination by the President ... that a democratically elected government in Cuba is in power." Negotiated at a time of increasing U.S. Coast Guard interdictions of Cubans trying to reach the United States by sea, the 1994 migration agreement purportedly sought to normalize migration between Cuba and the United States. Under the agreement, both nations agreed to take steps to promote "safe, legal, and orderly" migration. Among the agreement's key elements, Cuba agreed to try to prevent unsafe departures from the island, and the United States agreed that Cuban migrants rescued at sea would not be allowed to enter the United States and instead would be taken to safe-haven camps. With respect to legal migration, the United States agreed to admit no less than 20,000 Cuban immigrants annually, excluding the immediate relatives of U.S. citizens. To help achieve this level of admissions, the United States established the Special Cuban Migration Lottery; lottery winners, who are randomly selected among applicants, are considered for immigration parole. The 1995 migration agreement built on the 1994 accord. A key element of this agreement concerned treatment of Cubans intercepted at sea on their way to the United States. Both nations agreed that intercepted Cubans would be returned to Cuba and that this would be done in a manner consistent with "the parties' international obligations." The 1994 and 1995 migration agreements, supported by the CAA, have resulted in a so-called "wet foot/dry foot" policy toward Cuban migrants. "Wet foot" refers to Cubans who do not reach the U.S. shore. They are returned to Cuba unless they cite a well-founded fear of persecution, in which case they are considered for resettlement in third countries. "Dry foot" is a reference to Cubans who successfully reach the U.S. shore, are inspected by Department of Homeland Security (DHS) officers, and generally are permitted to stay in the United States. It is important to note that those who are permitted to stay under the "wet foot/dry foot" policy are not granted formal admission to the United States. Instead, they are typically granted parole and, as parolees, can apply to adjust to LPR status under the CAA after one year. DHS U.S. Coast Guard and U.S. Customs and Border Protection (CBP) data reveal recent increases in unauthorized immigration from Cuba to the United States, which experts attribute mainly to Cuban concerns that the policy of allowing those who reach the U.S. shore to become permanent residents may soon change. As shown in Figure 1 , since FY2013 (the year before the announced shift in U.S. policy toward Cuba), there have been notable increases in U.S. Coast Guard maritime interdictions, in U.S. Border Patrol apprehensions between U.S. ports of entry, and especially in numbers of unauthorized Cubans presenting themselves at official U.S. ports of entry (see Appendix for the yearly data in Figure 1 ). The terms "unauthorized" and "inadmissible" are used here to describe these Cuban migrants because they do not meet the INA requirements for admission to the United States (although policies may permit them to enter and remain in the country). The U.S. Coast Guard is charged with interdicting unauthorized migrants at sea prior to landfall in the United States. As shown in Figure 1 , the annual number of maritime interdictions of Cubans has fluctuated over the years (see Figure A-1 for yearly data). The trend, however, has been consistently upward since 2010. Between FY2013 (the year before the announced shift in U.S. policy toward Cuba) and FY2016, the number of maritime interdictions increased nearly fourfold, from 1,357 in FY2013 to 5,213 in FY2016. The number of maritime interdictions in FY2016 was higher than in any other year during the FY1995-FY2016 period. The annual number of Cubans apprehended by the Border Patrol between U.S. ports of entry has likewise fluctuated over the years, generally tracking the interdiction data. These apprehensions have risen consistently since FY2012 (see Figure A-2 ). Between FY2013 and FY2016, Border Patrol apprehensions of Cubans increased more than threefold, from 624 to 1,930. The FY2016 figure was the highest since FY2008. Consistent with maritime travel, the vast majority of these encounters have occurred in U.S. coastal areas. Far greater than the number of Coast Guard interdictions and Border Patrol apprehensions of Cubans each year combined, at least since FY2004, is the number of Cubans encountered at official U.S. ports of entry (see Figure A-3 ). These data reflect a preference on the part of Cubans to travel to the United States mainly by land. Unlike migrants of other nationalities, Cubans who are not eligible for formal admission are nevertheless generally able to enter and live in the United States in accordance with special immigration policies, as discussed. The number of inadmissible Cubans arriving at ports of entry has grown annually since FY2009. The increases since FY2014 have been marked, with total numbers more than doubling between FY2014 (24,277) and FY2016 (46,590). The majority of these Cubans present themselves at land ports of entry along the southwest border. Qualified Cubans can also avail themselves of pathways to permanent residence in the United States available to all nationalities. Cuban asylum seekers, like those of all nationalities, can apply for asylum from within the United States or at a U.S. port of entry, or they can be considered for refugee status abroad. Under the INA, refugees typically have to be outside their home country, but there is an in-country refugee program that enables certain Cubans, including human rights activists, members of persecuted religious minorities, and former political prisoners, to apply to the U.S. refugee program while still in Cuba. Persons granted asylum or admitted to the United States as refugees can apply for LPR status after one year. Among the other pathways to permanent residence, U.S. citizens and LPRs can petition for eligible family members in Cuba to become LPRs through the U.S. family-based immigration system. Annual numbers of refugee admissions to the United States from Cuba have varied over the years, revealing no clear trend. With the exception of one year when annual admissions of Cuban refugees exceeded 6,000, refugee admissions from Cuba have numbered less than 5,000 each year since FY1996. Asylum grants have been significantly lower. In FY1996, the peak year for asylum grants in the FY1996-FY2014 period, 886 Cubans were granted asylum. In each year between FY2002 and FY2014, fewer than 100 Cubans received asylum. In addition to creating processes for the admission of refugees and the granting of asylum, the Refugee Act of 1980 authorized federal assistance to resettle refugees of all nationalities and promote their self-sufficiency. It established the Office of Refugee Resettlement at the Department of Health and Human Services (HHS) to administer a set of refugee resettlement assistance programs. Another 1980 law, the Refugee Education Assistance Act, enacted at the time of the Mariel Boatlift, addressed the eligibility of Cubans and Haitians for federal assistance and benefits. Section 501(e) of the law defined the term "Cuban and Haitian entrant," which had been used by the Carter Administration to describe Mariel arrivals, for purposes of eligibility for federal assistance: (1) any individual granted parole status as a Cuban/Haitian Entrant (Status Pending) or granted any other special status subsequently established under the immigration laws for nationals of Cuba or Haiti, regardless of the status of the individual at the time assistance or services are provided; and (2) any other national of Cuba or Haiti-- (A) who--(i) was paroled into the United States and has not acquired any other status under the Immigration and Nationality Act; (ii) is the subject of removal proceedings under the Immigration and Nationality Act; or (iii) has an application for asylum pending with the Immigration and Naturalization Service; and (B) with respect to whom a final, nonappealable, and legally enforceable order of removalhas not been entered. The law directed the President "to exercise authorities with respect to Cuban and Haitian entrants which are identical to the authorities which are exercised under [the Refugee Assistance provisions of the INA]." It also allowed the President to provide by regulation "that benefits granted by any law of the United States ... with respect to individuals admitted to the United States [as refugees] ... shall be granted in the same manner and to the same extent with respect to Cuban and Haitian entrants." Another law, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, as amended, made Cuban and Haitian entrants eligible for certain federal public benefits to the same extent as refugees. Steps taken by the Obama Administration to date to normalize relations with Cuba have not changed U.S. policy toward Cuban migrants. However, these efforts have raised questions about the potential for changed policies in the future through either executive or congressional action. Much of this attention has focused on the CAA, which, as discussed, grants DHS the discretionary authority to adjust the status of eligible Cubans. Generally speaking, the executive could be said to have some latitude under the CAA to determine whether to exercise this discretion toward individual Cuban migrants or classes of Cuban migrants. With respect to congressional action, bills were introduced in the 114 th Congress to repeal the CAA. If enacted, measures such as these would eliminate the special adjustment of status pathway for Cubans, requiring them to qualify for adjustment of status under the applicable provisions in the INA. Other legislation was introduced in the 114 th Congress that would eliminate the special treatment that Cuban entrants receive with respect to federal refugee resettlement assistance and other federal assistance. Proposals limited to ending federal assistance, however, would not change existing immigration policies toward Cubans and, thus, would not directly impact the ability of Cubans to enter the United States or to adjust status under the CAA. These three figures provide available data on the migration of unauthorized Cubans to the United States. These are the same data included in Figure 1 . The figures display annual data since FY1995 on U.S. Coast Guard interdictions ( Figure A-1 ) and U.S. Border Patrol apprehensions between U.S. ports of entry ( Figure A-2 ), and annual data since FY2004 on inadmissible Cubans encountered at U.S. ports of entry ( Figure A-3 ). As discussed, the recent increases in all three measures are widely attributed to Cuban concerns that U.S. treatment of Cuban migrants may soon change. The data, however, also reflect considerable variability in earlier years. Observers have identified a number of factors that may have contributed to these annual changes. On the U.S. side, these include U.S. economic conditions (e.g., the 2007-2009 recession and slow recovery) and migration-related policies affecting Cubans (e.g., changes in Coast Guard patrolling methods).

The Obama Administration's efforts to normalize relations with Cuba focused attention on U.S. policies on immigration and federal assistance that apply to Cuban migrants in the United States--a set of policies that afford Cuban nationals unique immigration privileges. The November 2016 death of Cuba's Fidel Castro may lead to further consideration of these issues. "Normal" immigration from Cuba to the United States has not existed since the Cuban Revolution of 1959 brought Fidel Castro to power. For more than 50 years, the majority of Cubans who have entered the United States have done so through special humanitarian provisions of federal law. U.S. policy on Cuban migration has been shaped by a 1966 law known as the Cuban Adjustment Act, as amended, and U.S.-Cuban migration agreements signed in the mid-1990s, operating in conjunction with the Immigration and Nationality Act (INA). Among the special immigration policies presently in place is a so-called "wet foot/dry foot" policy toward Cuban migrants who try to reach the U.S. shore by sea. "Wet foot" refers to Cubans who do not reach the United States. They are returned to Cuba unless they cite a well-founded fear of persecution, in which case, they are considered for resettlement in third countries. "Dry foot" is a reference to Cubans who successfully reach the U.S. shore and are generally permitted to stay in the country. After one year, these individuals can apply to become U.S. lawful permanent residents (LPRs) under the Cuban Adjustment Act. In addition to entering the United States under special policies and becoming LPRs through the Cuban Adjustment Act, Cubans can gain permanent admission to the United States through certain standard immigration pathways set forth in the INA. They can be sponsored for U.S. permanent residence by eligible U.S.-based relatives who are U.S. citizens or LPRs through the U.S. family-based immigration system. They can also apply for asylum from within the United States or at a U.S. port of entry, or they can be considered for refugee status abroad. Persons granted asylum or admitted to the United States as refugees can apply for LPR status after one year. Special provisions of law also make Cuban migrants in the United States eligible for federal assistance. The Refugee Education Assistance Act of 1980 defines the term "Cuban and Haitian entrant" for purposes of eligibility for federal assistance. It makes these entrants eligible for the same resettlement assistance as refugees. The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, as amended, makes Cuban and Haitian entrants eligible for certain federal public benefits to the same extent as refugees. The steps taken by the Obama Administration to normalize relations with Cuba have raised questions about the possibility of future changes to U.S. policy toward Cuban migrants through either executive or congressional action. Regarding the latter, legislation was introduced in the 114th Congress to repeal the Cuban Adjustment Act and eliminate the special treatment that Cuban entrants receive with respect to federal refugee resettlement assistance and other federal assistance. It remains to be seen whether Congress will act on any such measures. For an overview of current issues in U.S.-Cuban relations, see CRS Report R43926, Cuba: Issues for the 114th Congress.

Research on climate change has identified a wide array of sources that emit "greenhouse gases" (GHGs)--compounds that trap the sun's heat, with effects on Earth's climate. The largest sources of these emissions, particularly in developed economies, are electric utilities and the transportation sector. In the United States, electricity generation accounts for about 40% of the emissions of carbon dioxide, the principal greenhouse gas, or about one-third of the emissions of the six major GHGs combined. The transportation sector, including cars, trucks, buses, trains, ships, and aircraft, accounts for roughly one-third of U.S. CO 2 emissions, or 28% of the six GHGs combined. Aircraft account for about 10% of the U.S. transportation sector's GHG emissions, or 2.6% to 3.4% of total U.S. GHG emissions. In the United States, aviation emissions have grown more slowly than those of other transportation sectors, and slightly less than the emissions of the economy as a whole over the last two decades, but worldwide aviation has been among the faster-growing sources of GHG emissions. According to the Commission of the European Union, emissions from international aviation increased by almost 70% between 1990 and 2002. The United Nations Intergovernmental Panel on Climate Change (IPCC), in a 1999 study that is still widely cited, projected that the impact of aircraft emissions on climate would be 2.6 to 11 times as large in 2050 as it was in 1992. If, as many argue, GHG emissions must be reduced 50% to 80% in that time period, emissions from aviation would need to be drastically reduced to provide a proportional share of the targeted reduction. U.S. emissions from aircraft have run counter to the worldwide trends and projections. Since 1990, aircraft GHG emissions have declined as a percentage of total U.S. emissions (see Table 1 ). The biggest factor in the decline was a 54% decrease in emissions from domestic military operations, which more than offset increases in domestic commercial and general aviation emissions. Emissions from domestic operation of commercial aircraft grew 13% between 1990 and 2007. That figure was well below the growth in air travel: according to the Air Transport Association (the association that represents the domestic airlines) passenger-miles traveled domestically on U.S. commercial airlines increased 74% between 1990 and 2007 and cargo revenue-ton miles increased 136%. Two types of efficiency increases contributed to the relatively slow growth in U.S. commercial aircraft emissions. First, load factors (the percentage of seats occupied) increased to 79.8% in 2007, compared with 60.4% in 1990. Second, fuel efficiency itself increased, as older, less efficient aircraft were retired in favor of newer, more efficient models. These savings can be substantial. For example, American Airlines estimates that the 18-year old MD-80s currently flying use 35% more fuel than the Boeing 737-800 aircraft that are to replace them over the next two years. EPA's Inventory of U.S. Greenhouse Gas Emissions and Sinks shows that domestic flights of all kinds (military, commercial aircraft, and general aviation) accounted for about 10% of the GHG emissions from the U.S. transportation sector in 2006--2.6% of overall U.S. GHG emissions. Aviation's impact on climate may be greater than these figures suggest, however, for two reasons. First, emissions resulting from international transportation are not currently included in the U.S. emission totals. These emissions totaled 52.7 million metric tons in 2007. If they were included in the U.S. aviation statistics, emissions from aircraft of all types would have accounted for 3.4% of the U.S. GHG total. Second, the bulk of the aviation sector's emissions occur high in the atmosphere, where their impact on climate is greater than that of emissions at ground level. According to a number of sources, the total impact of aviation could be around twice the impact of carbon dioxide alone when this factor is taken into account. Emissions from jet aircraft also lead to the formation of cirrus clouds, as the condensation trails (contrails) of water vapor and sulfur particles emitted from engines at high altitudes form ice crystals that persist as clouds under some atmospheric conditions. Scientists are uncertain how to measure the occurrence and impact of such clouds, but they are reasonably certain that the clouds add to the greenhouse effect of aircraft emissions, perhaps substantially. Thus, while the precise share of aviation in total greenhouse gas emissions depends on what is included, and the impact of some emissions is unclear, there is little doubt that aviation is a significant contributor to U.S. and world GHG emissions. The cost of jet fuel represents a significant portion of total cost for most air carriers. There is a great deal of variation depending on the distance traveled, the age and efficiency of the aircraft, and the price of fuel at any given time, but the total fuel expenses of U.S. airlines consumed an average of 24% of airline operating revenues in 2007, according to the Air Transport Association. Given the importance of fuel costs, airlines and air freight companies have a major incentive to purchase more fuel-efficient aircraft, and thus, aircraft manufacturers are constantly seeking to improve the efficiency of airplanes and engines. These incentives have resulted in sizeable efficiency gains: U.S. airlines carried 20.4% more passenger and cargo traffic in 2007 than they did in 2000, but they used nearly 3% less fuel in doing so. This resulted in a reduction of 5.1 million metric tons of CO 2 emissions in 2007, as compared to 2000, according to ATA. The industry has committed to a further 30% increase in fuel efficiency by 2025. In addition to improving the efficiency of individual aircraft, there is a general consensus that fuel use could be reduced by modernizing the Federal Aviation Administration (FAA)'s air traffic control system. The FAA is in the process of transforming air traffic control from a ground-based system of radars to a satellite-based system, dubbed the Next Generation (NextGen) Air Transportation System. The primary objective is to enable the air traffic control system to handle a projected doubling of current passenger loads by 2025. But, when fully implemented, NextGen is also expected to cut the GHG emissions of individual aircraft 10% to 15%, by allowing more direct routing, reducing delays, and through such features as Continuous Descent Approach. According to the FAA, United Parcel Service aircraft equipped with some of the NextGen technologies have reduced emissions as much as 34%. As policy makers consider whether the federal government should regulate aircraft GHG emissions (versus continuing to rely solely on market forces to determine the level of emissions), some have turned their attention to the potential for regulation under the Clean Air Act. In December 2007, EPA received two petitions requesting that it exercise that authority to regulate GHG emissions from aircraft engines. EPA has not responded to these petitions, nor has it promulgated regulations to control CO 2 from any source, to date. In 2003, responding to an earlier petition to regulate GHGs from cars and trucks, the agency maintained that it did not have authority under the Clean Air Act to do so. That determination was challenged by Massachusetts and other petitioners, and in a 2007 decision, the U.S. Supreme Court found that GHGs are air pollutants within the Clean Air Act's definition, and thus, EPA has authority to regulate them if it finds that they "cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare." Using the authority of Section 231 of the act, the EPA Administrator may propose emission standards applicable to any air pollutant from any class of aircraft engines which in the Administrator's judgment causes, or contributes to, air pollution which may reasonably be anticipated to endanger public health or welfare. The Administrator is required to consult with the FAA Administrator and hold public hearings before finalizing such standards. The President may disapprove of such standards if the Secretary of Transportation finds that they would create a hazard to aircraft safety. The December 2007 petitions request that EPA make a finding that aircraft GHG emissions do endanger public health or welfare, and that the agency adopt regulations that allow a range of compliance approaches: these might include emission limits, operational practices, fees, a cap-and-trade system, minimizing engine idling time, employing single engine taxiing, or use of ground-side electricity measures to replace the use of fuel-burning auxiliary power units at airport gates. The aircraft petitions are among several others that EPA has received to regulate GHG emissions from cars and trucks, ships, and nonroad engines and vehicles. As a result, whatever decision is made (for any one of these sectors) is considered likely to affect the decisions regarding all the others--ultimately, a large portion of the economy. Furthermore, as soon as greenhouse gases become "subject to regulation" under any section of the act, new stationary sources, such as electric generating units, will be required to install best available GHG control technology under the act's New Source Review/Prevention of Significant Deterioration provisions. Given the relative size of aircraft emissions as compared to power plants, cars, and trucks, aviation was never likely to be the first sector whose GHG emissions EPA would regulate. Thus, not surprisingly, EPA has taken no action on the aircraft petitions, to date. The agency is moving ahead with regulation of GHG emissions from cars and trucks, however: on May 19, at a press conference in the White House Rose Garden, the President announced that EPA would proceed to set greenhouse gas emission standards for new motor vehicles, in coordination with new fuel efficiency standards to be established by the National Highway Traffic Safety Administration. A formal set of proposed standards appeared in a joint EPA-NHTSA notice in the September 28, 2009 Federal Register . Both EPA and the President have made clear that, despite their action under existing authority, they support legislation targeted more specifically at GHGs, and would prefer that Congress enact a bill addressing GHG emissions specifically rather than EPA using its current authority. New legislation might be more efficient--clearly allowing sources in different industries to trade emission allowances to each other, for example--and it might avoid challenge in the courts if Congress were specific regarding the authority it was giving EPA to control GHG emissions. The current language of the act, while arguably providing regulatory authority, is sufficiently vague that legal challenges are considered almost a certainty as EPA proceeds. This might delay implementation of controls. The two options--proceeding under the Clean Air Act or supporting new legislation--are not mutually exclusive, however. Existing EPA authority under the Clean Air Act can be used as a backstop, while Congress considers granting new authority. In the meantime, EPA's development of regulations is among the factors motivating Congress and interested parties to agree on a legislative approach. GHG legislation has been a high priority of the current Congress. Attention has centered on legislation ( H.R. 2454 in the House) that would cap emissions of GHGs economy-wide and establish an allowance trading system for major emitters. (For a general discussion of how such cap-and-trade systems work, see CRS Report RL34502, Emission Allowance Allocation in a Cap-and-Trade Program: Options and Considerations , by [author name scrubbed], especially Appendix A.) As noted, aviation is considered a significant source of GHG emissions. Nevertheless, the aviation sector has not generally been targeted directly by the climate change bills introduced in Congress to date. An exception was the reported version of H.R. 2454 , the Waxman-Markey bill. As reported by the House Energy and Commerce Committee in May, the bill would have required EPA to promulgate best achievable control technology standards for emissions of GHGs from new aircraft and new engines used in aircraft by December 31, 2012. This requirement was removed from the version of the bill that passed the House June 26. Instead, the House-passed version encourages the development of a global framework for the regulation of GHG emissions from civil aircraft within the International Civil Aviation Organization. And, instead of direct regulation, the bill would deal with aviation emissions indirectly: by including the refining sector in its overall emissions cap, it would address the aviation sector's emissions "upstream." Capping emissions from fuels upstream of the air carriers and eventually lowering the cap more than 80%, as the bill would do, could have several effects: first, it would provide an incentive for refiners to produce lower-carbon fuels ; second, it would increase the price of fuels, as refiners either purchased additional allowances for their emissions or were forced to reduce production, in essence rationing fuels through a higher price in order to stay beneath the emissions cap; third, as the cost of fuel increased, the demand for fuel-efficient aircraft would increase; and fourth, consumers of aviation services (airline passengers and shippers of freight) would have incentives to replace higher-cost air transportation with lower-cost alternatives (e.g., video-conferencing by business and government entities, increased reliance on lower-emission forms of transport, greater reliance on local sources of goods, etc.). The cost of air travel and of air freight has been reduced substantially since its inception, as aircraft have become more efficient and airlines have reduced other costs in competitive markets. According to ATA, the cost of domestic air travel in real (inflation-adjusted) terms has declined by 51.9% since 1978. By contrast, controlling GHG emissions, if it were done, would likely increase the price of air travel and air freight, reducing demand in comparison to a business-as-usual (i.e., without GHG controls) scenario. Unlike the upstream approach of U.S. cap-and-trade bills, the European Union (EU) has chosen to regulate aviation directly, by including the sector in its Emission Trading Scheme (ETS), beginning in 2012. The ETS began operation in 2005, capping emissions of CO 2 from more than 10,000 energy-intensive stationary sources of emissions. The currently covered sectors (power plants; petroleum refining; iron and steel production; coke ovens; pulp and paper; and cement, glass, lime, brick, and ceramics production) account for about half of EU CO 2 emissions. On January 1, 2012, the aviation sector's CO 2 emissions are to be added to the ETS. The scheme is to cover all aircraft operators landing in or departing from the EU, with the exception of military aircraft, some small carriers, emergency services, research, and humanitarian flights. Thus, flights to and from the EU by U.S. air carriers would be subject to the emission limits. For the first year, the total quantity of allowances would be equivalent to 97% of the sector's average 2004-2006 emissions. The cap would be reduced to 95% in 2013, with further reductions to be agreed on as part of the ongoing review of the ETS. In allocating the emissions allowed under the cap, 85% of the sector's 2012 allowances are to be given to aircraft operators at no cost, and 15% of the allowances auctioned. The EU Commission has proposed that 80% of allowances be distributed free of charge in 2013, with 20% being auctioned; the percentage of free allowances is expected to continue declining with a goal of auctioning all allowances in 2020. Operators emitting more than their allowed cap would need to buy additional allowances on the carbon market. A special reserve fund, taken from the sector's overall cap, is to allocate up to one million tons worth of allowances a year to ensure access to the market to new operators and to provide allowances to rapidly growing airlines. The directive provides sanctions for failure to comply with the scheme, including the possibility that a non-complying airline might be banned from operating in the EU. According to press reports, "This warning shot is aimed at foreign airlines--including US carriers--that have said they will not recognise the scheme." For its part, the United States has responded by threatening trade sanctions if the EU makes an attempt to force foreign airlines to comply with the emissions trading system. This dispute highlights a general problem in directly regulating emissions from sectors such as aviation or shipping, a substantial portion of whose total emissions occur outside of national borders. Without international agreement, it may be difficult to enforce emission limits, and the imposition of controls by any one country or bloc of countries is likely to be challenged through existing international institutions. Regulating upstream of the aviation industry, as most U.S. climate change bills would do, may avoid some of these issues, maintaining a level playing field for U.S. and foreign airlines and air freight companies, without imposing emission limits that could be directly challenged or circumvented. Whether enactment of such legislation would be sufficient to address European concerns over U.S. airlines' emissions, resolving the dispute, remains to be seen. The EU is not the only international body addressing aircraft emissions. The International Civil Aviation Organization (ICAO), the international organization that administers standards and recommended practices for the aviation authorities of more than 190 countries, agreed in September 2007 to support the development of an "aggressive" action plan on aviation and climate change, but without a fixed timetable or specific emission reduction targets. The United States has supported the ICAO as the proper venue for international regulation of emissions, and maintains that the EU's approach is contrary to ICAO's charter, the Chicago Convention on International Civil Aviation. A majority of ICAO's members agree with the United States that participation in an emissions trading scheme (such as EU-ETS) should only be on the basis of mutual consent. As noted earlier, the House-passed version of H.R. 2454 encourages the development of a global regulatory framework through ICAO. Section 276 of the bill declares it to be the sense of Congress that the United States should actively promote an ICAO framework and work with foreign governments to reconcile emissions reduction programs to "minimize duplicative requirements" and avoid "unnecessary complication for the aviation industry, while still achieving the environmental goals." Greenhouse gas emission controls of some sort may affect U.S. aviation in the next few years, be they specific controls on engine emissions, emission caps applied to the sector as a whole, upstream caps (on fuel refiners), or carbon taxes. Depending on their stringency, the effects of most of these approaches could ripple through the economy, providing additional incentives for aircraft manufacturers to improve the fuel efficiency of aircraft, raising the cost of air travel and air freight, and providing further pressure to improve the air traffic control system. U.S. airlines and air freight companies, like many other sectors, would prefer that they be allowed to address the GHG issue through voluntary measures. Unlike some other sectors, they have achieved substantial increases in fuel economy over the last three decades or more, and in the current recession, their GHG emissions are at roughly their 1990 levels. Compared to other means of transportation, in fact, U.S. commercial aviation's record on GHG emissions over the last two decades is much better. As shown in Table 2 , GHG emissions from U.S. commercial aviation increased less than those of any other segment of the transportation market, despite the demand for aviation services (measured in passenger-miles traveled) increasing at a faster pace than the other sectors. But the sector is still an important source of emissions, and its projected growth indicates that it may outstrip the economy as a whole's rate of emission growth in future years. Thus, it is likely to be included in some fashion in any mandatory economy-wide approach to reducing GHG emissions. On a practical level, reducing emissions from aviation may be complicated: The sector is composed of tens of thousands of mobile emission sources; thus, direct controls on engines or aircraft face obstacles that do not apply in industries composed of fewer and stationary emission sources. Even monitoring the relevant emissions for this sector is difficult. The sector's emissions affect climate in several ways. Controlling only CO 2 emissions might leave other impacts of aircraft on climate unaffected. More research is needed to identify the precise effects of some of these, such as the impact of contrails on cirrus cloud formation, and the effect of such clouds on climate change. The sector's impressive progress in making itself more energy-efficient in recent years poses obstacles as well: improving load factors was relatively easy when they were at 60%; at the current level, roughly 80%, one begins to approach the limits of further improvement. Some means of emission reduction are beyond the industry's control, including the pace of modernization of the air traffic control system, and the degree to which aeronautical research and engine modifications can reduce fuel consumption. In both cases, emission reduction may depend, at least in part, on the actions of government agencies--the FAA and NASA, in particular. According to ATA, funding for NASA and FAA aviation environmental R&D programs has been cut by approximately 50 percent in the past 10 years. Finally, the sector faces controls from foreign countries, particularly the European Union. International negotiations for a post-Kyoto-Protocol emissions control scheme may give rise to emission limits in other countries, as well. As discussed, Congress and the Administration have a number of options, including several forms of legislation; regulation by EPA under the existing Clean Air Act is another possibility. If the Administration so chooses, the existing Clean Air Act might prove a particularly important tool to bring interested parties to the table, while providing a backdrop to consideration of legislation by Congress.

Aircraft are a significant source of greenhouse gases--compounds that trap the sun's heat, with effects on the Earth's climate. In the United States, aircraft of all kinds are estimated to emit between 2.6% and 3.4% of the nation's total greenhouse gas (GHG) emissions, depending on whether one counts international air travel. The impact of U.S. aviation on climate change is perhaps twice that size when other factors are considered. These include the contribution of aircraft emissions to ozone formation, the water vapor and soot that aircraft emit, and the high altitude location of the bulk of aircraft emissions. Worldwide, aviation is projected to be among the faster-growing GHG sources. If Congress or the Administration decides to regulate aircraft GHG emissions, they face several choices. The Administration could use existing authority under Sections 231 and 211 of the Clean Air Act, administered by the Environmental Protection Agency. EPA has already been petitioned to do so by several states, local governments, and environmental organizations. Congress could address aviation or aviation fuels legislatively, through cap-and-trade or carbon tax proposals, or could require EPA to set emission standards. Among the legislative options, the cap-and-trade approach (setting an economy-wide limit on GHG emissions and distributing tradable allowances to emitters) has received the most attention. Most cap-and-trade bills, including the House-passed energy and climate bill, H.R. 2454, would include aviation indirectly, through emission caps imposed upstream on their source of fuel--the petroleum refining sector. By capping emissions upstream of air carriers and eventually lowering the cap more than 80%, bills such as these would have several effects: they would provide an incentive for refiners to produce lower-carbon fuels; they would increase the price of fuels, and thus increase the demand for more fuel-efficient aircraft; and they might increase the cost of aviation services relative to other means of transport, giving airline passengers and shippers of freight incentives to substitute lower-cost, lower-carbon alternatives. Besides regulating emissions directly or through a cap-and-trade program or carbon tax, there are other tools available to policy makers that can lower aviation's GHG emissions. These include implementation of the Next Generation Air Traffic Control System (not expected to be complete until 2025, although some elements that could reduce aircraft emissions may be implemented sooner); research and development of more fuel-efficient aircraft and engines; and perhaps the development of lower-carbon jet fuel. This report provides background on aviation emissions and the factors affecting them; it discusses the tools available to control emissions, including existing authority under the Clean Air Act and proposed economy-wide cap-and-trade legislation; and it examines international regulatory developments that may affect U.S. commercial airlines. These include the European Union's Emissions Trading Scheme for greenhouse gases (EU-ETS), which is to include the aviation sector beginning in 2012, and discussions under the auspices of the International Civil Aviation Organization (ICAO).

Some observers assert that since 9/11 the Pentagon has begun to conduct certain types of counterterrorism intelligence activities that may meet the statutory definition of a covert action. The Pentagon, while stating that it has attempted to improve the quality of its intelligence program in the wake of 9/11, has contended that it does not conduct covert actions. Congress in 1990 toughened procedures governing intelligence covert actions in the wake of the Iran-Contra affair, after it was discovered that the Reagan Administration had secretly sold arms to Iran, an avowed enemy that had it branded as terrorist, and used the proceeds to fund the Nicaraguan Democratic Resistance, also referred to by some as "Contras." In response, Congress adopted several statutory changes, including enacting several restrictions on the conduct of covert actions and establishing new procedures by which Congress is notified of covert action programs. In an important change, Congress for the first time statutorily defined covert action to mean "an activity or activities of the United States Government to influence political, economic, or military conditions abroad, where it is intended that the role of the United States Government will not be apparent or acknowledged publicly." The 1991 statutory changes remain in effect today. This report examines the legislative background surrounding covert action and poses several related policy questions. In 1974, Congress asserted statutory control over covert actions in response to revelations about covert military operations in Southeast Asia and other intelligence activities. It approved the Hughes-Ryan Amendment to the Foreign Assistance Act of 1961 requiring that no appropriated funds could be expended by the CIA for covert actions unless and until the President found that each such operation was important to national security, and provided the appropriate committees of Congress with a description and scope of each operation in a timely fashion. The phrase "timely fashion" was not defined in statute. In 1980, Congress endeavored to provide the two new congressional intelligence committees with a more comprehensive statutory framework under which to conduct oversight. As part of this effort, Congress repealed the Hughes-Ryan Amendment and replaced it with a statutory requirement that the executive branch limit its reporting on covert actions to the two intelligence committees, and established certain procedures for notifying Congress prior to the implementation of such operations. Specifically, the statute stipulates that if the President determines it is essential to limit prior notice to meet extraordinary circumstances affecting the vital interests of the United States, the President may limit prior notice to the chairmen and ranking minority Members of the intelligence committees, the Speaker and minority leader of the House, and the majority and minority leaders of the Senate--a formulation that has become known as the "Gang of Eight." If prior notice is withheld, the President is required to inform the committees in a "timely fashion" and provide a statement of the reasons for not giving prior notice. In 1984, in the wake of the mining of Nicaraguan harbors in support of the Nicaraguan Democratic Resistance, the chairman and vice chairman of the Senate Select Committee on Intelligence signed an informal agreement--which became known as the "Casey Accords"--with then-Director of Central Intelligence (DCI) William Casey establishing certain procedures that would govern the reporting of covert actions to Congress. In 1986, the committee's principals and the DCI signed an addendum to the earlier agreement, stipulating that the committee would receive prior notice if "significant military equipment actually is to be supplied for the first time in an ongoing operation ... even if there is no requirement for separate higher authority or Presidential approval." This agreement reportedly was reached several months after President Reagan signed the January 17, 1986, Iran Finding which authorized the secret transfer of certain missiles to Iran. Following the Iran-Contra revelations, President Ronald Reagan in 1987 issued National Security Decision Directive 286 prohibiting retroactive findings and requiring that findings be written. The executive branch, without congressional consent, can revise or revoke such National Security Directives. In 1988, acting on a recommendation made by the Congressional Iran-Contra Committee, the Senate approved bipartisan legislation that would have required that the President notify the congressional intelligence committees within 48 hours of the implementation of a covert action if prior notice had not been provided. The House did not vote on the measure. Still concerned by the fall-out from the Iran-Contra affair, Congress in 1990 attempted to tighten its oversight of covert action. The Senate Intelligence Committee approved a new set of statutory reporting requirements, citing the ambiguous, confusing and incomplete congressional mandate governing covert actions under the then-current law. After the bill was modified in conference, Congress approved the changes. President George H. W. Bush pocket-vetoed the 1990 legislation, citing several concerns, including conference report language indicating congressional intent that the intelligence committees be notified "within a few days" when prior notice of a covert action was not provided, and that prior notice could only be withheld in "exigent circumstances." The legislation also contained language stipulating that a U.S. government request of a foreign government or a private citizen to conduct covert action would constitute a covert action. In 1991, after asserting in new conference language its intent as to the meaning of "timely fashion" and eliminating any reference to third-party covert action requests, Congress approved and the President signed into law the new measures. President Bush noted in his signing statement his satisfaction that the revised provision concerning "timely" notice to Congress of covert actions incorporates without substantive change the requirement found in existing law, and that any reference to third-party requests had been eliminated. Those covert action provisions remain in effect today. Since the 9/11 terrorist attacks, concerns have surfaced with regard to the Pentagon's expanded intelligence counterterrorism efforts. Some lawmakers reportedly have expressed concern that the Pentagon is creating a parallel intelligence capability independent from the CIA or other American authorities, and one that encroaches on the CIA's realm. It has been suggested that the Pentagon has adopted a broad definition of its current authority to conduct "traditional military activities" and "prepare the battlefield." Senior Defense Department officials reportedly have responded that the Pentagon's need for intelligence to support ground troops after 9/11 requires a more extensive Pentagon intelligence operation, and they suggest that any difference in DOD's approach is due more to the amount of intelligence gathering that is necessarily being carried out, rather than to any difference in the activity it is conducting. These same officials, however, also reportedly contend that American troops were now more likely to be working with indigenous forces in countries like Iraq or Afghanistan to combat stateless terrorist organizations and need as much flexibility as possible. Late 2008 media reports stated that the U.S. military since 2004 has used broad, secret authority to carry out nearly a dozen previously undisclosed attacks against Al Qaeda and other militants in Syria, Pakistan, and elsewhere. According to other media reports, DOD has been paying private contractors in Iraq to produce news stories and other media products to "engage and inspire" the local population to support U.S. objectives and the Iraqi government. The products may or may not be non-attributable to coalition forces. Adding even more complexity to DOD and CIA mission differences, according to then-Director of National Intelligence Dennis C. Blair, is that there often is not a "bright line" between traditional secret intelligence missions carried out by the military and those by the CIA, requiring that such operations be considered on a case-by-case basis. Mr. Blair said the executive branch would be guided by two criteria. First, the President and those in the military and intelligence chains of command would maintain the flexibility to design and execute an operation solely for the purpose of accomplishing the mission. Second, he said, such operations would be approved by the appropriate authorities, coordinated in the field, and reported to the relevant congressional committees, including the Intelligence, Armed Services, and Appropriations Committees. Former DNI Blair's views appear to comport with comments previously made by former CIA Director Michael Hayden, who reportedly stated that it has become more difficult to distinguish between traditional secret military and CIA intelligence missions and that any problems resulting from overlapping missions would be resolved case-by-case. Stating the military's perspective, General James R. Clapper, Jr., the Pentagon's former Under Secretary of Defense for Intelligence, testified before the Senate Armed Services Committee that within the statutory context of the meaning of covert action, "covert activities are normally not conducted ... by uniformed military forces." In written responses to questions posed by the Senate Armed Services Committee in advance of the hearing, General Clapper asserted that it was his understanding that "military forces are not conducting 'covert action,'" but are instead confining their actions to clandestine activities. Although testifying that the term "clandestine activities" is not defined by statute, he characterized such activity as consisting of those actions that are conducted in secret, but which constitute "passive" intelligence information gathering. By contrast, covert action, he suggested, is "active," in that its aim is to elicit change in the political, economic, military, or diplomatic behavior of a target. In comments before the committee, he further noted that clandestine activity can be conducted in support of a covert activity. He also distinguished between a covert action, in which the government's participation is unacknowledged, and a clandestine activity, which although intended to be secret, can be publicly acknowledged if it is discovered or inadvertently revealed. Being able to publicly acknowledge such an activity provides the military personnel who are involved certain protections under the Geneva Conventions, according to General Clapper, who suggested that those who participate in covert actions could jeopardize any rights they may have under the Geneva Conventions. He recommended "that, to the maximum extent possible, there needs to be a line drawn (between clandestine and covert activities) from an oversight perspective and as well [sic] as a risk perspective." Some observers suggest that Congress needs to increase its oversight of military activities that some contend may not meet the definition of covert action, and may therefore, be exempt from the degree of congressional oversight accorded to covert actions. Others contend that increased oversight would hamper the military's effectiveness. The Senate Intelligence Committee expressed its concern that the then-USD(I) has interpreted Title 10 to expand "military source operations" authority, thus allowing the Services and Combatant Commands to conduct clandestine HUMINT operations worldwide. "These activities can come awfully close to activities that constitute covert action," the committee stated in questions for the record posed to DNI following his confirmation hearing before the committee. Mr. Clapper would subsequently become Director of National Intelligence in August 2010. Perhaps in an effort to bring clarity to the covert action issue, Department of Defense officials early in the 112 th Congress stated that the law could be updated to reflect U.S. Special Operations Command's current list of core task and the missions assigned to it in the Unified Command Plan. But in doing so, they also noted that Section 167 includes "such other activities as may be specified by the President or the Secretary of Defense," which they argued provides the President and the Secretary the flexibility to meet changing circumstances. The current statute with regard to covert action remains virtually unchanged since it was signed into law in 1991. In essence it codified elements of the "Casey Accords," the President's 1988 national security directive, and various legislative initiatives. The legislation approved that year, according to the conferees, for the first time imposed the following requirements pertaining to covert action: A finding must be in writing. A finding may not retroactively authorize covert activities which have already occurred. The President must determine that the covert action is necessary to support identifiable foreign policy objectives of the United States. A finding must specify all government agencies involved and whether any third party will be involved. A finding may not authorize any action intended to influence United States political processes, public opinion, policies, or media. A finding may not authorize any action which violates the Constitution of the United States or any statutes of the United States. Notification to the congressional leaders specified in the bill must be followed by submission of the written finding to the chairmen of the intelligence committees. The intelligence committees must be informed of significant changes in covert actions. No funds may be spent by any department, agency, or entity of the executive branch on a covert action until there has been a signed, written finding. The term "covert action" was defined for the first time in statute to mean "an activity or activities of the United States Government to influence political, economic, or military conditions abroad, where it is intended that the role of the United States will not be apparent or acknowledged publicly." In 1991, congressional conferees said this new definition was intended to clarify understandings of intelligence activities requiring the President's approval, not to relax or go beyond previous understandings. Conferees also signaled their intent that government activities aimed at misleading a potential adversary to the true nature of U.S. military capabilities, intentions or operations, for example, would not be included under the definition. And they stated that covert action does not apply to acknowledged U.S. government activities which are intended to influence public opinion or governmental attitudes in foreign countries. To mislead or to misrepresent the true nature of an acknowledged U.S. activity does not make it a covert action, according to the conferees. In approving a statutory definition of covert action, Congress also statutorily stipulated four categories of activities which would not constitute covert action. They are (1) activities the primary purpose of which is to acquire intelligence, traditional counterintelligence activities, traditional activities to improve or maintain the operational security of U.S. government programs, or administrative activities; (2) traditional diplomatic or military activities or routine support to such activities; (3) traditional law enforcement activities conducted by U.S. government law enforcement agencies or routine support to such activities; and (4) activities to provide routine support to the overt activities (other than activities described in the first three categories) of other U.S. government agencies abroad. This report addresses the second category of activities--traditional military activities and routine support to those activities. Conferees stated: It is the intent of the conferees that "traditional military activities" include activities by military personnel under the direction and control of a United States military commander (whether or not the U.S. sponsorship of such activities is apparent or later to be acknowledged) preceding and related to hostilities which are either anticipated (meaning approval has been given by the National Command Authorities for the activities and or operational planning for hostilities) to involve U.S. military forces, or where such hostilities involving United States military forces are ongoing, and, where the fact of the U.S. role in the overall operation is apparent or to be acknowledged publicly. In this regard, the conferees intend to draw a line between activities that are and are not under the direction and control of the military commander. Activities that are not under the direction and control of a military commander should not be considered as "traditional military activities." Conferees further stated that whether or not activities undertaken well in advance of a possible or eventual U.S. military operation constitute "covert action" will depend in most cases upon whether they constitute "routine support" and referenced the report accompanying the Senate bill for an explanation of the term. The report accompanying the Senate bill states: The committee considers as "routine support" unilateral U.S. activities to provide or arrange for logistical or other support for U.S. military forces in the event of a military operation that is to be publicly acknowledged. Examples include caching communications equipment or weapons, the lease or purchase from unwitting sources of residential or commercial property to support an aspect of an operation, or obtaining currency or documentation for possible operational uses, if the operation as a whole is to be publicly acknowledged. The report goes on to state: The committee would regard as "other-than-routine" support activities undertaken in another country which involve other than unilateral activities. Examples of such activity include clandestine attempts to recruit or train foreign nationals with access to the target country to support U.S. forces in the event of a military operation; clandestine [efforts] to influence foreign nationals of the target country concerned to take certain actions in the event of a U.S. military operation; clandestine efforts to influence and effect [sic] public opinion in the country concerned where U.S. sponsorship of such efforts is concealed; and clandestine efforts to influence foreign officials in third countries to take certain actions without the knowledge or approval of their government in the event of a U.S. military operation. As the congressional conferees declared in 1991, timing of such activities--whether proximate to a military operation, or well in advance--does not define "other-than-routine" support of military activities. Rather, whether such activities constitute "other-than-routine" support, and thus constitute covert action, will depend, in most cases, on whether such an activity is unilateral in nature, that is, whether U.S. government personnel conduct the activity, or whether they enlist the assistance of foreign nationals. In committee report language accompanying the FY2010 Intelligence Authorization Act, the House Permanent Select Committee on Intelligence (HPSCI) expressed its concern that the distinction between the CIA's intelligence-gathering activities and DOD's clandestine operations is becoming blurred and called on the Defense Department to meets its obligations to inform the committee of such activities. The committee said that DOD frequently labels its clandestine activities as "Operational Preparation of the Environment" (OPE) to distinguish particular operations as traditional military activities and not as intelligence functions. According to the committee's report, the overuse of this term "has made the distinction all but meaningless" and there are no clear guidelines or principles for making consistent determinations in this regard. The committee stated: Clandestine military intelligence-gathering operations, even those legitimately recognized as OPE, carry the same diplomatic and national security risks as traditional intelligence-gathering activities. While the purpose of many such operations is to gather intelligence, DOD has shown a propensity to apply the OPE label where the slightest nexus of a theoretical, distant military operation might one day exist. Consequently, these activities often escape the scrutiny of the intelligence committees, and the congressional defense committees cannot be expected to exercise oversight outside of their jurisdiction. If DOD does not meet its obligations to inform the committee of intelligence activities, the report warned, the committee would consider clarifying the department's obligation to do so. The lines defining mission and authorities with regard to covert action are less than clear. The lack of clarity raises a number of policy questions for the 112 th Congress, including the following far-from-exclusive list. How should Congress define its oversight role? Which committees should be involved? Can the U.S. military improve the effectiveness of its intelligence operations without at some point enlisting the support of foreign nationals in such a way that such activity could be viewed as "non-routine support" to traditional military activities, that is, a covert action? Is it appropriate to view U.S. counterterrorism efforts in the context of a global battlefield and to view the military as having the authority to "prepare" that battlefield, and can "anticipated" military action precede the onset of hostilities by months or years? Is it appropriate to view the military as being involved in "a war" against terrorists, and thus its activities as constituting "traditional military activities" as it wages that war? By asserting that its activities do not constitute covert actions, is the Pentagon trying to avoid the statutory requirements governing covert action, including a signed presidential finding, congressional notification, and oversight by the congressional intelligence committees? Or, as Pentagon officials suggest, is DOD, in the wake of 9/11, fulfilling a greater number of intelligence needs associated with combating terrorism that are sanctioned in statute and do not fall under the statutory definition of covert action? Since 1991, when Congress last comprehensively addressed the issue of covert action, has the environment in which the U.S. military operates changed sufficiently to warrant a review of the statute that applies to covert actions? In order to clarify certain Pentagon authorities and covert action guidelines, should Congress consider updating Section 167 of Title 10 to reflect U.S. Special Operations Command's current list of core task and the missions assigned to it in the Unified Command Plan? In his 1991 signing statement, President George H. W. Bush argued that Congress's definition of "covert action" was unnecessary. He went on to state that in determining whether particular military activities constitute covert actions, he would continue to bear in mind the historic missions of the Armed Forces to protect the United States and its interests, influence foreign capabilities and intentions, and conduct activities preparatory to the execution of operations.

Published reports have suggested that in the wake of the 9/11 terrorist attacks, the Pentagon has expanded its counterterrorism intelligence activities as part of what the Bush Administration termed the global war on terror. Some observers have asserted that the Department of Defense (DOD) may have been conducting certain kinds of counterterrorism intelligence activities that would statutorily qualify as "covert actions," and thus require a presidential finding and the notification of the congressional intelligence committees. Defense officials have asserted that none of DOD's current counterterrorism intelligence activities constitute covert action as defined under the law, and therefore, do not require a presidential finding and the notification of the intelligence committees. Rather, they contend that DOD conducts only "clandestine activities." Although the term is not defined by statute, these officials characterize such activities as constituting actions that are conducted in secret but which constitute "passive" intelligence information gathering. By comparison, covert action, they contend, is "active," in that its aim is to elicit change in the political, economic, military, or diplomatic behavior of a target. Some of DOD's activities have been variously described publicly as efforts to collect intelligence on terrorists that will aid in planning counterterrorism missions; to prepare for potential missions to disrupt, capture or kill them; and to help local militaries conduct counterterrorism missions of their own. Senior U.S. intelligence community officials have conceded that the line separating Central Intelligence Agency (CIA) and DOD intelligence activities has blurred, making it more difficult to distinguish between the traditional secret intelligence missions carried out by each. They also have acknowledged that the U.S. intelligence community confronts a major challenge in clarifying the roles and responsibilities of various intelligence agencies with regard to clandestine activities. Some Pentagon officials have appeared to indicate that DOD's activities should be limited to clandestine or passive activities, pointing out that if such operations are discovered or are inadvertently revealed, the U.S. government would be able to preserve the option of acknowledging such activity, thus assuring the military personnel who are involved some safeguards that are afforded under the Geneva Conventions. Covert actions, by contrast, constitute activities in which the role of the U.S. government is not intended to be apparent or to be acknowledged publicly. Those who participate in such activities could jeopardize any rights they may have under the Geneva Conventions, according to these officials. In committee report language accompanying P.L. 111-259, the FY2010 Intelligence Authorization Act, the House Permanent Select Committee on Intelligence (HPSCI) expressed its concern that the distinction between the CIA's intelligence-gathering activities and DOD's clandestine operations is becoming blurred and called on the Defense Department to meet its obligations to inform the committee of such activities. Perhaps in an effort to bring more clarity to the covert action issue, Department of Defense officials early in the 112th Congress stated that current statute could be updated to reflect U.S. Special Operations Command's list of core tasks and the missions assigned to it in the Unified Command Plan. But in doing so, they also noted that Section 167 includes "such other activities as may be specified by the President or the Secretary of Defense," which, they argued, provides the President and the Secretary flexibility to meet changing circumstances.

On March 25, 2016, the Occupational Safety and Health Administration (OSHA) of the Department of Labor (DOL) published in the Federal Register new standards governing exposure to respirable crystalline silica in the workplace. Key features of the new crystalline silica standards include the following requirements for employers: protect workers when exposure to respirable crystalline silica exceeds the new permissible exposure limit (PEL) of 50 ug/m 3 (micrograms per cubic meter of air), as an 8-hour time-weighted average (TWA), through the use of engineering controls, or if such controls are not effective, the use of respirators; measure workers' exposure to respirable crystalline silica if such exposure may reach or exceed levels of 25 ug/m 3 as an 8-hour TWA; limit workers' access to areas where they may be exposed to respirable crystalline silica; offer medical exams, including chest x-rays and lung function tests, every 3 years to workers exposed to crystalline silica at or above the level of 25 ug/m 3 as an 8-hour TWA for 30 or more days in a year or to construction workers required to wear respirators for 30 or more days in a year; train workers to limit exposure to respirable crystalline silica; and maintain records of workers' exposure to respirable crystalline silica and employer-provided medical exams. These new standards are to be phased in over a five-year period, beginning June 23, 2017, with different implementation dates for construction, general industry, and hydraulic fracturing (fracking). The standards provide employers in the construction industry an exemption from the PEL and requirement to measure employee exposure to crystalline silica if these employers follow the engineering controls and work practices of the new standards, as outlined in Table 1 of the new standards. For example, if a stationary masonry saw is used in construction, the employer is exempt from the PEL and requirement to measure silica exposure if the following controls and practices are used: Use saw equipped with integrated water delivery system that continuously feeds water to the blade. Operate and maintain tool in accordance with manufacturer's instructions to minimize dust emissions. Crystalline silica is a compound found in the earth's crust. It is a component of soil, sand, and other natural materials. The three most common forms of crystalline silica are quartz, cristobalite, and tridymite. Crystalline silica in dust commonly occurs when workers cut, saw, grind, drill, or crush materials such as glass, stone, rock, concrete, brick, or industrial sand. Exposure also occurs when industrial sand is used in abrasive operations, such as sandblasting, and in the hydraulic fracturing process. The National Institute for Occupational Safety and Health (NIOSH) estimates that 1.7 million workers are exposed to crystalline silica in the workplace. However, NIOSH's estimates are based on 1986 data, which were published in 1991. In the preamble to its new crystalline silica standards, OSHA estimates that more than 2.3 million workers are potentially exposed to crystalline silica in the workplace, including more than 2 million workers in the construction industry. Crystalline silica particles can be 100 times smaller than normal sand particles. Because of their small size, these particles can easily enter the human respiratory system. The International Agency for Research on Cancer (IARC) and the Department of Health and Human Services (HHS) National Toxicology Program has identified crystalline silica as a human carcinogen. The respiration of crystalline silica has been associated with the incurable disease silicosis and other respiratory diseases, such as pulmonary tuberculosis and lung cancer; auto-immune diseases, such as scleroderma, rheumatoid arthritis, and lupus; and renal disease and renal changes. The health effects of crystalline silica and the link between occupational exposure to crystalline silica and silicosis and other diseases have been known since the beginning of the 20 th century, when cases of "consumption" and "phthisis" were documented among miners, stonecutters, glass workers, and other workers in the United States and other countries. In 1931, several hundred workers died of acute silicosis after being exposed to silica during the construction of Union Carbide and Carbon Corporation's Hawk's Nest Tunnel in Gauley Bridge, WV, making this exposure one of the deadliest single incidents of occupational disease in American history. The federal government, under the provisions of the Energy Employees Occupational Illness Compensation Program Act (EEOICPA), currently provides a $150,000 cash benefit and health benefits to workers, or their survivors, who contracted chronic silicosis as a result of digging tunnels in Alaska and Nevada used for the underground testing of atomic weapons. In the preambles to its Notice of Proposed Rulemaking (NPRM) and Final Rule, OSHA lays out a detailed rationale for the new crystalline silica standards. OSHA claims that based on an extensive review of existing literature and research that identifies links between exposure to crystalline silica and various medical conditions, including silicosis, cancers, renal conditions, and other diseases, the new standards will prevent more than 600 silica-related deaths each year and reduce monetarized benefits by reducing mortality and morbidity, which far exceed projected costs of compliance. In preparing its new crystalline silica standards, OSHA conducted a Preliminary Quantitative Risk Assessment and Final Quantitative Risk Assessment. Both assessments consisted of an extensive review of published literature and research on the health effects of occupational exposure to crystalline silica. OSHA performed these risk assessments in compliance with Section 6(b)(5) of the Occupational Safety and Health Act (OSH Act), which states, in part Development of standards under this subsection shall be based upon research, demonstrations, experiments, and such other information as may be appropriate. In addition to the attainment of the highest degree of health and safety protection for the employee, other considerations shall be the latest available scientific data in the field, the feasibility of the standards, and experience gained under this and other health and safety laws.... Before the Preliminary Quantitative Risk Assessment, a draft health effects review document was subject to external peer review in accordance with Office of Management and Budget (OMB) guidelines. As a result of the Final Quantitative Risk Assessment, OSHA concludes in the preamble to its Final Rule: [T]here is convincing evidence that inhalation exposure to respirable crystalline silica increases the risk of a variety of adverse health effects, including silicosis, NMRD [non-malignant respiratory disease] (such as chronic bronchitis and emphysema), lung cancer, kidney disease, immunological effects, and infectious tuberculosis (TB). The new standards set a uniform PEL of 50 ug/m 3 measured as an 8-hour TWA. If workers are exposed to crystalline silica above the PEL, they must be protected through engineering controls, such as using water to control dust generated by a work process or respirators provided by the employer. Because the PEL is measured as an 8-hour TWA, a worker can be exposed to levels above the PEL periodically during the work day, provided that his or her average exposure over 8 hours does not exceed the 50 ug/m 3 . Prior to the promulgation of the new crystalline silica standards, the OSHA occupational safety and health standards (the old standards) did not include a universal PEL for all industries and types of crystalline silica. In addition, the PELs in the old standards, as published in the Code of Federal Regulations (C.F.R.), are not directly comparable to the new PELs. The PELs in the old standards are expressed as a formula of volume of crystalline silica per cubic meter of air, divided by the percentage of silicon dioxide (SiO 2 ); or as millions of particles per cubic foot of air, divided by the percentage of SiO 2 . In its NPRM on the new standards, OSHA reports that the particle-count methodology used to determine the number of particles per cubic foot of air is obsolete. In its NPRM, OSHA also provides the following estimates of the old-standard PELs expressed using the new methodology of ug/m 3 , measured as an 8-hour TWA: quartz in general industry: 100 ug/m 3 ; quartz in construction industry: 250 ug/m 3 ; quartz in shipyard industry: 250 ug/m 3 ; cristobalite in all industries: 50 ug/m 3 ; and tridymite in all industries: 50 ug/m 3 . The old-standard PELs trace their history to a report from the U.S. Public Health Service in 1929, which examined exposure to silica among workers in the granite-cutting industry in Barre, VT. The report recommended an exposure limit of between 10 million and 20 million particles per cubic foot (mppcf) for dust containing approximately 35% free silica (which includes crystalline silica) in the form of quartz and stated that this level could be "obtained by the use of economically practicable ventilating devices applied to the source of the dust." A review of the report stated It should be pointed out that the limit established was not found to prevent the occurrence of silicosis. It was found, however, that there seemed to be no particular liability to pulmonary tuberculosis where the concentration of dust was within this limit. Section 6(a) of the OSH Act required OSHA to convert existing federal occupational safety and health standards and national consensus standards into OSHA standards within two years of enactment of the OSH Act. In 1971, OSHA's original PELs for crystalline silica were promulgated based on the existing PELs provided in regulations implementing the Walsh-Healey Public Contracts Act of 1936, which established certain standards for federal contractors. The Walsh-Healey regulations were based on the 1968 Threshold Limit Values (TLVs) established by the American Conference of Governmental Industrial Hygienists (ACGIH). The ACGIH TLVs were based on the recommendations in the 1929 U.S. Public Health Service Report. In 1989, OSHA updated nearly all of its PELs, including those for crystalline silica. The updated PELs for general industry were not increased, but rather were converted from the outdated formulas to measures of ug/m 3 of air. In 1992, OSHA proposed changing the crystalline silica PELs for the construction, agriculture, and maritime industries such that all industries would have the same PELs of 100 ug/m 3 for quartz and 50 ug/m 3 for cristobalite and tridymite. These changes would have resulted in a reduction in the PELs for the construction and maritime industries. In 1992, the U.S. Court of Appeals for the Eleventh Circuit vacated the 1989 changes to the PELs and mooted the 1992 proposed changes, thus returning the PELs back to their original levels set in 1971. These 1971 levels are replaced by the new PELs promulgated in 2016. In 1974, NIOSH issued a recommended PEL for crystalline silica of 50 ug/m 3 , measured as a 10-hour workday, 40-hour week TWA. In response to this recommendation, OSHA in 1974 published an Advanced Notice of Proposed Rulemaking (ANPRM) seeking public comments on whether a new crystalline silica standard should be promulgated based on the NIOSH recommendation or any other factors. More than 40 years after the NIOSH recommendation and the ANPRM, the new OSHA crystalline silica PEL now essentially matches the NIOSH recommendation, although it will be measured as an average over an 8-hour day. The new crystalline silica standards took effect June 23, 2016. However, employers were not required to comply with the new standards at that time. Rather, compliance is to be implemented according to the following schedule: construction industry --September 23, 2017, except for provisions related to the analysis of air samples, which require compliance by June 23, 2018; good faith compliance assistance --On September 20, 2017, OSHA announced that during the first 30 days of enforcement of the standards for the construction industry, the agency would provide compliance assistance, rather than issue citations, to employers making "good faith efforts" to comply with the new standards. general industry (except hydraulic fracturing) and maritime industry --2 years after the effective date (June 23, 2018), except for medical surveillance, which is required to begin for employees exposed at or above the PEL for 30 days in a year by June 23, 2018, and for employees exposed at or above the level of 25 ug/m 3 by June 23, 2020; and hydraulic fracturing --2 years after the effective date (June 23, 2018), except for medical surveillance, which is required to begin for employees exposed at or above the PEL for 30 days in a year by June 23, 2018, and for employees exposed at or above the level of 25 ug/m 3 by June 23, 2020, and also except for engineering controls provisions, which require compliance by June 23, 2021. OSHA projects that the implementation of its new crystalline standards will prevent 642 silica-related deaths per year and produce annual benefits of approximately $8.7 billion through mortality and morbidity reductions. OSHA also projects that annual benefits will be more than eight times greater than the annual projected costs of compliance with the new standards. The projected annualized costs of compliance with the standards are just over $1 billion, with 64% of these costs coming from implementing engineering controls. Table 1 provides OSHA's projected costs and benefits of the new crystalline silica standards. After OSHA published the NPRM on the new crystalline silica standards on September 12, 2013, several groups representing employers expressed their opposition to the proposed changes. These groups argued that OSHA had significantly underestimated the projected costs of the new standards and that the declining rate of silicosis deaths indicated that stricter standards and lower PELs were not necessary. In a March 2015 report, the Construction Industry Safety Coalition (CISC), made up of 25 trade associations representing employers that may be affected by the new standards, estimates that the proposed new standards will cost employers $4.9 billion annually. The CISC estimates annual direct compliance costs of $3.9 billion and indirect costs due to higher prices for building materials of more than $1 billion. The CISC's cost estimate is significantly higher than OSHA's cost estimate of just over $1 billion in the preamble to the Final Rule. The Crystalline Silica Panel of the American Chemistry Council (ACC), composed of representatives from mining and mineral associations and industries, claims that evidence shows the current OSHA crystalline silica PELs are effective at reducing silica-related deaths and thus do not need to be changed. The ACC claims that data from the Centers for Disease Control and Prevention (CDC) indicate a nearly 90% reduction in annual silicosis deaths between 1968 and 2010. The ACC attributes this reduction, in part, to the current PELs adopted in 1971. The CDC states that the reduction in silicosis deaths in this period is likely due to two factors. First, the higher numbers of deaths in the early period of the data may be capturing workers who were exposed to crystalline silica and contracted silicosis before the original OSHA PELs were implemented in 1971, mine safety regulations under the Coal Mine Safety and Health Act of 1969 and the Mine Safety and Health Act of 1977, and a greater use of engineering controls and other measures to control crystalline silica exposure. Second, there has been a reduction in the number of workers in heavy industries, such as the mining industry, where silica exposure is prevalent. In the preamble to its NPRM, OSHA calls these factors identified by the CDC "reasonable." In addition, the ACC claims that better compliance with current PELs, not lower PELs, is the key to reducing silicosis deaths among workers. Annual silicosis mortality data are shown in Figure 1 . In public comments in response to the NPRM, the ACC, the U.S. Chamber of Commerce, the National Utility Contractors Association, and the National Federation of Independent Business all argued that OSHA's projection of the new standards preventing 642 annual deaths from silicosis and non-malignant respiratory diseases (NMRD) in the NPRM exceeded the number of silicosis-related deaths reported in 2010 by the CDC and cited this as evidence that OSHA had overstated the benefits of the proposed standards. In response to these objections, OSHA claims that commenters are making "apples and oranges" comparisons because the industry's objections focus on the number of deaths attributable to silicosis only, whereas OSHA's projections are for the number of deaths from silicosis and other NMRD prevented by the new standards. In Section 115 of its FY2016 appropriations bill, S. 1695 , the Senate Committee on Appropriations included a provision that would have prohibited OSHA from spending any appropriated funds to implement any change to the crystalline silica standards until a review is conducted, after the date of enactment, by a small business advocacy review (SBAR) panel (commonly referred to as a SBREFA panel) under the provisions of the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996, and a report of this panel is submitted to OSHA; and OSHA commissions a study by the National Academy of Sciences (NAS), and reports on the results of this study to the Senate Committees on Appropriations and Health, Education, Labor, and Pensions within one year of enactment of the legislation, to examine the epidemiological justification for reducing the crystalline silica PEL, "including consideration of the prevalence or lack of disease and mortality associated" with the current PELs; the ability to collect and measure samples of crystalline silica at levels below the proposed PELs and below the level of 25 ug/m 3 ; the ability of regulated industries to comply with the proposed standards; the ability of various types of personal protective equipment (PPE) to protect workers from crystalline silica exposure; and the costs of various types of PPE compared with the costs of engineering controls and work practices. S. 1695 would have appropriated $800,000 to OSHA to conduct the NAS study. S. 1695 was reported by the Senate Committee on Appropriations, but was not voted on by the Senate. The crystalline silica provisions were not included in the Consolidated Appropriations Act, 2016, P.L. 114-113 . In the weeks after the Final Rule was published, legal challenges to the new crystalline silica standards were initiated by groups representing employers, manufacturers, and labor. The U.S. Judicial Panel on Multidistrict Litigation ruled that these petitions for review were to be consolidated in the U.S. Court of Appeals for the D.C. Circuit. Employers and manufacturers challenged the standards on the basis of the following five issues: 1. whether substantial evidence supports OSHA's finding that limiting workers' silica exposure to the level set by the new standards reduces a significant risk of material health impairment; 2. whether substantial evidence supports OSHA's finding that the standards are technologically feasible for the foundry, hydraulic fracturing, and construction industries; 3. whether substantial evidence supports OSHA's finding that the standards are economically feasible for these industries; 4. whether OSHA violated the Administrative Procedure Act in promulgating the new standards; and 5. whether substantial evidence supports the provision that allows workers who undergo medical examinations to keep the results confidential from their employers, the provision that prohibits employers from using dry cleaning methods unless doing so is infeasible. Labor groups challenged the following: 1. the requirement that medical surveillance for construction workers be provided only if the employee has to wear a respirator for 30 days for 1 employer within a 1-year period; and 2. the absence of medical removal provisions. The U.S. Court of Appeals for the D.C. Circuit decided the case on December 22, 2017, and upheld the new standards. In its decision, the court rejected all challenges brought by manufacturers and employers as well as labor groups' objections to the medical surveillance provision. On the issue of medical removal raised by labor groups, the court held that OSHA had acted in an "arbitrary and capricious" manner in declining to require medical removal of a worker in cases in which a medical professional recommends permanent removal of the worker, when a medical professional recommends temporary removal of the worker to alleviate symptoms of chronic obstructive pulmonary disease (COPD), or when a medical professional recommends temporary removal of a worker pending a further determination by a medical specialist. The court remanded these issues to OSHA for reconsideration or further explanation.

On March 25, 2016, the Occupational Safety and Health Administration (OSHA) of the Department of Labor (DOL) published new standards regulating exposure to crystalline silica in the workplace. Under the new standards, the Permissible Exposure Limit (PEL) for crystalline silica is to be reduced to 50 ug/m3 (micrograms per cubic meter of air). Employers are to be required to monitor crystalline silica exposure if workplace levels may exceed 25 ug/m3 for at least 30 days in a year and provide medical monitoring to employees in those workplaces. In the case of construction workers, medical monitoring is required only if the new standards require workers to wear respirators for at least 30 days in a year. Construction industry employers are exempt from the PEL and exposure monitoring requirements if they comply with the engineering controls and work practices specified in the new standards. The new standards are scheduled to be phased in over the next five years, beginning June 23, 2017, with different implementation dates for construction, general industry, and hydraulic fracturing (fracking). OSHA projects that the new crystalline silica standards will prevent 642 deaths per year, costing employers just over $1 billion annually. The net monetary benefits of the new standards are projected to be $7.6 billion annually based on reduced mortality and morbidity related to exposure to crystalline silica. Groups representing employers, manufacturers, and labor filed court challenges to the new standards. On December 22, 2017, the U.S. Court of Appeals for the D.C. Circuit upheld the new standards.

In the mid-1990s, the Army began fielding the M-4 carbine, a lighter, more compact version of the Vietnam-era M-16 rifle. Both M-16 and M-4 carbines are 5.56 mm caliber weapons and are primarily manufactured by Colt Defense LLC, Hartford, CT. Army officials are said to be satisfied with the M-16 family of weapons and have suggested that the M-16 is "simply too expensive to replace with anything less than a significant leap in technology." The Army's "leap ahead" program to replace the M-16 family of weapons--the Objective Individual Combat Weapon (OICW) program--began in 1994, and one weapon evaluated in that program, Heckler & Koch's XM-8 assault rifle, was considered by some as the M-16's/M-4's replacement. As late as 2005, the XM-8 was reportedly close to being officially approved as the Army's new assault rifle, but alleged acquisition and bureaucratic conflicts compelled the Army to cancel the XM-8 in October 2005. The Army plans to continue its procurement of M-16s and M-4s for "years to come," while some in Congress have called for an "open competition" to choose a successor to the M-16 and M-4 assault rifles. The M4 Carbine Improvement Program will evaluate the following potential improvements: Heavier barrel for better performance during high rates of fire. Replacing the direct-gas system with a piston gas system. Improving trigger pull. Strengthening the rail system. Adding ambidextrous controls. Adding a round-counter to track number of total rounds fired. The option of a heavier barrel is being considered in response to concerns about barrel warping and erosion during high rates of fire. The M4 currently has a system that uses the gas generated by a cartridge firing to cycle the next round into the weapon's receiver. This reduces the number of moving parts in the rifle in comparison to the gas-piston system and offers potential improvements in the weapon's stability when firing; however, it also results in greater amounts of heat and carbon deposits in the receiver, which can lead to the weapon's malfunctioning. The rail along the top of the rifle's receiver lends stability to the weapon and also serves as the mount for weapon attachments. Increasing its strength without adding weight to the weapon may be possible with the use of new composite materials or metal alloys. A round counter would make it possible to better evaluate when an individual weapon should be refurbished or replaced. The assessment of these options is being undertaken by an integrated product team comprising representatives from the Infantry Center; the Armament, Research, Development, and Engineering Center; the Program Executive Office Soldier; and each of the other armed services. The Army intends to conduct an open competition for a successor to the M4. Its proposal is before the Joint Requirements Oversight Council for approval and, if approved as expected, would permit the Army to solicit submissions from the small arms industry by this fall. The competition will be open to all manufacturers and is intended to provide an evaluation of the full range of weapons available. Complete results of the competition and selection of a new carbine are not expected before FY2013, and it is anticipated that it would then take another three to four years to fully field the new weapons. Reports suggest that soldiers have expressed concerns regarding the reliability and lethality of the M-4. Reliability can be described as "the probability that an item can perform its intended function for a specified interval under stated conditions" and lethality as "the killing or stopping power of a bullet when fired from a weapon." Other reports, however, suggest that the M-4 has performed well and been generally well-received by troops. In February 2001, USSOCOM published a study and analysis of alternatives focused on the M-4A1 carbine used by USSOCOM units. The study concludes that the M-4A1 design was fundamentally flawed--in part due to barrel and gas tube shortening--and that a variety of factors "led to alarming failures of the M-4A1 in operations under the harsh conditions and heavy firing schedules common in SOF training and operations." While USSOCOM concluded in 2001 that the M-4A1 carbine in its current configuration did not meet SOF requirements, USSOCOM noted that the shortfalls that they identified had not become evident in conventional Army units that used the M-4, likely due to the "newness" of the weapon and the lower firing schedules of conventional unit training. USSOCOM further noted that the M-4 met or exceeded the Army's specifications for reliability and that the M-4 met the needs of the conventional Army. In July 2003, the Army published a report to assess small arms performance during Iraqi Freedom. Army personnel interviewed over 1,000 soldiers to assess what "worked well and what did not." The assessment was generally favorable toward all small arms examined and did not employ any discernable analytic metrics. The assessment stated that the M-4 was "by far the preferred individual weapon across the theater of operations" and recommended in the "near term replace the M-16 with the M-4 as the standard issue weapon." But without any corresponding analytical data, some might question the validity of the Army's assessment. In December 2006, the Center for Naval Analyses (CNA) published a survey and study at the request of the Army's Project Manager-Soldier Weapons of 2,600 soldiers who had returned from Iraq and Afghanistan and who had engaged in a firefight using a variety of small arms. Some of the M-4-specific observations were as follows: Over 50% of soldiers using the M-4 and M-16 reported that they never experienced a stoppage [malfunction] while in theater, to include during training firing of the weapons (p. 2). Frequency of disassembled cleaning had no effect on the occurrences of stoppages. Variations in lubrication practices, such as the type of lubrication used and the amount of lubrication applied, also had little effect on stoppages. Using a dry lubricant decreased reports for stoppages only for M-4 users (p. 3). Of soldiers surveyed who used the M-4, 89% reported being satisfied with their weapon (p. 11). Of M-4 users, 20% recommended a larger bullet for the M-4 to increase lethality (p. 30). Regarding M-16s and M-4s, many soldiers and experts in theater commented on the limited ability to effectively stop targets, saying that those personnel targets who were shot multiple times were still able to continue fighting (p. 29). Although M-4 critics cite this report as evidence of unsuitability of the M-4, it might also be interpreted as a favorable report on the M-4's overall reliability and acceptance by soldiers. The "larger bullet" recommendation for lethality purposes may, in fact, be a valid recommendation based on observations from Iraq and Afghanistan, but the "bigger bullet debate" has been a source of contention for many small arms experts ever since the Army adopted the 5.56 mm M-16 during Vietnam in lieu of the 7.62 mm M-14 rifle. In USSOCOM's February 2001 study, a number of M-4 reliability problems were documented. The USSOCOM report described the M-4's shortened barrel and gas tube as a "fundamentally flawed design," which contributed to failures extracting and ejecting spent cartridges during firing. In recognition of these reported deficiencies, the 1 st Special Forces Operational Detachment-Delta, also referred to as "Delta Force," reportedly began working with German arms manufacturer Heckler & Koch to replace the M-4's gas system with a piston operating system to improve reliability and increase parts life. In 2004, Delta reportedly replaced their M-4s with the HK-416--a weapon that combines the operating characteristics of the M-4 with the piston operating system. In addition to reliability problems detailed in USSOCOM's February 2001 study, another possible reason that USSOCOM might have wanted to replace the M-4 carbine is that the M-4 was a weapon procured by the Department of Defense and subject to military standards and the technical data package, meaning that USSOCOM could not make changes to the weapon. If USSOCOM became the procurement agency for a new carbine, then they could direct the carbine's manufacturer to make changes and modifications. In early 2003, USSOCOM officials initiated efforts to identify potential new combat rifle capabilities. From May through August 2004, USSOCOM evaluated 12 weapons from nine different manufacturers. In November 2004, USSOCOM awarded a contract to FNH USA to develop the Special Operations Combat Assault Rifle (SCAR). The SCAR will come in two variants--the heavy 7.62 mm SCAR-H and the light 5.56 mm SCAR-L. Each variant will accommodate three different barrels--a standard 35.7 cm barrel, a 25.5 cm close-combat barrel, and a sniper variant barrel. All barrels reportedly will take less than five minutes to switch. The SCAR-L is intended to replace USSOCOM M4-A1 carbines. In April 2009, the first 600 of 1,800 SCARs to be issued to USSOCOM were fielded to units of the 75 th Ranger Regiment, and reports suggest that the Rangers will deploy into combat with the SCAR. Because this is the first known large-scale deployment of this weapon into combat, there will likely be a significant amount of evaluation of the SCAR's reliability and performance. These evaluations may prove useful to the Army as it examines the future of small arms. In April 2007, Senator Tom Coburn (R-Oklahoma) sent a letter to then Acting Secretary of the Army Peter Geren questioning why the Army planned to spend $375 million on M-4 carbines through FY2009 "without considering newer and possibly better weapons available on the commercial market." Senator Coburn's letter also cited M-4 reliability and lethality concerns and called for a competition to evaluate alternatives to the M-4, citing a need to conduct a "free and open competition." The Army initially agreed to begin the tests in August 2007 at the Army Test and Evaluation Center at Aberdeen Proving Ground, MD, but then postponed the test until December 2007. The test evaluated the M-4 against the HK-416, the HK-XM8, and the FNH SCAR, with each weapon firing 6,000 rounds under sandstorm conditions. Officials reportedly evaluated 10 each of the four weapons, firing a total of 60,000 rounds per model resulting in the following: XM-8, 127 stoppages; FNH SCAR, 226 stoppages; HK-416, 233 stoppages; and the M-4, 882 stoppages. On December 17, 2007, when the Army briefed Congress and the press, the Army reportedly claimed that the M-4 suffered only 296 stoppages during the test, explaining that the stoppage discrepancy from the original 882 M-4 stoppages reported could have been due to the application of the Army Test and Evaluation Center's post-test Reliability, Availability, and Maintainability (RAM) Scoring Conference. This process attributes failures to such factors as operator error or part failure and, as an example, if evaluators linked 10 stoppages to a broken part on a weapon, they could eliminate nine of the stoppages and count only one failure for reporting purposes. The M-4's developer, Colt Defense, LLC, contends that there were a number of factors during the test that might have resulted in testing discrepancies. Among the issues raised, the Colt M-4 carbines used for the test were drawn from the Army's inventory and did not meet military specifications but were used in the test, whereas weapons tested from other manufacturers were provided from the manufacturers. Another point of contention was that the M-4 carbines were three-round burst weapons and the other weapons tested were fully automatic. It was also alleged that testers did not know how to operate the three-round burst M-4s in both the laboratory environment and in a related test at Aberdeen Proving Grounds and, therefore, mistakenly reported M-4 stoppages, resulting in inflated results. Given these and other allegations, it is possible that testing conditions during the December 2007 test were not consistent, calling into question the validity of the results. On January 21, 2009, the Secretary of the Army provided the House and Senate Armed Services Committees with the findings of the U.S. Army Infantry Center Small Arms Capabilities-Based Assessment (CBA), which had been completed in April 2008. The Army, as the Department of Defense (DOD) Executive Agent for Small Arms (SA), conducted the Small Arms CBA to establish and support a small arms acquisition strategy through 2015. This analysis examined 10 tasks, as described below: 1. Engage threat personnel with SA fire. 2. Engage threat personnel that are in defilade. 3. Engage threats with precision SA fire. 4. Engage threats with SA volume fire. 5. Acquire personnel and vehicle targets. 6. Determine range to target. 7. Mark or tag targets. 8. Breach existing entry points. 9. Avoid detection caused by weapon signature. 10. Operate and maintain weapons. Based on analysis, the study team identified 25 capability gaps associated with the 10 aforementioned tasks, as well the overall requirement from individual soldiers and their leaders that they required "greater lethality" and "more knockdown power." The study team identified a number of non-material and material recommendations to address the identified capability gaps. Non-material solutions--which are preferable because they can be implemented relatively quickly and inexpensively--included improving training, updating doctrine, using additional SA ancillary devices (example: optics), developing a Small Arms Weapons Expert Program at battalion and brigade level, and adding a weapons repairman at company level. Material solutions included developing special airburst munitions to engage defilade targets; developing ammunition that would be more lethal at short ranges (0 to 200 meters); improving breaching and non-lethal marking 40 mm rounds; improving combat optics; developing a new weapon system for vehicle and aircraft crews that provides greater maneuverability in confined spaces and provides more firepower than a pistol; and developing SA weapons that require fewer and simpler tools to maintain and that would require less cleaning and lubrication. Another recommendation was that any new SA developed to meet these capability gaps needed to contribute to lightening the soldier's overall combat load. The study identified 42 separate Ideas for Material Solutions (IMAs) to address capability gaps that required a material solution. Of these 42 IMAs, 13 involved creating new munitions or improving existing munitions, and 10 involved aiming devices, optics, or laser designators; only 7 IMAs suggested modifying current SAs or developing new SAs. Other IMAs included suggestions such as improving munitions propellants and improving weapon magazines. Secretary Geren's January 21, 2009, letter to House and Senate Armed Service Committee Leadership stated that "following the completion of the CBA, the Army decided to update the requirement for combat rifle/ carbine and compete this updated requirement in an open competition." The Army's SA CBA appears to be a comprehensive assessment of DOD's small arms requirements that incorporates a great amount of analytical data and many observations derived from combat operations in Iraq and Afghanistan. It can be argued that the CBA does not present a compelling case to develop and acquire a new combat rifle or carbine. Many of the CBA's recommended material solutions involve improved or new munitions or ancillary items such as optics or weapons magazines. The CBA does call for the development of a new SA system for vehicle and aircraft crew and an extended-range heavy machine gun, but nowhere explicitly calls for a new combat rifle or carbine. It is possible that many of the CBA's proposed material solutions might be readily adaptable to current combat rifles (M-16s) and carbines (M-4s) with little or no modification to the weapon. In this regard, a totally new design might be required only if new munitions, optics, other ancillary items, and reliability improvements are totally incompatible with SAs currently in use. The majority of the deficiencies cited in the SA CBA do not directly fault the current combat rifle or carbine, but instead call for ammunition, sight, and optic improvements, which might not in and of themselves appear to justify undertaking a potentially lengthy and costly development and procurement effort. Based in part on the results of the Small Arms CBA, the Army issued a request for information in August 2008 to the small arms industry seeking information on "the state of the art in small arms technologies." This request is viewed by some as the first step in a carbine competition that the Army intends to conduct sometime in 2009 after Colt Defense turns over the M-4's technical data rights in June 2009. The Army plans to release a request for proposal (RFP) in the late summer of 2009 requesting prototype weapons for testing. Army officials have stated that they will consider other caliber weapons other than the current 5.56mm. Factors that the Army will consider in its evaluation are improved accuracy, durability in all environments, and modularity. DOD is currently conducting a service-wide review of small arms requirements that some believe could "challenge the Army's decision to search for a new carbine." This review involves small arms experts from each service as well as experts from the small arms industry and is intended to "map out a common strategy for the Defense Department's individual and crew-served weapons needs." The DOD review team is currently said to be reviewing the Army's Small Arms CBA and was supposed to have developed a set of conclusions by the end of May 2009. Based on the aforementioned studies and tests, there appears to be not only a wide range of opinions as to the M-4's reliability and lethality, but also questions if testing of the M-4 has been consistent and whether performance results are indeed accurate. If the Army does opt to replace the M-4 and the competition involves comparative testing, efforts might be undertaken to ensure consistency between test weapons. As previously noted, the Army is basing its upcoming carbine competition to a large extent on the Small Arms CBA, which some believe does not present a compelling case to launch a competition to replace the M-4. According to reports, DOD--as part of its joint small arms review--is supposed to shortly reach a number of conclusions about the Army's Small Arms CBA that might be relevant to any planned M-4 replacement competition. The results of DOD's review might possibly support the Army's planned M-4 replacement competition or instead suggest an alternative course of action. Congress might benefit from examining the results of DOD's service-wide small arms review as it considers the future of the Army's small arms modernization efforts. It has been suggested that USSOCOM's decision to adopt the FNH SCAR has implications for the Army. In one sense, the SCAR is the first modular small arms system adopted by the military. The SCAR-L and SCAR-H will replace the following weapons: M-4A1, MK-18 close quarter carbine, MK-11 sniper security rifle, MK-12 special purpose rifle, and the M-14 rifle. There is also a 90% parts commonality between the SCAR-L and SCAR-H, including a common upper receiver and stock and trigger housing and an enhanced grenade launcher can be attached to either model. While the SCAR might not meet all of the conventional Army's requirements, its adaptability in terms of missions (close quarters combat to long-range sniper operations), being able to rapidly convert from a 5.56 mm to a 7.62 mm weapon, and the ability to accommodate a variety of modifications such as grenade launchers and special optics, might be factors worth considering as the "modular Army" plans future small arms programs. The Rangers' forthcoming combat deployment with the SCAR and associated lessons learned and performance and lethality data might also have implications for future Army small arms development and acquisition efforts.

The M-4 carbine is the Army's primary individual combat weapon for infantry units. While there have been concerns raised by some about the M-4's reliability and lethality, some studies suggest that the M-4 is performing well and is viewed favorably by users. The Army is undertaking both the M4 Carbine Improvement Program and the Individual Carbine Competition, the former to identify ways to improve the current weapon, and the latter to conduct an open competition among small arms manufacturers for a follow-on weapon. An integrated product team comprising representatives from the Infantry Center; the Armament, Research, Development, and Engineering Center; the Program Executive Office Soldier; and each of the armed services will assess proposed improvements to the M4. The proposal for the industry-wide competition is currently before the Joint Requirements Oversight Council, and with the anticipated approval, solicitation for industry submissions could begin this fall. It is expected, however, that a selection for a follow-on weapon will not occur before FY2013, and that fielding of a new weapon would take an additional three to four years. This report will be updated as events warrant.

Steadily increasing presidential involvement in agency rulemaking efforts has often been cited as one of the most significant developments in administrative law and domestic policymaking since the introduction of the first formal review programs in the 1970s. The evolution of presidential review of agency rulemaking efforts since the Reagan era in particular constitutes a significant assertion and accumulation of presidential power in the regulatory context. While initial presidential forays into centralized regulatory review were limited in scope, presidential review of rules has emerged as one of the most widely-used and controversial mechanisms by which a President can ensure the realization of his regulatory agenda. The first formal regulatory review program was instituted by President Nixon in 1971 through the establishment of a "Quality of Life Review" program designed to improve "the interagency coordination of proposed agency regulations, standards, guidelines and similar materials pertaining to environmental quality, consumer protection, and occupational and public health and safety." Under this program agencies were required to submit "significant" proposed and final regulations to the Office of Management and Budget (OMB), which then disseminated them to affected agencies for comment. President Ford extended regulatory review through Executive Order 11,821, requiring agencies to prepare "inflation impact statements" for any "major" regulatory action. President Carter expanded presidential review through the issuance of Executive Order 12,044, which required agencies to prepare a "regulatory analysis" of all proposed "major rules," examining the potential economic impact of the proposal and an evaluation of alternative regulatory options. President Carter took the additional step of forming the Regulatory Council, which was tasked with coordinating agency rulemaking activities in an effort to avoid duplicative or conflicting regulatory regimes. While the programs established in the Nixon, Ford, and Carter Administrations illustrate a successive increase in the centralization of regulatory review with the Executive Office of the President, these programs are generally characterized as having been "designed primarily to facilitate interagency dialogue." However, these programs laid the foundation for the implementation of a much more extensive and vigorous review process under the Reagan Administration. Shortly after taking office, President Reagan issued Executive Order 12,291, "to reduce the burdens of existing and future regulations, increase agency accountability for regulatory actions, provide for Presidential oversight of the regulatory process, minimize duplication and conflict of regulations, and insure well-reasoned regulations." E.O. 12,291 required agencies to submit any proposed major rule to OIRA for review, along with a "regulatory impact analysis" of the rule, including a cost-benefit analysis. The Reagan order was significant in comparison to earlier efforts in this context, in that it centralized review within OMB and had the practical effect of giving OMB a substantial degree of control over agency rulemaking. President Reagan expanded this review scheme with the issuance of Executive Order 12,498, which required agencies to submit an annual plan listing proposed regulatory actions for the year to OMB for review. This procedure enabled OMB to exert influence over agency regulatory efforts at the earliest stages of the process and to ensure that agency actions were in accord with the aims of the Administration. Additionally the order created a "Task Force for Regulatory Relief"which was tasked with reviewing and seeking the elimination of unneeded or ineffective regulations. In practical effect, the impact of the Reagan orders on agency regulatory activities was immediate and substantial. Under the order, OIRA reviewed over 2,000 regulations per year and returned multiple rules for agency reconsideration. The practical effect of this rigorous review process was to sensitize agencies to the regulatory agenda of the Reagan Administration, largely resulting in the enactment of regulations that reflected the goals of the Administration. Not surprisingly, this review process generated criticism and controversy. In particular, the review scheme was seen by some as having a distinct anti-regulatory bias, leading to charges that the orders constituted an unlawful transfer of authority from the agencies to OMB; that the review process was too secretive and subject to influence by private interests; that OMB lacked the resources or expertise to properly assess submitted regulations; and that the required cost-benefit analysis did not take into account the unquantifiable social benefits of certain types of regulations. Additionally, E.O. 12,291 was criticized on the grounds that it allowed OIRA to delay indefinitely rules under review, unless a countervailing statutory deadline or court order mandated promulgation. The order attempted to mitigate legal concerns regarding usurpation of agency decisionmaking authority by mandating that none of its provisions were to "be construed as displacing the agencies' responsibilities delegated by law." Additionally, the Department of Justice's Office of Legal Counsel (OLC) drafted an opinion shortly before the publication of E.O. 12,291, supporting its constitutionality. The OLC asserted that the provisions of the order were valid as an exercise of the President's power to "take care that the laws be faithfully executed," additionally relying upon its determination that "an inquiry into congressional intent in enacting statutes delegating rulemaking authority will usually support the legality of presidential supervision of rulemaking by executive agencies. The opinion acknowledged, however, that "the President's exercise of supervisory powers must conform to legislation enacted by Congress," and went on to state that presidential "supervision is more readily justified when it does not purport to wholly displace, but only to guide and limit, discretion which Congress has allocated to a particular subordinate official." Despite these pronouncements in the OLC opinion and the order itself, allegations were made that OMB utilized E.O. 12,2291 to determinatively control agency rulemaking activities during the Reagan Administration. However, courts considering OMB involvement in agency rulemaking under the auspices of 12,291 did not address the constitutionality of such review. In Public Citizen Health Research Group v. Tyson , for instance, the court addressed the validity of a rule promulgated by OSHA governing ethylene oixide, including a challenge based on the argument that a critical portion of the proposed rule had been deleted based on a command from OMB. While stating that "OMB's participation in the rulemaking presents difficult constitutional questions concerning the executive's proper rule in administrative proceedings and the appropriate scope of delegated power from Congress to certain executive agencies," the court nonetheless found that it had "no occasion to reach the difficult constitutional questions presented by OMB's participation" given its finding that the challenged deletion was not supported by the rulemaking record. The Reagan orders were retained during the first Bush Administration to similar effect and controversy, with Congress going so far as to refuse to confirm President George H.W. Bush's nominee for the position of Administrator at OIRA. In 1989 the Administration created the Council on Competitiveness, which was empowered to resolve disputes between OIRA and regulatory agencies covered under E.O. 12,291. The Council itself was likewise controversial, in one instance asserting its authority to uphold OMB's rejection of certain elements of a proposed Environmental Protection Agency rule. EPA acquiesced in the Council's decision, and excised the provisions from the final rule. When this deletion was challenged in court, the Court of Appeals for the District of Columbia did not address the propriety of the influence wielded by the Council, determining that the deletion was supported by the rulemaking record. Touching upon the Council's involvement, the court declared that EPA's deletion of the provisions at issue "in light of the Council's advice ... does not mean that EPA failed to exercise its own expertise in promulgating the final rules." It is important to note that the court's treatment of the Council's involvement in the EPA rulemaking does not in any way indicate that the Council or OMB had authority to compel changes thereto. Instead, the court based its decision on a determination that there was a sufficient basis in the record to conclude that the EPA had exercised its independent expertise in promulgating a rule that was in accord with the Council's position. As such, the court's holding is illustrative of the proposition that it is "very difficult, if not impossible, for the judiciary to police displacement if the agency accepts it." Many of the concerns voiced over the effects of E.O. 12,291 were assuaged, at least temporarily, by the review regime established by the Clinton Administration. Upon assuming office, President Clinton supplanted the Reagan Administration's review scheme through the issuance of Executive Order 12,866, entitled "Regulatory Planning and Review." The preamble to E.O. 12,866 characterizes its provisions as presenting a more nuanced approach to the management of agency rulemaking, and declares that the objective of the order is to: enhance planning and coordination with respect to both new and existing regulations; to reaffirm the primacy of Federal agencies in the regulatory decision-making process; to restore the integrity and legitimacy of regulatory review and oversight; and to make the process more accessible and open to the public. In pursuing these objectives, the regulatory process shall be conducted so as to meet applicable statutory requirements and with due regard to the discretion that has been entrusted to the Federal agencies. While this language could be interpreted as a retreat from the broad executive authority asserted in the Reagan order, it is important to note that substantive changes to the regulatory review process made by E.O. 12,866 do not appear to have been developed as the result of a divergent interpretation of presidential power in this context. Rather, as is addressed in more detail below, the provisions of E.O. 12,866 indicate a similarly expansive view of presidential authority to control agency rulemaking. E.O. 12,866 was self-avowedly designed to ensure that federal agencies "promulgate only such regulations as are required by law, are necessary to interpret the law, or are made necessary by a compelling public need." To accomplish this goal, the order requires agencies to supply OIRA with a "Regulatory Plan" of the "most important significant regulatory actions that the agency reasonably expects to issue in proposed or final form" in each fiscal year. Furthermore, the order provides for centralized review of all regulations, requiring each agency to periodically submit to OIRA a list of all planned regulatory actions, "indicating those which the agency believes are significant regulatory actions." The order defines a "significant regulatory action" as: Any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order. Upon receipt of such a list, OIRA has ten days to determine whether a planned regulatory action not identified as significant by the agency is in fact covered under the aforementioned definition. Planned actions that are not deemed significant are not subject to OIRA review, while those that are must be subjected to a cost-benefit analysis by the agency. A regulatory action that is deemed significant is further subject to the review and clearance provisions of the order. Under this process, OIRA is required to waive or complete review of preliminary regulatory actions (such as notices of inquiry or advance notices of proposed rulemaking) within ten working days after the submission of the draft action. For all other regulatory actions (such as notices of proposed rulemaking or final rules), OIRA must waive or complete review within 90 calendar days after the date of submission. The review process may be extended once by no more than 30 days upon request of the agency head and the written approval of the OIRA Administrator. These requirements mark a significant departure from the provisions of E.O. 12,291, which, as was noted above, was criticized for allowing OIRA to delay most rules indefinitely. The Administrator of OIRA may also remand a regulatory action to the agency "for further consideration of some or all of its provisions." In the event that a disagreement or conflict between an agency head and OIRA cannot be resolved by the Administrator, the President (or the Vice-President acting at the President's request) may resolve the issue. Such consideration by the President or the Vice-President may only be initiated by the Director of OMB or the relevant agency head. The Clinton Administration drafted this language to make the OIRA review process less onerous on agencies than had been the case in the preceding Reagan and Bush Administrations, and this goal manifested itself at OIRA in a selective review process that resulted in the consideration of significantly fewer rules. For instance, while OIRA reviewed an average of 2080 regulations in FY1982-FY1993, the number of regulations reviewed fell substantially during the Clinton Administration, from 1100 in 1994, to 663 in 1995, and down to 498 in FY1996. Furthermore, an average of 600 significant rulemaking actions were approved per year during the Clinton Administration, while only 25 rules, and none after 1997, were returned to agencies for further consideration. Additionally, the Clinton order provides for a more transparent review process than was the case with E.O. 12,291. In particular, E.O. 12,866 imposes substantial disclosure requirements on OIRA "in order to ensure greater openness, accessibility, and accountability in the regulatory review process." Specifically, the order regulates oral communications initiated by individuals not employed by the executive branch, mandating that only the Administrator of OIRA or a particular designee may receive any such communications " regarding the substance of a regulatory action under OIRA review. " The order further controls all substantive communications between OIRA personnel and individuals outside the executive branch by requiring that a representative from the issuing agency be invited to any OIRA meetings held with outsiders, and that OIRA forward any such communications, " including the dates and names of individuals involved in all substantive oral communications, " to the issuing agency within ten days of receipt. Additionally, the order requires OIRA to maintain a publicly available log containing information regarding contacts of the type mentioned above. Finally, the order requires OIRA to make available to the public all documents exchanged between the agency and itself during the review proceeding, " after the regulatory action has been published in the federal register or otherwise issued to the public, or after the agency has announced its decision not to publish or issue the regulatory action. " From these requirements, it is evident that E.O. 12,866 imposes significant information sharing and disclosure requirements between OIRA and an issuing agency, particularly with regard to substantive communications between OIRA and individuals outside of the executive branch. It should be noted, however, that the disclosure requirements of the order are less stringent in the context of inter-agency communications with OIRA during the review process. Specifically, whereas SS6(b)(4) requires OIRA to disclose to the issuing agency any substantive communications with persons not employed by the executive branch, there is no similar requirement regarding communications with other agencies. Given this distinction, OIRA would not seem to be required to disclose communications with other agencies regarding a draft regulatory action to an issuing agency by the terms of the order. Accordingly, OIRA would likewise not appear to be required by the order to make such communications available to the public upon completion of the review process, as is generally required, unless it affirmatively discloses the communications to the issuing agency during review proceedings. As touched upon above, the effects of OIRA review during the Reagan and Bush Administrations generated a great deal of debate regarding constitutional issues adhering to the displacement of agency decisionmaking authority. Not surprisingly, then, the transparency and selectiveness of E.O. 12,866, coupled with the more pro-regulatory stance of the Clinton era OMB, led to a rather rapid drop in debate concerning the proper scope of presidential review of agency rulemaking. However, it does not appear that the drop in rates of OIRA review during this period should be taken to indicate a concession that there were limits on presidential control over the agency rulemaking process, particularly in light of the vigor with which the Clinton Administration pressed agencies to effectuate its regulatory goals. For instance, President Clinton greatly expanded the use of formal presidential directives to executive agencies compelling specific action on their part. President Reagan and President Bush issued nine and four presidential directives respectively, three of which instructed agencies to either delay or terminate the issuance of regulations. President Clinton, however, issued 107 presidential directives, several of which were designed to compel agencies to initiate regulatory action to address a particular issue of importance to the administration. Also, aspects of the Clinton order indicate just as expansive a view of presidential authority as the Reagan and Bush orders, despite the selectiveness and transparency that characterized OIRA review during the Clinton Administration. For example, E.O. 12,866, unlike Reagan ' s order, includes independent agencies within its ambit to a certain extent. The order does not require independent agencies to submit individual rules for review, but does require them to comply with the regulatory planning process established in the order. Another example of the broad assertion of Presidential authority included in the Clinton order is the fact that the order provides that conflicts between agencies or between OMB and an agency are to be resolved, " To the extent permitted by law, " by " the President, or by the Vice President acting at the request of the President, with the relevant agency head. " This language could be taken to indicate that agency heads are to retain some role in the resolution of a disagreement, but the order appears to vest ultimate decisionmaking authority in the President or Vice President, stating that " the President, or the Vice President acting at the request of the President, shall notify the affected agency and the Administrator of OIRA of the President ' s decision with respect to the matter. " Similar to the Reagan order, E.O. 12,866 mitigates the potential controversy that this type of presidential displacement of agency authority could generate by providing that this authority is to be exercised " only to the extent permitted by law, " thereby giving an agency head the opportunity to argue in a given case that the President could only issue an advisory opinion, but it seems that the potential implication of this provision is that the President is perceived as having determinative authority in this context. This provision has turned out to have little effect, given that Clinton ' s assertion and exercise of authority over the regulatory process manifested itself outside of the traditional OMB process. As noted above, President Clinton used devices such as presidential directives to direct agency heads to take a specific course of action in furtherance of his Administration ' s regulatory agenda, in contrast to the Reagan and George H.W. Bush Administration ' s approach of using the processes mandated in E.O. 12,291 to curtail agency rulemaking efforts. However, from the perspective of analyzing presidential control over the administrative process, it is interesting to note that unlike the Reagan order, E.O. 12,866 could be interpreted as asserting direct presidential authority over discretionary actions that have been assigned to agency heads by Congress. Accordingly, while the operative aspects of E.O. 12,866 were welcomed by many as improving upon the transparency and selectiveness of OIRA review, other aspects of the order could be taken to indicate that the Clinton Administration ' s view of presidential authority over agency rulemaking was largely consonant with that of the Reagan and George H.W. Bush Administrations, with the manifestation of this perspective differing primarily due to the obvious differences in the political aims of these administrations. The George W. Bush Administration, while retaining E.O. 12,866, has developed a regulatory review policy that is subjecting rules to more stringent review than was the case during the Clinton Administration. In particular, it has been asserted that the current Administration has returned to the regulatory review dynamic that prevailed under E.O. 12,291, with OIRA going so far as to describe itself as the "gatekeeper for new rulemakings." At the same time, however, the George W. Bush Administration appears to be taking a more nuanced approach to OIRA review than was the case under E.O. 12,291, enabling it to have a substantial impact on agency rulemaking while avoiding the degree of criticism and controversy occasioned by regulatory review under the Reagan and George H.W. Bush Administrations. OIRA has markedly increased the use of "return" letters to require agencies to reconsider rules under E.O. 12,866. According to a memorandum from OIRA Administrator John D. Graham for the President's Management Council, return letters may be issued "if the quality of the agency's analyses is inadequate, if the regulatory standards adopted are not justified by the analyses, if the rule is not consistent with the regulatory principles stated in the Order, or with the President's policies or priorities, or if the rule is not compatible with other Executive orders or statutes." Under Administrator Graham's tenure, OIRA has returned over 20 rules for agency reconsideration. OMB has discussed two notable effects of the reinvigoration of this practice. First, the willingness to issue such letters emphasizes to agencies that OIRA "is serious about the quality of new rulemakings." Second, agencies have begun to seek OIRA input "into earlier phases of regulatory development in order to prevent returns late in the rulemaking process." In practical terms, this type of collaboration is arguably beneficial to the extent that it enables OIRA to ensure that rulemaking efforts comply with the aims of E.O. 12,866, while giving agencies confidence that their regulatory proposals will not be returned after the investment of significant resources in their formulation. Conversely, this dynamic buttresses executive control over agency rulemaking efforts by allowing the exertion of influence at the earliest stages of the formulation process, and, as is discussed in more detail below, raises concerns regarding the extent to which this type of influence is disclosed. In a significant departure from the nature of OIRA review under the Reagan and George H.W. Bush Administrations, under the current Administration, OIRA has taken a proactive stance in identifying issues that the office feels are ripe for regulation, and has instituted the practice of issuing "prompt letters" to the appropriate agency to encourage rulemaking on those issues. OIRA has described the prompt letter as a "modest device to bring a regulatory matter to the attention of agencies." As acknowledged by OIRA, prompt letters "do not have the mandatory implication of a Presidential directive." Rather, the device "simply constitutes an OIRA request that an agency elevate a matter in priority." OIRA has also taken steps to ensure that prompt letters are available to the public, in order to stimulate "agency, public and congressional interest in a potential regulatory priority." Noting that prompt letters could be treated as confidential, OIRA has further stated that it feels publication is warranted "in order to focus congressional and public scrutiny on the important underlying issues." By specifically identifying regulatory issues of importance to the Administration through prompt letters, OIRA has presumably been able to exert a substantial degree of influence over the pursuit and scope of regulatory efforts in those areas. In addition to the use of prompt letters, OIRA has staved off criticism of the degree leveled at the Reagan and George H.W. Bush Administrations by increasing the transparency of the review process. As discussed above, the Reagan Administration in particular was criticized for its reluctance to open the OIRA review process to outside inspection. E.O. 12,866, as issued by President Clinton, established fairly expansive disclosure standards, requiring OMB and OIRA to disclose any closed door meeting between federal officials outside groups regarding a regulation. Under Administrator Graham, OIRA has retained these requirements and has significantly expanded access to this information by placing information regarding meetings and OIRA decisions on the OIRA website. With this step, information that was previously accessible only at OIRA's record room is now available via the internet, increasing access to OIRA information regarding meeting logs, communications between OIRA and agency officials, and general OIRA guidance on rulemaking. This approach has effectively undercut what was once a major avenue of attack on OIRA review, although concerns remain regarding OIRA's influence on the rulemaking process and the extent to which its involvement is disclosed. In particular, a 2003 study by the General Accounting Office (GAO) raised concerns regarding the level of transparency governing certain "preinformal review" OMB contacts with outside parties, as well as with contacts between OIRA and agency officials during "informal review." Specifically, one of the significant OIRA disclosure policies instituted by Administrator Graham establishes that OIRA will disclose substantive meetings and contacts with outside parties regarding rules under review even in instances where OIRA was engaged only in an informal review, including substantive telephone calls initiated by the Administrator. However, the GAO report found that OIRA does not consider a rule to be under review for purposes of these disclosure requirements if OIRA is in general consultation with an agency regarding a matter that has not become substantive or for which the agency has not submitted a draft rule for informal review. Accordingly, during this so-called "preinformal review" period, OIRA may communicate with outside parties without triggering the aforementioned disclosure requirements. Additionally, the GAO report found that, with regard to contacts with agencies, OIRA interprets disclosure requirements as applicable only to the period where a rule is under formal review pursuant to E.O. 12,866. In practical effect, this review dynamic allows varying degrees of unreported contacts both between OIRA and outside parties, and OIRA and the executive agencies. Furthermore, as noted by GAO, these preformal review proceedings would allow an agency to submit a proposal to OIRA for informal review and to alter that proposal in accordance with OIRA's input, without revealing any such changes to the public. Additionally, OIRA appears to have reinvigorated review of existing rules, and has taken steps to involve the public in the review process. In May 2001, OIRA solicited the public to nominate rules that should be considered for recision or modification. OIRA received 71 nominations from 33 commentators, and concluded that 23 of the rules nominated merited "high priority review." In February 2004, OIRA solicited public nomination of reforms of regulations in the manufacturing sector, specifically requesting suggestions for reforms to regulations, guidance documents, or paperwork requirements that would "improve manufacturing regulation by reducing unnecessary costs, increasing effectiveness, enhancing competitiveness, reducing uncertainty and increasing flexibility." OIRA received 189 reform nominations from 41 commentators, determining that 76 of the 189 nominations "have potential merit and justify further action." This review process serves to further illustrate the degree of involvement of the current Administration in all facets of regulatory review. As touched upon above, OIRA's use of mechanisms such as return and prompt letters have served to encourage agency collaboration with OIRA at the earliest stages of the rule formulation process. Indeed, OIRA has stated that "it is at these early stages where OIRA's analytic approach can most improve the quality of regulatory analyses and the substance of rules." The obvious potential for OIRA to exert a degree of influence over rulemaking at this stage of development that rivals or perhaps even exceeds that wielded during formal review proceedings could be seen as tempering the salutory effects of the increased transparency requirements imposed during the formal review process. Nonetheless, OIRA has maintained that "its interactions with agencies prior to formal regulatory review are pre-decisional communications that should generally be insulated from public disclosure in order to facilitate valuable deliberative exchanges." In light of these developments, it seems apparent that while the aforementioned changes to disclosure requirements pertaining to the formal OIRA review process have shielded the current Administration from the degree of criticism occasioned by E.O. 12,291, the potential that OIRA may play an important and potentially unacknowledged role in the formulation of agency rules during preformal review proceedings may be viewed as raising the same concerns that have traditionally adhered in this context. As has been illustrated by the consideration of the review regimes discussed above, there has been a steady evolution of presidential review of agency rulemaking from the Nixon Administration to the current Administration of George W. Bush. While the initial programs established in the 1970s were generally viewed as benign, President Reagan's issuance of E.O. 12,291 ushered in a new era of presidential assertions of authority over agency rulemaking efforts, raising attendant concerns with regard to the proper allocation of authority between the President and Congress in this context. Despite these separation of powers based concerns over the propriety of such review regimes, no reviewing court has squarely addressed the issue. Furthermore, while the actions of both the Clinton and George W. Bush Administrations in implementing the provisions of E.O. 12,866 appear to indicate a conception of presidential authority consonant with that conveyed by the Reagan order, their more nuanced approach to exercising this authority has largely diminished charges against its constitutionality. In turn, presidential review of agency rulemaking has become a widely used and increasingly accepted mechanism by which a President can exert significant, and sometimes determinative, authority over the agency rulemaking process.

Presidential review of agency rulemaking is widely regarded as one of the most significant developments in administrative law since the introduction of the first formal review programs in the 1970s. The evolution of presidential review of agency rulemaking efforts from the Reagan era through the current Administration marks a significant assertion and accumulation of presidential power in the regulatory context. While initial presidential forays into centralized regulatory review were limited in scope, presidential review of rules has emerged as one of the most effective and controversial mechanisms by which a President can ensure the realization of his regulatory agenda. Limited regulatory review began with President Nixon's establishment of a program requiring proposed environmental, consumer protection, and occupational and public health and safety regulations be circulated within the executive branch for comment. President Reagan issued an executive order requiring agencies to prepare inflationary impact statements for any major regulatory actions, and President Carter expanded presidential review through the issuance of an executive order requiring a regulatory analysis of all proposed major rules. In 1981, President Reagan issued Executive Order 12,291, ushering in a new era of presidential assertions of authority over agency rulemaking efforts. E.O. 12,291 required cost-benefit analyses and established a centralized review procedure for all agency regulations. E.O. 12,291 delegated responsibility for this clearance requirement to the Office of Information and Regulatory Affairs, which had recently been created within the Office of Management and Budget as part of the Paperwork Reduction Act of 1980. The impact of E.O. 12,291 on agency regulatory activities was immediate and substantial, generating controversy and criticism. Opponents of the order asserted that review thereunder was distinctly anti-regulatory and constituted an unconstitutional transfer of authority from the executive agencies. The review scheme established in the Reagan Administration was retained by President George H.W. Bush to similar effect and controversy. Many of the concerns voiced regarding E.O. 12,291 were assuaged by President Clinton's issuance in 1993 of Executive Order 12,866, which implemented a more selective and transparent review process. E.O. 12,866 has been retained by the current Administration, which has utilized it to implement a review regime subjecting rules to greater scrutiny than in the Clinton Administration. The actions of both the Clinton and George W. Bush Administrations in implementing the provisions of E.O. 12,866 could be taken to indicate a conception of presidential authority consonant with that conveyed by the Reagan order. However the comparatively nuanced exercise of this asserted authority by these Administrations has largely diminished arguments against the constitutionality of presidential review. Accordingly, presidential review of agency rulemaking has become a widely used and increasingly accepted mechanism by which a President can exert significant and sometimes determinative authority over the agency rulemaking process.

All commercial nuclear power plants in the United States, as well as nearly all nuclear plants worldwide, use light water reactor (LWR) technology that was initially developed for naval propulsion. Cooled by ordinary water, LWRs in the early years were widely considered to be an interim technology that would pave the way for advanced nuclear concepts. After the early 1960s, the federal government focused most of its nuclear power research and development efforts on breeder reactors and high temperature reactors that could use uranium resources far more efficiently and potentially operate more safely than LWRs. However, four decades later, LWRs continue to dominate the nuclear power industry, and are the only technology currently being considered for a new generation of U.S. commercial reactors. Federal license applications for as many as 30 new LWRs have been recently announced. The proposed new nuclear power plants would begin coming on line around 2016 and operate for 60 years or longer. Under that scenario, LWRs appear likely to dominate the nuclear power industry for decades to come. If the next generation of nuclear power plants consists of LWRs, what is the potential role of advanced nuclear reactor and fuel cycle technologies? Do current plans for a new generation of LWRs raise potential problems that advanced nuclear technologies could or should address? Can new fuel cycle technologies reduce the risk of nuclear weapons proliferation? What is the appropriate time frame for the commercial deployment of new nuclear technology? This report provides background and analysis to help Congress address those questions. Prominent among the policy issues currently before Congress is the direction of the existing nuclear energy programs in the U.S. Department of Energy (DOE). DOE administers programs to encourage near-term construction of new LWRs, such as the Nuclear Power 2010 program, which is paying half the cost of licensing and first-of-a-kind engineering for new U.S. LWR designs, and loan guarantees for new reactors now under consideration by U.S. utilities. DOE's Global Nuclear Energy Partnership (GNEP) is developing advanced fuel cycle technologies that are intended to allow greater worldwide use of nuclear power without increased weapons proliferation risks. Advanced nuclear reactors that could increase efficiency and safety are being developed by DOE's Generation IV program, which is looking beyond today's "Generation III" light water reactors. The priority given to these options depends not only on the characteristics of existing and advanced nuclear technologies, but on the role that nuclear power is expected to play in addressing national energy and environmental goals. For example, if nuclear energy is seen as a key element in global climate change policy, because of its low carbon dioxide emissions, the deployment of advanced reactor and fuel cycle technologies could be considered to be more urgent than if nuclear power is expected to have a limited long-term role because of economic, non-proliferation, and safety concerns. As their name implies, light water reactors use ordinary water for cooling the reactor core and "moderating," or slowing, the neutrons in a nuclear chain reaction. The slower neutrons, called thermal neutrons, are highly efficient in causing fission (splitting of nuclei) in certain isotopes of heavy elements, such as uranium 235 and plutonium 239 (Pu-239). Therefore, a smaller percentage of those isotopes is needed in nuclear fuel to sustain a nuclear chain reaction (in which neutrons released by fissioned nuclei then induce fission in other nuclei, and so forth). The downside is that thermal neutrons cannot efficiently induce fission in more than a few specific isotopes. Natural uranium has too low a concentration of U-235 (0.7%) to fuel an LWR (the remainder is U-238), so the U-235 concentration must be increased ("enriched") to between 3% and 5%. In the reactor, the U-235 fissions, releasing energy, neutrons, and fission products (highly radioactive fragments of U-235 nuclei). Some neutrons are also absorbed by U-238 nuclei to create Pu-239, which itself may then fission. After several years in an LWR, fuel assemblies will build up too many neutron-absorbing fission products and become too depleted in fissile U-235 to efficiently sustain a nuclear chain reaction. At that point, the assemblies are considered spent nuclear fuel and removed from the reactor. LWR spent fuel typically contains about 1% U-235, 1% plutonium, 4% fission products, and the remainder U-238. Under current policy, the spent fuel is to be disposed of as waste, although only a tiny fraction of the original natural uranium has been used. Long-lived plutonium and other actinides in the spent fuel pose a long-term hazard that greatly increases the complexity of finding a suitable disposal site. Reprocessing, or recycling, of spent nuclear fuel for use in "fast" reactors--in which the neutrons are not slowed--is intended to address some of the shortcomings of the LWR once-through fuel cycle. Fast neutrons are less effective in inducing fission than thermal neutrons but can induce fission in all actinides, including all plutonium isotopes. Therefore, nuclear fuel for a fast reactor must have a higher proportion of fissionable isotopes than a thermal reactor to sustain a chain reaction, but a larger number of different isotopes can constitute that fissionable proportion. A fast reactor's ability to fission all actinides makes it theoretically possible to repeatedly separate those materials from spent fuel and feed them back into the reactor until they are entirely fissioned. Fast reactors are also ideal for "breeding" the maximum amount of Pu-239 from U-238, eventually converting virtually all of natural uranium to useable nuclear fuel. Current reprocessing programs are generally viewed by their proponents as interim steps toward a commercial nuclear fuel cycle based on fast reactors, because the benefits of limited recycling with LWRs are modest. Commercial-scale spent fuel reprocessing is currently conducted in France, Britain, and Russia. The Pu-239 they produce is blended with uranium to make mixed-oxide (MOX) fuel, in which the Pu-239 largely substitutes for U-235. Two French reprocessing plants at La Hague can each reprocess up to 800 metric tons of spent fuel per year, while Britain's THORP facility at Sellafield has a capacity of 900 metric tons per year. Russia has a 400-ton plant at Ozersk, and Japan is building an 800-ton plant at Rokkasho to succeed a 90-ton demonstration facility at Tokai Mura. Britain and France also have older plants to reprocess gas-cooled reactor fuel, and India has a 275-ton plant. About 200 metric tons of MOX fuel is used annually, about 2% of new nuclear fuel, equivalent to about 2,000 metric tons of mined uranium. While long a goal of nuclear power proponents, the reprocessing or recycling of spent nuclear fuel is also seen as a weapons proliferation risk, because plutonium extracted for new reactor fuel can also be used for nuclear weapons. Therefore, a primary goal of U.S. advanced fuel cycle programs, including GNEP, has been to develop recycling technologies that would not produce pure plutonium that could easily be diverted for weapons use. The "proliferation resistance" of these technologies is subject to considerable debate. Removing uranium from spent nuclear fuel through reprocessing would eliminate most of the volume of radioactive material requiring disposal in a deep geologic repository. In addition, the removal of plutonium and conversion to shorter-lived fission products would eliminate most of the long-term (post-1,000 years) radioactivity in nuclear waste. But the waste resulting from reprocessing would have nearly the same short-term radioactivity and heat as the original spent fuel, because the reprocessing waste consists primarily of fission products, which generate most of the radioactivity and heat in spent fuel. Because heat is the main limiting factor on repository capacity, conventional reprocessing would not provide major disposal benefits in the near term. DOE is addressing that problem with a proposal to further separate the primary heat-generating fission products--cesium 137 and strontium 90--from high level waste for separate storage and decay over several hundred years. That proposal would greatly increase repository capacity, although it would require an alternative secure storage system for the cesium and strontium that has yet to be designed. Safety and efficiency are other areas in which improvements have long been envisioned over LWR technology. The primary safety vulnerability of LWRs is a loss-of-coolant accident, in which the water level in the reactor falls below the nuclear fuel. When the water is lost, the chain reaction stops, because the neutrons are no longer moderated. But the heat of radioactive decay continues and will quickly melt the nuclear fuel, as occurred during the 1979 Three Mile Island accident. DOE's Generation IV program is focusing on high temperature, gas-cooled reactors that would use fuel whose melting point would be higher than the maximum reactor temperature. The high operating temperature of such reactors would also result in greater fuel efficiency and the potential for cost-effective production of hydrogen, which could be used as a non-polluting transportation fuel. However, the commercial viability of Generation IV reactors remains uncertain. DOE's advanced nuclear technology programs date back to the early years of the Atomic Energy Commission in the 1940s and 1950s. In particular, it was widely believed that breeder reactors would be necessary for providing sufficient fuel for a commercial nuclear power industry. Early research was also conducted on a wide variety of other power reactor concepts, some of which are still under active consideration. The U.S. research effort on various advanced nuclear concepts has waxed and waned during subsequent decades, sometimes resulting from changes in Administrations. Technical and engineering advances have appeared to move some of the technologies closer to commercial viability, but significantly greater federal support would be necessary to move them beyond the indefinite research and development stage. GNEP is the Bush Administration's program for commercial deployment of reprocessing or recycling of spent nuclear fuel. The program's goal is to develop "proliferation resistant" fuel cycle technologies--not producing pure plutonium--that could be used around the world. Previous U.S. commercial reprocessing programs have been blocked at least partly over concerns that they would encourage other countries to begin separating weapons-useable plutonium. The fundamental technology for spent fuel reprocessing is the PUREX process (plutonium-uranium extraction) developed to provide pure plutonium for nuclear weapons. A commercial PUREX plant operated from 1966 through 1972 in West Valley, New York, and two other commercial U.S. plants were built but never operated. Meanwhile, DOE and its predecessor agencies worked to develop fast breeder reactors that could run on the reprocessed plutonium fuel. Major facilities included Experimental Breeder Reactors I and II, which began operating in Idaho in 1951 and 1964, and the Fast Flux Test Facility (FFTF), a larger fast reactor that began full operation in Hanford, Washington, in 1982. FFTF was designed to pave the way for the first U.S. commercial-scale breeder reactor, planned to begin construction near Clinch River, Tennessee, in 1977. However, the Clinch River Breeder Reactor (CRBR) and the federal government's support for commercial reprocessing were halted by President Carter in 1977 because of the nuclear proliferation issues noted above. Upon taking office in 1981, President Reagan reversed the Carter policy and restarted preparations for CRBR, but Congress eliminated further funding for the project in 1983. DOE then turned to an alternative technology based on work carried out at Experimental Breeder Reactor II (EBR-II), which used metal fuel that could be recycled through pyroprocessing (melting and electrochemical separation) rather than with the aqueous (water-based) PUREX process. Supporters of this program, called the Integral Faster Reactor (IFR) and the Advanced Liquid Metal Reactor (ALMR), contended that pyroprocessing would not produce a pure plutonium product and could be carried out at a small scale at reactor sites, reducing weapons proliferation risks. The Clinton Administration, however, moved in 1993 to terminate DOE's advanced reactor programs, including shutdown of EBR-II. Congress agreed to the proposed phaseout but continued funding for pyroprocessing technology as a way to treat EBR-II spent fuel for eventual disposal. The George W. Bush Administration made energy policy a high priority and placed particular emphasis on nuclear energy. The National Energy Policy Development (NEPD) Group, headed by Vice President Cheney, recommended in May 2001 that nuclear power be expanded in the United States and that reprocessing once again become integral to the U.S. nuclear program: * The NEPD Group recommends that, in the context of developing advanced nuclear fuel cycles and next generation technologies for nuclear energy, the United States should reexamine its policies to allow for research, development and deployment of fuel conditioning methods (such as pyroprocessing) that reduce waste streams and enhance proliferation resistance. In doing so, the United States will continue to discourage the accumulation of separated plutonium, worldwide. * The United States should also consider technologies (in collaboration with international partners with highly developed fuel cycles and a record of close cooperation) to develop reprocessing and fuel treatment technologies that are cleaner, more efficient, less waste-intensive, and more proliferation-resistant. The Bush Administration's first major step toward implementing those recommendations was to announce the Advanced Fuel Cycle Initiative in 2003 (AFCI), a DOE program to develop proliferation-resistant reprocessing technologies. The program built on the ongoing pyroprocessing technology development effort and reprocessing research conducted under other DOE nuclear programs. Much of the program's research has focused on an aqueous separations technology called UREX+, in which uranium and other elements are chemically removed from dissolved spent fuel, leaving a mixture of plutonium and other highly radioactive elements. Congress provided $5 million above the Administration's $63 million initial request in FY2004 for AFCI, and the program received statutory authorization in the Energy Policy Act of 2005 ( P.L. 109-58 , Sec. 953), including support for international cooperation. The announcement of the GNEP initiative in February 2006 (as part of the Administration's FY2007 budget request) appeared to further address the 2001 reprocessing goals of the National Energy Policy Development Group. Using reprocessing technologies to be developed by AFCI, GNEP envisioned a consortium of nations with advanced nuclear technology that would guarantee to provide fuel services and reactors to countries that would agree not to conduct fuel cycle activities, such as enrichment and reprocessing. GNEP has attracted significant international attention, but no country has yet indicated interest in becoming solely a fuel recipient rather than a supplier. The Nuclear Nonproliferation Treaty guarantees the right of all participants to develop fuel cycle facilities, and a GNEP Statement of Principles signed by the United States and 15 other countries on September 16, 2007, preserves that right, while encouraging the establishment of a "viable alternative to acquisition of sensitive fuel cycle technologies." According to DOE, GNEP currently has 21 member countries and 17 candidates and observers. Although GNEP is largely conceptual at this point, DOE issued a Spent Nuclear Fuel Recycling Program Plan in May 2006 that provided a general schedule for a GNEP Technology Demonstration Program (TDP), which would develop the necessary technologies to achieve GNEP's goals. According to the Program Plan, the first phase of the TDP, running through FY2006, consisted of "program definition and development" and acceleration of AFCI. Phase 2, running through FY2008, was to focus on the design of technology demonstration facilities, which then were to begin operating during Phase 3, from FY2008 to FY2020. The National Academy of Sciences in October 2007 strongly criticized DOE's "aggressive" deployment schedule for GNEP and recommended that the program instead focus on research and development. Similar criticism was raised in April 2008 by the Government Accountability Office. As part of GNEP, AFCI is conducting R&D on an Advanced Burner Reactor (ABR) that could destroy recycled plutonium and other long-lived radioactive elements. The ABR is similar to a breeder reactor, except that its core would be configured to produce less plutonium (from U-238) than it consumes, reducing potential plutonium stockpiles. AFCI, the primary funding component of GNEP, has received steadily increased funding from Congress, but far less than requested during the past two budget cycles. For FY2007, DOE sought $243.0 million and received $166.1 million, and for FY2008 the request of $395.0 million was cut to $179.4 million. Typically, the Senate recommends more for the program than the House does, and that pattern appears to be continuing for FY2009. The FY2009 Advanced Fuel Cycle Initiative funding request is $301.5 million, nearly 70% above the FY2008 appropriation of $179.4 million but below the FY2008 request of $395.0 million. The House Appropriations Committee recommended cutting AFCI to $90.0 million in FY2009, eliminating all funding for GNEP. The remaining funds would be used for research on advanced fuel cycle technology, but none could be used for design or construction of new facilities. The Committee urged DOE to continue coordinating its fuel cycle research with other countries that already have spent fuel recycling capability, but not with "countries aspiring to have nuclear capabilities." FY2009 funding of $10.4 million was requested for conceptual design work on an Advanced Fuel Cycle Facility (AFCF) to provide an engineering-scale demonstration of AFCI technologies, according to the budget justification. The FY2008 Consolidated Appropriations act rejected funding for development of AFCF, as did the House Appropriations Committee for FY2009. DOE requested $18.0 million for the ABR program for FY2009, up from $11.7 million in FY2008. The program is expected to focus on developing a sodium-cooled fast reactor (SFR). The House Appropriations Committee recommended no FY2009 funding for the ABR. DOE describes "Generation IV" as advanced reactor technologies that could be available for commercial deployment after 2030. These technologies are intended to offer significant advantages over existing "Generation III" reactors (LWRs in the United States) in the areas of cost, safety, waste, and proliferation. DOE is conducting some Generation IV research in cooperation with other countries through the Generation IV International Forum (GIF), established in 2001. A technology roadmap issued by GIF and DOE in 2002 identified six Generation IV nuclear technologies to pursue: fast neutron gas-cooled, lead-cooled, sodium-cooled, molten salt, supercritical water-cooled, and very high temperature reactors. These reactor concepts are not new, and some have been demonstrated at the commercial scale, but none has been sufficiently developed for successful commercialization. The DOE Generation IV Nuclear Energy Systems Initiative (Gen IV) is focusing on a helium-cooled Very High Temperature Gas Reactor (VHTR) and conducting cross-cutting research on materials and other areas that could apply to all reactor technologies, including LWRs. The VHTR technology is being developed for the Next Generation Nuclear Plant (NGNP) authorized by the Energy Policy Act of 2005. Development of sodium-cooled fast reactors is being conducted by the AFCI program as part of the ABR effort described above. DOE requested $70.0 million for Gen IV for FY2009--$44.9 million below the FY2008 funding level of $114.9 million, which was nearly triple the Administration's FY2008 budget request of $36.1 million. The House Appropriations Committee recommended an increase to $200.0 million. Most of the FY2009 request--$59.5 million--is for the NGNP program. The VHTR technology being developed by DOE uses helium as a coolant and coated-particle fuel that can withstand temperatures up to 1,600 degrees celsius. Phase I research on the NGNP is to continue until 2011, when a decision will be made on moving to the Phase II design and construction stage, according to the FY2009 DOE budget justification. The House Appropriations Committee provided $196.0 million "to accelerate work" on NGNP--all but $4.0 million of the Committee's total funding level for the Generation IV program. The Energy Policy Act of 2005 authorizes $1.25 billion through FY2015 for NGNP development and construction (Title VI, Subtitle C). The authorization requires that NGNP be based on research conducted by the Generation IV program and be capable of producing electricity, hydrogen, or both. DOE's plans for commercial nuclear fuel recycling facilities are still being formulated. The Department is currently preparing a draft Programmatic Environmental Impact Statement (PEIS) for GNEP that will lead to decisions about development of an advanced fuel cycle research facility. The PEIS will not consider the next stages of the program, which would include commercial-scale reprocessing/recycling facilities and an advanced fast reactor, according to DOE. A schedule for completing this process has not been announced. To help determine the future direction of the GNEP program, DOE solicited studies from four industry consortia. The four studies, released by DOE on May 28, 2008, describe concepts for advanced fuel recycling/reprocessing facilities, along with general cost estimates and schedules. The four teams have signed cooperative agreements with DOE to continue developing "conceptual designs, technology development roadmaps, and business plans for potential deployment and commercialization of recycling and reactor technologies" at least through FY2008 and possibly through FY2009. According to DOE, these additional studies will "help inform a decision on the potential path forward for technologies and facilities associated with domestic implementation of GNEP." EnergySolutions, a waste treatment and disposal firm, Shaw Group, an engineering and construction firm, and Westinghouse Electric Company, a reactor design firm, led an industry team that proposed that aqueous reprocessing facilities to handle 1,500 metric tons per year of LWR spent fuel begin operating by 2023. A fuel fabrication plant would be built to supply MOX fuel to existing LWRs. Recycling facilities during this initial phase would be funded and built by DOE. The next phase of the EnergySolutions proposal would run from 2030 to 2049. A 410 megawatt (electric) fast reactor would begin operating in 2033, with four additional units starting up by 2045. Aqueous reprocessing capacity would be expanded by 3,000 metric tons per year, and non-aqueous reprocessing facilities would be added. In the final phase, 2050 through 2100, the fast reactor recycling fleet would expand to 96 gigawatts (about the capacity of today's U.S. LWR fleet), and less aqueous reprocessing capacity would be needed. A federal corporation would be established to sign long-term contracts with industry for spent fuel recycling and fuel fabrication, build and operate a waste repository, and transport spent fuel. The federal corporation's funding would come from nearly doubling the nuclear waste fee currently imposed on nuclear power generation, from 1 mill per kilowatt-hour to 1.95 mills/kwh, assuming the previously collected balance in the Nuclear Waste Fund (the Treasury account that holds the waste fees) is not used. At the current rate of nuclear power generation, the proposed fee would produce revenues of about $1.5 billion per year. A team led by General Electric Hitachi Nuclear Energy prepared a proposal based on the IFR/ALMR program that was halted in 1993. The pyroprocessing facility that is proposed would use the electrometallurgical separations process developed by the IFR program, with improvements that have been made during the subsequent 15 years. The fast reactor is the Power Reactor Inherently Safe Module (PRISM) that GE developed for the ALMR program, also with subsequent refinements. According to the report, a power plant consisting of six PRISM modules (totaling 1,866 megawatts electric, mwe), along with the necessary reprocessing capacity, would consume 5,800 metric tons of LWR spent fuel over its planned 60-year operating life. The first phase of the GE-Hitachi proposal, taking about 20 years, would consist of construction and operation of one or two PRISM modules. The second phase, lasting about 10 years, would feature commercial deployment of at least one Advanced Recycling Center (ARC), consisting of six PRISM modules and a reprocessing and fuel fabrication facility. Multiple ARCs would be constructed in the third phase, after 30 years. General Atomics, long associated with gas-cooled reactor technology, led a team that proposed a two-tier spent fuel recycling system. In the first tier, LWR spent fuel would be sent to aqueous reprocessing plants to extract nuclear fuel material to be used in high-temperature gas reactors, such as the type being developed by the DOE Gen IV program. Because of their high fuel burnup, the gas reactors would eliminate most plutonium and minor actinides. In the second tier, spent fuel from the gas reactors would be pyroprocessed so that the remaining plutonium and minor actinides could be fissioned in a fast reactor. Under the team's preferred scenario, LWRs would continue to be constructed through 2050 (136 in all) and be phased out by 2110. The first gas-cooled reactor module (385 mwe) would start up by 2025, and the first aqueous reprocessing center would begin operation by about 2030. The aqueous reprocessing centers would have a capacity of about 1,500 tons of LWR spent fuel per year and cost about $8.3 billion to construct (in 2006 dollars). The first pyroprocessing facility would open in 2040, and the first fast reactor would open by 2075. The team recommended that initial facilities for the program be developed by a government corporation, which would be privatized by 2035. The French nuclear firm Areva, which has long experience with commercial PUREX reprocessing plants in France, led a team that proposed continued reliance on LWRs with a gradual buildup of fast reactors. Through 2019, the team recommended that MOX fuel be tested in existing U.S. reactors, from plutonium extracted from U.S.-origin spent fuel reprocessed overseas. The first 800-ton per year aqueous recycling plant would open in 2023, with additional 800-ton modules starting up in 2045 and 2070. A 500 mwe fast reactor would begin operating in 2025, a 1,000 mwe reactor would open in 2035, and a 1,500 mwe reactor would begin operating in 2050, with additional 1,500 mwe units starting up about every two years thereafter. A government corporation would be established to run the recycling program. Costs are estimated to be 10%-70% higher than the existing 1 mill/kwh nuclear waste fee. For Congress and other federal policymakers, issues posed by current GNEP and Gen IV proposals are similar to those of the past several decades. The fundamental policy question is whether the government should encourage the expansion of nuclear power. The industry has long contended that new commercial reactors will not be constructed without increased government incentives or subsidies. After the initial federal push to commercialize nuclear power in the 1950s and 1960s, government support waned to the point where a nuclear phaseout seemed possible. But nuclear power proponents now contend that dramatic growth will be needed (with federal support) to meet future energy demand in a carbon-constrained environment. Such high-growth scenarios must overcome many of the same perceived challenges that faced the optimistic initial expectations for nuclear power. If dramatic growth were to finally occur, could light water reactors meet the challenge, or is a transition to advanced nuclear technologies necessary? And if new technologies will be needed, how urgently must the federal government move forward? As in the early years of the nuclear power program, a primary concern with renewed nuclear power growth is long-term fuel supply, since LWRs can extract energy from only a fraction of natural uranium. During the past two decades of slowed U.S. and world nuclear power expansion, the only problem with uranium was oversupply and chronically low prices. Supply has since tightened, but uranium production capacity is expanding rapidly in response. Whether increased exploration activity will result in higher worldwide resource estimates will have important implications for this issue. The long-proposed solution to the fuel problem--replacing LWRs with fast breeder reactors--raises the nuclear weapons proliferation issue. LWR spent fuel is highly resistant to proliferation at least for the first 100 years, although the technology requires uranium enrichment facilities that may pose their own risks. GNEP's goal of expanding nuclear power while limiting the proliferation of fuel cycle facilities is widely shared, but the success of the program's current approach remains uncertain. Nuclear waste management has also been a longstanding problem in the United States and the world. The once-through LWR fuel cycle requires extremely long-term isolation of plutonium and other long-lived radionuclides. Reprocessing could potentially shorten the disposal horizon and make siting easier for waste repositories. But if long-term isolation is determined to be feasible, the waste disposal benefits of reprocessing may become less significant. Other anticipated benefits of advanced reactor technologies over LWRs include improved safety, lower costs, and high-temperature heat production for hydrogen and other industrial purposes. LWR technology has improved steadily in safety, particularly in its vulnerability to loss-of-coolant accidents, and the projected risks of the latest designs have been reduced one to two orders of magnitude below that of existing reactors. Proposed Generation IV designs are intended to virtually eliminate the major risk factors inherent in LWRs, although they may have other safety risks that have yet to be as fully quantified. New LWR designs are also intended to reduce costs from those incurred by existing reactors, but cost estimates have recently escalated (along with those of all competing power systems). Generation IV reactors are projected by their designers to reduce both construction and operating costs, but these projections have yet to be demonstrated. LWRs are limited to relatively low-temperature operation, so high-temperature gas reactors could be the most practical technology for nuclear generation of hydrogen as a transportation fuel. If hydrogen were to become a major transportation fuel--which remains far from certain--nuclear power could begin to play a significant role in replacing petroleum. However, more commercial attention has recently been focused on battery-based electric vehicle systems, which could be recharged by LWRs. Recent U.S. nuclear energy policy has focused primarily on large government incentives for private-sector construction of new LWRs, such as loan guarantees, tax credits, and regulatory risk insurance. Imposition of federal controls on carbon dioxide emissions would provide additional powerful incentives for LWR construction. As shown by the industry studies described above, the advanced nuclear technologies under development by GNEP and Gen IV will require many years of government-supported development before they reach the current stage of LWRs. The Bush Administration has renewed the federal research effort on these technologies, so now the question before Congress is whether the time has come to move to the next, more expensive, development stages.

Current U.S. nuclear energy policy focuses on the near-term construction of improved versions of existing nuclear power plants. All of today's U.S. nuclear plants are light water reactors (LWRs), which are cooled by ordinary water. Under current policy, the highly radioactive spent nuclear fuel from LWRs is to be permanently disposed of in a deep underground repository. The Bush Administration is also promoting an aggressive U.S. effort to move beyond LWR technology into advanced reactors and fuel cycles. Specifically, the Global Nuclear Energy Partnership (GNEP), under the Department of Energy (DOE) is developing advanced reprocessing (or recycling) technologies to extract plutonium and uranium from spent nuclear fuel, as well as an advanced reactor that could fully destroy long-lived radioactive isotopes. DOE's Generation IV Nuclear Energy Systems Initiative is developing other advanced reactor technologies that could be safer than LWRs and produce high-temperature heat to make hydrogen. DOE's advanced nuclear technology programs date back to the early years of the Atomic Energy Commission in the 1940s and 1950s. In particular, it was widely believed that breeder reactors--designed to produce maximum amounts of plutonium from natural uranium--would be necessary for providing sufficient fuel for a large commercial nuclear power industry. Early research was also conducted on a wide variety of other power reactor concepts, some of which are still under active consideration. Although long a goal of nuclear power proponents, the reprocessing of spent nuclear fuel is also seen as a weapons proliferation risk, because plutonium extracted for new reactor fuel can also be used for nuclear weapons. Therefore, a primary goal of U.S. advanced fuel cycle programs, including GNEP, has been to develop recycling technologies that would not produce pure plutonium that could easily be diverted for weapons use. The "proliferation resistance" of these technologies is subject to considerable debate. Much of the current policy debate over advanced nuclear technologies is being conducted in the appropriations process. For FY2009, the House Appropriations Committee recommended no further funding for GNEP, although it increased funding for the Generation IV program. Typically, the Senate is more supportive of GNEP and reprocessing technologies. Recent industry studies conducted for the GNEP program conclude that advanced nuclear technologies will require many decades of government-supported development before they reach the current stage of LWRs. Key questions before Congress are whether the time has come to move beyond laboratory research on advanced nuclear technologies to the next, more expensive, development stages and what role, if any, the federal government should play.

The 112 th Congress is in the midst of considering an omnibus farm bill that will establish the direction of agricultural policy for the next several years. Many provisions of the current farm bill (the Food, Conservation, and Energy Act of 2008, P.L. 110-246 ) expire this year. The Senate Agriculture Committee approved its version of the 2012 omnibus farm bill on April 26, 2012 (Agriculture Reform, Food and Jobs Act of 2012), and officially filed the measure, S. 3240 , on May 24, 2012. After the bill was filed, more than 300 amendments were proposed for consideration on the Senate floor. By mid-June, an agreement was reached to limit the debate to 77 of the proposed amendments, of which 45 were adopted between June 19 and June 21. The full Senate approved S. 3240 , as amended, by a vote of 64-35 on June 21. The House Agriculture Committee completed markup of its version of the farm bill ( H.R. 6083 , the Federal Agriculture Reform and Risk Management Act of 2012) on July 11, 2012, and approved the amended measure by a 35-11 vote. Nearly 100 amendments were offered for committee consideration, of which nearly half were adopted by the committee. The House bill was officially filed and reported by the committee on September 13, 2012. Within their 12 titles, the five-year House and Senate farm bills would reshape the structure of farm commodity support, expand crop insurance coverage, consolidate conservation programs, revise the Supplemental Nutrition Assistance Program (formerly food stamps), and extend authority to appropriate funds for many U.S. Department of Agriculture (USDA) discretionary programs through FY2017. Following are summaries of the major similarities and differences within each of the 12 titles of the respective versions of the House Agriculture Committee-approved and Senate-passed 2012 farm bills. The summaries are followed by a comprehensive title-by-title comparison of all of the House and Senate provisions with each other and with current law or policy. The Congressional Budget Office (CBO) projects that the programs of the 2008 farm bill, if they were to continue, would cost nearly $1 trillion over the next 10 years. Compared to this "baseline," the Senate-passed farm bill, S. 3240 , would reduce spending by $23.1 billion (2.3%); and the House Agriculture Committee-reported bill, H.R. 6083 , would reduce it by $35.1 billion (-3.5%). The $23 billion 10-year reduction (or "score") in the Senate bill is consistent with a joint House-Senate Agriculture Committee proposal to the Joint Select Committee on Deficit Reduction in fall 2011. The $35 billion 10-year reduction in the House bill is consistent with reconciliation instructions in the House budget resolution for FY2013. The net reduction in each bill is composed of some titles receiving more funding than in the past, while other titles provide offsets for deficit reduction. Figure 1 illustrates the budgetary impacts of changes to each title in each bill, and the following table contains the data in tabular form. More background and detail on the budget available to write the farm bill, the CBO scores of each bill, and other budgetary issues is available in CRS Report R42484, Budget Issues Shaping a 2012 Farm Bill . Under both the Senate-passed ( S. 3240 ) and House Agriculture Committee-reported ( H.R. 6083 ) farm bills, farm support for traditional program crops is restructured by eliminating direct payments, the existing counter-cyclical price program, and the Average Crop Revenue Election (ACRE) program. Authority is continued for marketing assistance loans, which provide additional low-price protection at "loan rates" specified in current law (with an adjustment made to the cotton loan rate). Direct payments account for most of current commodity spending and are made to producers and landowners based on historical production of corn, wheat, soybeans, cotton, rice, peanuts, and other "covered" crops. Some of the 10-year, $50 billion in savings associated with the proposed elimination of direct payments would be used to offset the cost of revising farm programs and enhancing crop insurance in Title XI. Both bills provide programs for covered crops, except cotton, which would have its own program (see " Farm Bill Title XI, Crop Insurance "). Both bills borrow conceptually from current programs, revising (and renaming) them to enhance price or revenue protection for producers. The House bill is similar to the current mix of farm programs in that it retains producer choice between a counter-cyclical price program (renamed Price Loss Coverage or PLC) and a revenue program (renamed Revenue Loss Coverage or RLC). For PLC, the price guarantees ("reference prices") that determine payment levels are increased relative to parameters in the current program to better protect producers in a market downturn. For RLC, the guarantee is based on historical revenue at the county level, so losses are more likely to be covered than under the current ACRE, which calculates the guarantee at the state level. In contrast to the House bill, the Senate bill provides for only a revised revenue program called Agriculture Risk Coverage (ARC). It offers a slightly higher guarantee than in the House bill, plus an option for farmers to select coverage at either the county or individual farm level. Five disaster programs were established in the 2008 farm bill for weather-induced losses in FY2008-FY2011. Both S. 3240 and H.R. 6083 reauthorize four programs covering livestock and tree assistance for FY2012-FY2017. The crop disaster program from the 2008 farm bill (i.e., Supplemental Revenue Assistance, or SURE) is not reauthorized in either bill, but elements of it are folded into the new ARC in the Senate bill by allowing producers to protect against farm-level revenue losses (not included in House bill). S. 3240 also provides disaster benefits to tree fruit producers who suffered crop losses in 2012. Farm commodity programs have certain limits that cap payments (currently $105,000 per person) and set eligibility based on adjusted gross income (AGI, currently $500,000 per person for nonfarm income and $750,000 for farm income). The two bills diverge from current law and each other, with S. 3240 reducing the farm program payment limit to $50,000 per person for ARC and adding a $75,000 limit on loan deficiency payments (LDPs). The program payment limit under the H.R. 6083 is $125,000 for PLC and RLC, with no limit on LDPs. The Senate bill changes the threshold to be considered actively engaged and to qualify for payments, by effectively requiring personal labor in the farming operation. Both bills also tighten limits on AGI, with a combined AGI limit of $750,000 in S. 3240 and $950,000 in H.R. 6083 . For dairy policy, both bills contain similar, significant changes, including elimination of the dairy product price support program, the Milk Income Loss Contract (MILC) program, and export subsidies. These are replaced by a new program, which makes payments to participating dairy producers when the national margin (average farm price of milk minus average feed costs) falls below $4.00 per hundredweight (cwt.), with coverage at higher margins available for purchase. Another provision makes participating producers subject to a separate program, which reduces incentives to produce milk when margins are low. Federal milk marketing orders have permanent statutory authority and continue intact. However, S. 3240 (but not H.R. 6083 ) includes two provisions that require more frequent reporting of dairy market information and studies on potential changes to the federal milk marketing order system. The sugar program is left unchanged in both bills, with an exception in the Senate bill that advances the date (to February 1 from April 1) that USDA can increase the import quota. The current agricultural conservation portfolio includes over 20 conservation programs. The conservation titles of both the Senate-passed ( S. 3240 ) and House Agriculture Committee-reported ( H.R. 6083 ) farm bills reduce and consolidate the number of conservation programs while also reducing mandatory funding more than $6 billion over the 10-year baseline. Many of the larger existing conservation programs, such as the Conservation Reserve Program (CRP), the Environmental Quality Incentives Program (EQIP), and the Conservation Stewardship Program (CSP), are reauthorized by both bills with smaller and similar conservation programs "rolled" into them. In response to reduced demand and as a budget saving measure, the largest conservation program, CRP, is reauthorized with a reduced acreage enrollment cap using a step-down approach from the current 32 million acres to 25 million by FY2017 under both bills. CRP also is amended to include the enrollment of grassland acres similar to the Grasslands Reserve Program (GRP), which is repealed. These grassland acres are limited to 1.5 million acres in S. 3240 and 2 million acres in H.R. 6083 . EQIP, a program that assists producers with conservation measures on land in production, is reauthorized by both bills with a 5% funding carve-out for wildlife habitat practices (similar to the Wildlife Habitat Incentives Program, WHIP, which is repealed). The Senate-passed bill reduces EQIP a total of almost $1 billion over 10 years, while the House committee bill offers no reduction from the current $1.75 billion annually. CSP, another working land program, is reauthorized at a reduced enrollment level under both bills: 10.348 million acres annually under S. 3240 and 9 million acres annually under H.R. 6083 , down from 12.769 million acres annually under current law. Both bills create two new conservation programs--the Agricultural Conservation Easement Program (ACEP) and the Regional Conservation Partnership Program (RCPP)--out of several of the remaining programs. Conservation easement programs, including the Wetlands Reserve Program (WRP), Farmland Protection Program (FPP), and GRP, are repealed and consolidated to create ACEP. ACEP retains most of the program provisions in the current easement programs by establishing two types of easements: wetlands easements (similar to WRP) that protect and restore wetlands, and agricultural land easements (similar to FPP and GRP) that prevent non-agricultural uses on productive farm or grassland. The Agricultural Water Enhancement Program (AWEP), Chesapeake Bay Watershed program, Cooperative Conservation Partnership Initiative (CCPI), and Great Lakes basin program are repealed by both bills and consolidated into the new RCPP. RCPP uses partnership agreements with state and local governments, Indian tribes, farmer cooperatives, and other conservation organizations to leverage federal funding and further conservation on a regional or watershed scale. The Senate-passed bill adds the federally funded portion of crop insurance premiums to the list of program benefits that could be lost if a producer is found to produce an agricultural commodity on highly erodible land without an approved conservation plan or qualifying exemption, or converts a wetland to crop production. This prerequisite, referred to as conservation compliance, has existed since the 1985 farm bill and currently affects most USDA farm program benefits, but has excluded crop insurance since 1996. The House committee bill offers no comparable provision. The trade title of the farm bill deals with statutes concerning U.S. international food aid and agricultural export market development programs. Both S. 3240 and H.R. 6083 reauthorize all of the international food aid programs, including the largest, Food for Peace Title II (emergency and nonemergency food aid). Both bills contain amendments to current food aid law that place greater emphasis on improving the quality of food aid products (i.e., enhancing their nutritional quality). The Senate bill places new restrictions on the practice of monetization or selling U.S. food aid commodities in recipient countries to raise cash to finance development projects. In this regard, S. 3240 requires implementing partners such as U.S. private voluntary organizations or cooperatives to recover 70% of the U.S. commodity procurement and shipping costs. The Senate bill repeals the specified dollar amounts for nonemergency food aid required in current law (the "safe box"). In place of the safe box S. 3240 provides that nonemergency food aid be not less than 20% nor more than 30% of funds made available to carry out the program, subject to the requirement that a minimum of $275 million be provided for nonemergency food aid. The House bill places no limits on the practice of monetization, other than new reporting requirements, and fixes the amount of "safe box" nonemergency assistance at $400 million annually. Both bills reauthorize funding for the Commodity Credit Corporation (CCC) Export Credit Guarantee program and various agricultural export market promotion programs. S. 3240 reduces the value of U.S. agricultural exports that can benefit from export credit guarantees from $5.5 billion to $4.5 billion annually. The House bill retains the $5.5 billion level of guarantees. Both bills authorize CCC funding of $200 million annually for the Market Access Program (MAP), which finances promotional activities for both generic and branded U.S. agricultural products. MAP had been targeted in a number of deficit reduction proposals for elimination. Authorized CCC funding for the Foreign Market Development Program (FMDP), a generic commodity promotion program, continues in both bills at $34.5 billion annually through F2017. H.R. 6083 authorizes the Secretary of Agriculture to establish the position of Under Secretary of Agriculture for Foreign Agricultural Services, while S. 3240 calls for a study of the trade functions of USDA, noting that in implementing the study, the Secretary may include a recommendation for the establishment of an Under Secretary for Trade and Foreign Agriculture. Title IV of both S. 3240 and H.R. 6083 largely maintains the nutrition program policies and discretionary and mandatory funding that are contained in the Food and Nutrition Act of 2008 and other nutrition program authorizing statutes. Of the changes made, many are the same in the two bills, but the bills also differ in a number of ways, most notably in recognized cost savings associated with the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps). CBO estimates total 10-year budget savings of $4.0 billion in the Senate bill and $16.1 billion in the House bill. SNAP provisions in both bills include changes to the requirements for retailers who apply for authorization to accept SNAP and changes to some of the rules that govern participants' and retailers' redemption of SNAP benefits. Both bills provide additional mandatory funding for reducing SNAP trafficking (the sale of SNAP benefits for cash or ineligible goods), although the Senate provides a larger amount. In terms of eligibility for SNAP and the calculation of monthly benefit amounts, both bills identically change how a household's receipt of Low-Income Home Energy Assistance Program (LIHEAP) benefits affects the household's SNAP benefit calculation. However, the House bill also restricts categorical eligibility, repeals state performance bonuses, and clarifies the consideration of medical marijuana expenses. The House bill also makes changes to the nutrition assistance provided to the Northern Mariana Islands and Puerto Rico. Both bills increase Community Food Projects grants (the Senate by $5 million and the House by $10 million); the House bill also carves out $5 million of these grants for projects that incentivize low-income households to purchase fruits and vegetables. Both bills increase mandatory funding for the Emergency Food Assistance Program (TEFAP), the Senate by $174 million over 10 years, and the House Committee by $270 million (according to CBO). Both bills would limit eligibility for the Commodity Supplemental Food Program (CSFP) to low-income elderly participants, phasing out eligibility for low-income pregnant and post-partum women, infants, and children. The Senate adds discretionary authority for a Healthy Food Financing Initiative, a financing mechanism to sustain and create food retail opportunities in communities that lack access to healthy food; and provides $100 million (over five years) in mandatory funding for Hunger-Free Communities Incentive Grants, which funds programs that provide incentives for SNAP participants' purchase of fruits and vegetables; neither of these programs are included in the House committee's bill. Within the child nutrition programs, the Senate bill includes authorization and funding to continue a whole grain pilot program and to begin a pulse crops pilot program, whereas the House bill does not include these pilots and eliminates the "fresh" requirement in the Fresh Fruit and Vegetable Program. Both bills include additional authorizations for farm-to-school efforts. The Consolidated Farm and Rural Development Act (also known as the ConAct) is the permanent statute that authorizes USDA agricultural credit and rural development programs. USDA serves as a lender of last resort by providing direct and guaranteed loans to farmers and ranchers who are denied direct credit by commercial lenders but have the wherewithal to repay the loan. Both the Senate and House bills make relatively small policy changes to USDA's credit programs. Both bills give USDA discretion to recognize (1) alternative legal entities to qualify for farm loans and (2) alternatives to meet a three-year farming experience requirement; and both bills increase the maximum size of down-payment loans. The Senate farm bill also updates and modernizes the ConAct's statutory language and organizes the various programs into separate subtitles (new Subtitle A is farm loans; Subtitle B is rural development; Subtitle C is general provisions). Generally, most of the revised ConAct provisions are substantially the same, but are renumbered and reorganized. The Senate bill also extends the number of years that farmers can remain eligible for direct farm operating loans, and eliminates term limits on guaranteed operating loans. The House bill's credit title does not restructure the ConAct nor change any term limits provisions. However, the House bill does create a new microloan program, increases the percentage of a conservation loan that can be guaranteed, and adds another lending priority for beginning farmers, among other changes. Other non-USDA credit programs--such as the Farm Credit Act, which establishes the Farm Credit System and Farmer Mac--could be part of the farm bill, but neither the House bill nor the Senate addresses these programs. Like Title V, discussed above, Title VI of S. 3240 is a restructuring of the ConAct, which provides permanent authority for USDA to carry out its portfolio of rural development programs. Title VI of H.R. 6083 makes funding authorization amendments to many existing rural development programs (at levels mostly lower than those of the Senate bill), but generally offers no new provisions, nor does it significantly modify current programs authorized under the ConAct and the Rural Electrification Act. The House bill does include a new provision directing the Secretary of Agriculture to begin collecting data on the economic effects of the projects that USDA Rural Development funds, and directs the Secretary to develop simplified applications for funding. The Senate bill consolidates various rural water and wastewater assistance programs and the Community Facilities loan and grant program into a new Rural Community Program category, and establishes criteria for which rural communities will receive priority in making loan and grant awards. The restructuring of the ConAct also eliminates several business programs, but consolidates many of their objectives into a broad program of Business and Cooperative Development grants. Separately, S. 3240 provides a total of $115 million in mandatory rural development funding, including funds for the Value-Added Producer Grant Program ($12.5 million annually for FY2014-FY2017) and the Rural Microentrepreneur Assistance Program ($3.75 million annually for FY2014-FY2017), and $50 million in mandatory spending for pending rural development loans and grants. The House bill contains no mandatory spending authorization. S. 3240 retains the definition of "rural" and "rural area" for purposes of program eligibility and makes it the basis for all rural development programs. The definition of "rural area" for electric and telephone programs has been eliminated, and becomes the same as for other rural programs. The bill retains the 2008 farm bill provision permitting communities that might otherwise be ineligible for USDA Rural Development funding to petition USDA to designate their communities as "rural in character," thereby making them eligible for program support. S. 3240 also eliminates the existing statutory definition of "rural" and "rural areas" for water and waste water programs and community facilities, but permits areas currently deemed as rural to remain eligible for these programs, unless USDA determines that they are no longer "rural in character." Also included in both the House and Senate bills is reauthorization of funding for programs under the Rural Electrification Act of 1936, including the Access to Broadband Telecommunications Services in Rural Areas Program and the Distance Learning and Telemedicine Program. The Senate bill also establishes a new grant program for the Access to Broadband Telecommunications Services in Rural Areas Program in addition to its current loan guarantee program. The Delta Regional Authority and the Northern Great Plains Regional Authority are reauthorized by both bills, but the Senate bill makes various technical changes to the organizational structure and operation of the two authorities. USDA is authorized under various laws to conduct agricultural research at the federal level, and provides support for cooperative research, extension, and post-secondary agricultural education programs in the states. Both bills reauthorize funding for these activities for FY2013-FY2017, subject to annual appropriations, and amend authority so that only competitive grants can be awarded under certain programs. In both bills, mandatory funding is increased for the Specialty Crop Research Initiative ($416 million over 10 years) and the Organic Agricultural Research and Extension Initiative ($80 million over 10 years). Also, mandatory funding is continued for the Beginning Farmer and Rancher Development Program in both the Senate bill ($85 million) and House bill ($50 million). New in S. 3240 is mandatory funding of $100 million to establish the Foundation for Food and Agriculture Research, a nonprofit corporation designed to supplement USDA's basic and applied research activities. It will solicit and accept private donations to award grants for collaborative public/private partnerships with scientists at USDA and in academia, nonprofits, and the private sector. General forestry legislation is within the jurisdiction of the Agriculture Committees, and past farm bills have included provisions addressing forestry assistance, especially on private lands. Both the Senate-passed and House Agriculture Committee-reported farm bills generally repeal, reauthorize, and modify existing programs and provisions under two main authorities: the Cooperative Forestry Assistance Act (CFAA), as amended, and the Healthy Forests Restoration Act of 2003 (HFRA), as amended. Most federal forestry programs are permanently authorized, and thus do not require reauthorization in the farm bill. The Senate bill, however, amends several forestry assistance programs by replacing their permanent authority to receive annual appropriations of such sums as necessary with a set level of appropriations through FY2017. The House bill also limits permanent authority for some programs, but in fewer instances than the Senate bill. Both bills repeal programs that have expired or have never received appropriations. Other provisions in both bills include reauthorizing stewardship contracting, requiring revised strategic plans for forest inventory and analysis, and adding alternatives for addressing insect infestations and disease. An energy title first appeared in the 2002 farm bill, and was both extended and expanded by the 2008 farm bill. USDA renewable energy programs have been used to incentivize research, development, and adoption of renewable energy projects, including solar, wind, and anaerobic digesters. The primary focus of USDA renewable energy programs has been to promote U.S. biofuels production and use. Cornstarch-based ethanol dominates the U.S. biofuels industry. However, the 2008 farm bill attempted to refocus U.S. biofuels policy initiatives in favor of non-corn feedstocks; the most critical program to this end is the Biomass Crop Assistance Program (BCAP), which assists farmers in developing nontraditional crops for use as feedstocks for the eventual production of cellulosic ethanol. All of the major Title IX energy programs expire at the end of FY2012 and lack baseline funding going forward. Both the Senate-passed bill ( S. 3240 ) and the House Agriculture Committee-reported measure ( H.R. 6083 ) extend most of the renewable energy provisions of Title IX, with the exception of the Repowering Assistance Program, the Rural Energy Self-Sufficiency Initiative, and the Renewable Fertilizer Study, which are repealed by both bills. In addition, S. 3240 repeals the Forest Biomass for Energy Program, while the House bill repeals the Biofuels Infrastructure Study. The primary difference between the House and Senate bills is in the source of funding. The Senate bill contains $800 million in new mandatory funding and authorizes $1.140 billion in appropriations for the various Title IX programs over the FY2013-FY2017 period. In contrast, H.R. 6083 contains no mandatory funding for Title IX programs, while authorizing $1.355 billion subject to appropriations. In addition, the House bill prevents USDA from spending Rural Energy for America (REAP) program funds on retail blender pumps and eliminates all support for the collection, harvest, storage, and transportation (CHST) component of BCAP, severely limiting its potential effectiveness as an incentive to produce cellulosic feedstocks. The horticulture titles of both S. 3240 and H.R. 6083 reauthorize many of the existing farm bill provisions supporting farming operations in the specialty crop and certified organic sectors. CBO estimates a total increase in mandatory spending of $360 million (FY2013-FY2017) for Title X in the Senate bill and $428 million in the House bill. Many of the Title X provisions fall into the categories of marketing and promotion; organic certification; data and information collection; pest and disease control; food safety and quality standards; and local foods. The House bill also includes several provisions that are not in the Senate bill that would provide exemptions from certain regulatory requirements under some laws, including the Federal Insecticide, Fungicide, and Rodenticide Act, the Clean Water Act, and the Endangered Species Act, among other modifications. Provisions affecting the specialty crop and certified organic sectors are not limited to Title X, but are contained within several other titles of the farm bill. These include programs in the research, nutrition, and trade titles, among others. Both the House and Senate bills reauthorize (and in some cases provide for increased funding for) several key programs benefitting specialty crop producers, including the Specialty Crop Block Grant Program, plant pest and disease programs, USDA's Market News for specialty crops, the Specialty Crop Research Initiative (SCRI), and also the Fresh Fruit and Vegetable Program (Snack Program) and Section 32 purchases for fruits and vegetables under the nutrition title. Both bills also reauthorize most programs benefitting certified organic agriculture producers, including continued support for USDA's National Organic Program (NOP) and development of crop insurance mechanisms for organic producers, Organic Production and Market Data Initiatives (ODI), and research programs such as the Organic Agriculture Research and Extension Initiative (OREI) and the Organic Transitions Program (ORG) under the Integrated Research, Education, and Extension Competitive Grants Program. One exception is that the House bill would repeal the National Organic Certification Cost Share Program (NOCCSP), while the Senate would maintain that program. Programs in other farm bill titles benefitting specialty crop and certified organic producers also include the Value-Added Producer Grant Program, Technical Assistance for Specialty Crops (TASC), the Market Access Program (MAP), and most conservation programs (including assistance specifically for organic producers), among other programs, within the crop insurance, credit, and miscellaneous titles. Title X and other titles in both the House and Senate bills also include provisions that would expand opportunities for local food systems and also beginning farmers and ranchers. For example, both bills reauthorize and expand the scope and overall funding for USDA's farmers' market program, which would be renamed the Farmers' Market and Local Food Promotion Program. Other provisions supporting local food producers are within the horticulture, nutrition, rural development, and research titles, among others. Both bills increase funding for crop insurance relative to baseline levels by making several changes to the existing federal crop insurance program, which is permanently authorized by the Federal Crop Insurance Act. The federal crop insurance program makes available subsidized crop insurance to producers who purchase a policy to protect against individual farm losses in yield, crop revenue, or whole farm revenue. An amendment to S. 3240 adopted during floor debate reduces crop insurance premium subsidies by 15 percentage points for producers with average adjusted gross income greater than $750,000. With cotton not covered by the farm revenue programs established in Title I of both bills, a new crop insurance policy called Stacked Income Protection Plan (STAX) is made available in both bills for cotton producers. Producers could purchase this policy alone or in addition to their individual crop insurance policy, and the indemnity from STAX would pay all or part of the deductible under the individual policy. STAX sets a revenue guarantee based on expected county revenue. For other crops, a similar type of policy called Supplemental Coverage Option (SCO), based on expected county yields or revenue, is made available by both bills as an additional policy. The farmer subsidy as a share of the policy premium is set at 80% for STAX and 70% for SCO. Additional crop insurance changes in both bills are designed to expand or improve crop insurance for other commodities, including specialty crops. Provisions in both bills revise the value of crop insurance for all organic crops to reflect prices of organic (not conventional) crops. The bills require USDA to conduct more research on whole farm revenue insurance with higher coverage levels than currently available. Studies are also required on insuring (1) specialty crop producers for food safety and contamination-related losses, (2) swine producers for a catastrophic disease event, (3) producers of catfish against reduction in the margin between the market prices and production costs, (4) commercial poultry production against business disruptions caused by integrator bankruptcy, and (5) poultry producers for a catastrophic event (House bill only). A provision in S. 3240 makes payments available to producers who purchase private-sector index weather insurance, which insures against specific weather events and not actual loss. A peanut revenue insurance product also is mandated. For conservation purposes, a "sod saver" provision in Title XI of S. 3240 reduces crop insurance subsidies and noninsured crop disaster assistance for the first four years of planting on native sod acreage. The same provision in the House bill would apply only to the Prairie Pothole National Priority Area (i.e., portions of Iowa, Minnesota, Montana, North Dakota, and South Dakota). In the Senate bill only, crop insurance premium subsidies are available only if producers are in compliance with wetland conservation requirements (goes into effect immediately) and conservation requirements for highly erodible land (within five years). Title XII of S. 3240 and H.R. 6083 includes provisions that cover three areas: socially disadvantaged and limited-resource producers; livestock; and other miscellaneous. Both bills extend authority through FY2017 for the Office of Small Farms and Beginning Farmers and Ranchers, which was established in the 2008 farm bill to ensure that minorities and limited-resource producers have access to all USDA programs. They also add military veteran farmers and ranchers as a qualifying group. In addition, the bills establish a military veterans agricultural liaison within USDA to advocate for and to provide information to veterans. Both bills reauthorize funding for the USDA Office of Advocacy and Outreach, which assists socially disadvantaged and limited-resource producers, and both establish an Office of Tribal Relations to coordinate USDA activities with Native American tribes. Both S. 3240 and H.R. 6083 make available higher coverage levels under the Noninsured Crop Assistance Programs, prohibit attendance at animal-fighting events, and include grants to promote the U.S. maple syrup industry and for technological training for farm workers. Within its livestock provisions, Title XII of S. 3240 renews the trichinae certification and aquatic animal health programs that were established in the 2008 farm bill; establishes a grant program for research on brucellosis, bovine tuberculosis, and other priority animal diseases; sets up a grant program to study the eradication of feral swine; and establishes a competitive grant program to improve the sheep industry. Title XII of H.R. 6083 includes identical provisions for the trichinae certification and aquatic animal health programs, but does not contain the grant provisions for the animal disease initiative, the sheep industry, and feral swine eradication that are in S. 3240 . H.R. 6083 includes a provision to repeal regulations on livestock and poultry practices that USDA finalized on February 7, 2012. Within 90 days of enactment, USDA is required to repeal regulations on the definitions of additional capital investments and suspension of delivery of birds, and on applicability of live poultry and the 90-day notification regulation for suspension of delivery of birds. The House bill also requires that USDA submit to Congress reports on how to comply with the World Trade Organization's ruling on country-of-origin labeling and how to meet the needs of small and very small meat and poultry growers and processors. H.R. 6083 reauthorizes funding for the National Sheep Industry Improvement Center, subject to appropriations. These provisions are not included in S. 3240 . Other miscellaneous provisions in Title XII of H.R. 6083 , but not in S. 3240 , are the High Plains Water Study; prohibitions on closing Farm Service Agency offices with high workloads; flood protection for the Missouri River basin; and a prohibition that states may not establish production standards that would prevent interstate sales of agricultural goods. Provisions in S. 3240 that are not in H.R. 6083 include clarifications of conditions for releasing data gathered by USDA to state or local government agencies; an increase in the population threshold for the definition of "rural" and "rural areas"; an increase in administrative expenses for three regional development commissions that were established by the 2008 farm bill; and a provision to remove Canada geese from National Park Service lands near airports to diminish flight safety risks. In addition, S. 3240 repeals the 2008 farm bill provision that made catfish an amenable species subject to inspection by USDA and animal welfare provisions that exempt household pets from some exhibition regulations. Two provisions included in Title XII of S. 3240 that are unrelated to food and agriculture policy are a prohibition on federal funding for presidential nominating conventions and a requirement for three reports on sequestration under the Budget Control Act of 2011 ( P.L. 112-25 ).

Congress periodically establishes agricultural and food policy in an omnibus farm bill. The 112th Congress faces reauthorization of the current five-year farm bill (the Food, Conservation, and Energy Act of 2008, P.L. 110-246) because many of its provisions expire in 2012. The 2008 farm bill contained 15 titles covering farm commodity support, horticulture, livestock, conservation, nutrition assistance, international trade and food aid, agricultural research, farm credit, rural development, bioenergy, and forestry, among others. The Senate approved its version of the 2012 omnibus farm bill (S. 3240, the Agriculture Reform, Food, and Jobs Act of 2012) by a vote of 64-35 on June 21, 2012. Subsequently, the House Agriculture Committee conducted markup of its own version of the farm bill (H.R. 6083, the Federal Agriculture Reform and Risk Management Act of 2012) on July 11, 2012, and approved the amended bill by a vote of 35-11. Floor action on the House farm bill is pending. Within the 12 titles of S. 3240 and H.R. 6083, both farm bills would reshape the structure of farm commodity support, expand crop insurance coverage, consolidate conservation programs, revise the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), and extend authority to appropriate funds for many U.S. Department of Agriculture (USDA) discretionary programs through FY2017. Among the major differences in the two farm bills is how each would restructure the farm safety net. Both farm bills borrow conceptually from current programs, by revising (and renaming) them to enhance price or revenue protection for producers. The House farm bill is similar to the current mix of farm programs in that it retains producer choice between a counter-cyclical price program and a revenue enhancement program, while the Senate farm bill provides for a revised revenue program with a slightly higher guarantee than in the House farm bill. The Congressional Budget Office (CBO) projects that the programs of the 2008 farm bill, if they were to continue, would cost nearly $1 trillion over the next 10 years. Compared to this "baseline," the Senate-passed farm bill would reduce spending by $23.1 billion and the House Agriculture Committee-reported farm bill would reduce it by $35.1 billion, both over the same 10-year horizon. Explaining much of the $12 billion difference in estimated savings between the two farm bills are provisions in the nutrition title of the House bill that would affect program eligibility for SNAP. This report contains a detailed summary of the major similarities and differences between the House and Senate 2012 farm bills and also provides a side-by-side comparison of every provision in the two farm bills and how these provisions relate to current federal law or policy.

In 1980, Chile replaced its pay-as-you-go public pension system, under which benefits for current beneficiaries were paid with taxes from current workers, similar to Social Security in the United States, with a system of individual accounts that has become a possible model for public pension restructuring around the world. The preceding pay-as-you-go system had been foundering financially and was unable to pay full scheduled benefits. In addition, the previous system had been extremely complex, with more than 100 different combinations of contribution rates, retirement ages, and benefit amounts for different groups of employees. Chile's system of private pension accounts has been widely studied as one model for public pension restructuring. The U.S. Congress has considered a number of proposals to include private accounts in the Social Security system, either by carving contributions to private accounts out of Social Security's current payroll tax revenue stream or by adding private accounts onto Social Security's traditional benefit system. This report provides an overview of Chile's pension system, including a description of major reforms approved in 2008, the Chilean government's role, and challenges facing the system. The Chilean pension system consists of three tiers: a poverty prevention tier, an individual account tier, and a voluntary savings tier. The poverty prevention tier provides a basic benefit to aged persons who did not participate in the public pension system and to retired workers whose monthly pensions financed by individual account assets (the second tier) do not reach certain thresholds. Under the second tier, workers contribute 10% of wage or salary income to an individual account and choose a private-sector Administradora de Fondos de Pensiones (AFP) to manage the account. Upon retirement, the worker may withdraw the individual account's accumulated assets as an immediate or deferred annuity or through programmed withdrawals. A third, voluntary savings tier encourages workers to supplement pension income with additional savings. The 2008 reforms were designed, among other goals, to increase participation in the public pension system, reduce high investment management fees and administrative costs, and bolster the poverty prevention tier. The first tier of Chile's public pension system is a poverty prevention tier funded by general revenues. The poverty prevention tier is available to all citizens aged 65 and older who pass a means test and who have lived in Chile for at least 20 years, and for at least 3 of the past 5 years, whether or not they contributed to an individual account (the second tier). The Chilean government pays a Basic Solidarity Pension to individuals who have not contributed to individual accounts and pass the means test. The Basic Solidarity Pension is 75,000 Chilean pesos (about $154) per month, wage indexed starting from July 2008. A Pension Solidarity Complement is paid to individuals who contributed to individual accounts (the second tier) and pass the means test, but who would receive a monthly pension below a threshold amount of 255,000 Chilean pesos (about $523) in July 2011, wage indexed thereafter. In the case of retirees who have annuitized their individual account balances, the Pension Solidarity Complement is paid as the difference between the minimum benefit amount and the annuity financed by the individual account. In the case of pensions paid through programmed withdrawals from the individual account, the Pension Solidarity Component is paid once the member has used the balance in his or her individual account. Because the existence of a poverty prevention tier could discourage savings through the second tier (individual accounts), the state's contributions are designed so that every dollar saved always increases retirement income, but not by a full dollar. Employees are required to contribute 10% of wage and salary earnings to an individual account, up to a ceiling on monthly taxable earnings of 60 unidades de fomento (UF). Since 2009, the earnings ceiling has been indexed to growth in average earnings and stood at 67.4 UF in early 2012. Employers are required to withhold workers' contributions from their paychecks and to forward contributions to the AFP chosen by each worker. Employees' contributions are tax deferred: contributions do not count as income in the period they are made and interest earnings are exempt from taxation until withdrawal. Retirees pay regular income taxes on pension income when it is drawn as a retirement benefit. Employers are not generally required to contribute to employees' accounts. Since 2008, employers have been required to pay premiums for survivor and disability insurance, which in Chile is provided by private insurance companies. Survivor and disability insurance premiums have recently totaled about 1.49% of employers' payroll, on average. Tax incentives are available to employers who make matching contributions to employees' supplemental savings through the third, voluntary savings tier. Workers choose one AFP with which to invest their 10% pension contributions. An AFP is a private company that is regulated by Chile's Superintendent of Pensions. An AFP exclusively manages a worker's pension investments and administers pension benefits, including collecting pension contributions, keeping records, managing pension investments, calculating retirement annuities (unless a worker chooses to contract with an insurance company), and paying retirement annuities. Workers may choose any AFP and may switch AFPs at any time for a fee. In February 2012, there were six AFPs. Each AFP offers up to five government-approved funds, called Funds A to E, with different levels of risk. Fund A, with the highest proportion of equities, carries the highest risk and potentially the highest return. The five-fund portfolios operate within regulations established separately for each type of fund concerning the credit rating and liquidity of investments, diversification, and other factors. Participants pay administrative charges to the AFPs for managing individual account assets. These charges are levied in addition to the 10% mandatory contribution. The AFPs are free to set fees and commissions, as long as these are standard for all members. In other words, it has been assumed that participants' freedom to choose their AFPs, combined with competition among AFPs, will result in an appropriate level of commissions. Administrative charges and AFP profits have historically been significant, however. A worker's pension annuity is calculated based on the accumulated assets, plus returns, in his or her individual account. The annuity calculation is based on age and gender-specific life expectancy. If the pension annuity is below certain thresholds, the Chilean government provides additional payments to bring the total pension up to the monthly Solidarity Pension (first tier) amount. Early retirement is possible at any time as long as the capital accumulated in the account is sufficient to finance a pension that (1) starting from August 2010, replaces 70% of the worker's average earnings in the 10 years prior to drawing the pension, and (2) starting from July 2012, equals 80% of the Pension Solidarity Complement. The normal retirement age (NRA) is reduced by one or two years for each five years of work in certain specified, arduous occupations, with a maximum reduction in the NRA of 10 years. The assets accumulated in the individual account can be withdrawn in the following ways: 1. Programmed Withdrawal . The AFP calculates monthly annuity amounts, including an annual inflation adjustment, and manages the pension payments. The account balance is held in one of the three lower-risk funds, at the retiree's choice, to avoid risk-taking that might result in premature account exhaustion and trigger the government's minimum benefit guarantee. The account holder retains ownership of the account, and can leave any remaining balance to heirs, but assumes longevity and investment risk in the case of monthly withdrawals that exceed the minimum benefit guarantee. 2. Life Annuity . Members may choose a life insurance company to pay an inflation-adjusted monthly pension and a survivor pension to any beneficiaries. The account holder transfers ownership of the assets to the life insurance company, which assumes both financial and longevity risk. The decision to choose a life annuity is irrevocable once the ownership of the account assets has been transferred to the life insurance company. 3. Temporary Income with Deferred Life Annuity . The account holder contracts with an insurance company to provide temporary or programmed monthly payments until, at some point after retirement, the insurance company starts to pay a life annuity. In this way the account holder retains ownership of the part of the account that remains in the AFP until the life annuity begins. 4. Immediate Annuity Plus Programmed Withdrawals . In 2004, a new option was created, under which a portion of the account balance is used to purchase an immediate annuity and the remainder is paid out as programmed withdrawals. From the account balance, 15 UFs are reserved to cover funeral expenses. In Chile, disability and survivor benefits are financed by a combination of the worker's individual account and private insurance. AFPs are required to purchase insurance policies to finance disability and survivorship benefits on behalf of participants and their surviving dependents through the age of 65. Since 2009, employers have been required to pay the premiums to the AFPs on behalf of their employees. Survivor and disability insurance premiums have recently averaged about 1.49% of payroll contributions. This insurance is used to pay the difference between an annuity financed from the accumulated assets in the worker's account and the disability or survivor pension to which the disabled worker or the worker's survivor (spouse, children, or parents) is entitled. The monthly disability pension is 70% of the worker's base salary (defined as his or her average monthly salary for the previous 10 years) for those entitled to a total disability pension and 50% of base salary for those who are entitled to a partial disability pension. Eligible survivors may include a surviving widow(er) and children younger than aged 18 or aged 24 if a student. There is no age limit for disabled surviving children. Workers may make voluntary additional contributions to certain savings products authorized by the Chilean government, including voluntary savings accounts managed by the AFPs, mutual funds offered by banks, and savings products offered by insurance companies. Contributors may pay up to 50 UF per month (unindexed) to voluntary savings vehicles, over and above the mandatory 10% basic contribution to the AFP. Contributions may be made on a periodic basis or on a single occasion. Contributors may transfer funds from a voluntary savings account to the individual account (tier 2) to increase the amount of the monthly pension annuity. Voluntary contributions receive tax preferences. At the worker's choice, contributions may be paid from pre-tax income with the assets and accumulated income subject to taxation upon withdrawal, or contributions may be made out of after-tax income and are tax-free at withdrawal. Because tax preferences provide little incentive to workers who have no income tax liability, the government subsidizes low-income workers' contributions to voluntary savings accounts. Since 2008, the government has also offered tax incentives to promote employer-sponsored voluntary pension plans (Ahorro Previsional Voluntario Colectivo). The tax incentives are intended to encourage firms to establish voluntary savings accounts for their employees and to match a share of employees' contributions. The second tier of individual accounts is generally fully funded by workers' contributions. In cases in which the Superintendent closes an AFP or an AFP becomes insolvent, the Chilean government assumes responsibility for contributions, guaranteeing pension benefits, disability pensions, and the death benefit. Chile's government is also responsible for financing the first, poverty prevention tier, from general revenues, including the Basic Solidarity Pension for persons who did not contribute to individual accounts and the Pension Solidarity Complement for persons whose annuitized individual accounts provide pensions below the guaranteed minimum. The Chilean government also provides subsidies to low-income workers who contribute under the third, voluntary savings tier, and tax incentives to employees who save in the third tier as well as to employers who establish voluntary savings accounts and match employees' contributions to these accounts. Transition costs have been financed from general revenues, particularly during the first years of Chile's move from a pay-as-you-go system to a system of individual accounts plus poverty prevention programs. Between the 1981 conversion to individual accounts and 1999, total transition costs averaged about 3.25% of gross domestic product (GDP) per year. Transition costs include spending for current beneficiaries and those who remained in the pay-as-you-go system, plus "recognition bonds" issued to those who transferred to the new individual account system. Although expenditures on recognition bonds are currently increasing as more former pay-as-you-go system participants reach retirement age, total transition costs have begun to decline as the number of participants under the pay-as-you-go system declines and are expected to be negligible by about 2050. The 2008 reforms discussed below, which included substantial expansions of the government-financed poverty prevention tier, are expected to cost an additional 0.5% of GDP in the first few years, rising to about 1% of GDP after phase-in by 2025. This estimate is qualified, however, by considerable uncertainty in the number of potential beneficiaries in the reformed poverty prevention tier, as well as uncertainty about future demographic and economic assumptions. It is "quite possible" that the current 10% contribution rate may be insufficient to fund adequate benefits from individual accounts, particularly if life expectancy increases, in which case payouts from the poverty prevention tier would increase. The Superintendent of Pensions is responsible for supervising and regulating the mandatory and voluntary individual account systems. The Superintendent approves new AFPs; sets capital requirements; oversees AFP accounting, advertising, investment, and legal practices; interprets laws; issues regulations; proposes new laws; imposes fines; and orders the dissolution of AFPs when necessary. For each of the five investment portfolios that AFPs are authorized to offer, the Chilean government sets certain per-instrument, per-issuer, and per-group-of-instrument limits to ensure that the five authorized portfolios are diversified, have appropriate balances of risk and return, and that a single AFP does not acquire a controlling interest in any single issuer of stocks or bonds. In 2008, Chile under President Michelle Bachelet introduced several major reforms to the pension system to address concerns, including low participation rates, high pension fund management fees, and inadequate benefits for low-wage and women workers. Before the 2008 reforms, only about 62% of the labor force, and about 68% of those employed, participated actively in the national pension system. A large share of the workforce was then, and continues to be, self-employed in Chile's formal and large informal sectors. Prior to 2008, the law allowed self-employed workers to participate on a voluntary basis and only a small percentage of the self-employed chose to contribute. Other non-participants were temporarily out of the workforce due to caregiving or unemployment. Among those who did participate, many underreported their income to lower their contributions. As a result of low participation rates and underreporting, there was concern that many workers would reach retirement with individual account balances that were too small to provide an adequate pension annuity. The 2008 reforms phased in a requirement that most self-employed workers contribute to the pension system. In addition, the 2008 reform package, to increase participation among younger workers, established government subsidies to the accounts of low-income workers between the ages of 18 and 35. The 2008 reforms also tightened rules facing employers who fail to transfer workers' contributions. Historically, fees and commissions charged by AFPs to manage individual accounts have been a concern attributed to high-cost marketing and increased concentration in the industry. The number of AFPs was 12 in 1981, rose to 21 by 1994, and declined to 5 by 2008 due to mergers and closures. Administrative costs reduce investment returns to account holders, reducing a worker's account balance over time and resulting in a lower annuity at retirement. The 2008 reform package included a number of measures intended to reduce administrative costs, including a simplified fee structure that facilitates workers' ability to compare administrative costs among the AFPs. The 2008 package also included provisions intended to increase competition among the AFPs and reduce industry concentration. Insurance companies were allowed to create AFP subsidiaries. In addition, AFPs were allowed to contract out more services, such as record keeping and customer service, in order to lower barriers to entry for new AFPs. The 2008 reforms also created a competitive bidding process under which all new participants for two years are automatically enrolled in the AFP that offers the lowest management charges in the most recent round of bidding; it is hoped that this new bidding process, by guaranteeing a steady flow of participants for two years without having to incur marketing costs, will attract potential new AFPs. It may be too early to tell if these reforms will increase competition. In February 2012, the number of AFPs was six. In January 2012, AFP Modelo won the competitive bidding process for new workers' accounts for the next two years with a low bid of 0.77% for administrative expenses, notably lower than current AFP administrative expenses, which range from 1.14% to 2.35% of covered (that is, taxable) earnings. The adequacy of pension benefits has also been a source of concern. Individual accounts systems do not generally allow for the redistribution that occurs in public defined benefit systems; instead, a worker's pension is directly related to his or her own earnings and contribution history. In addition, low or negative returns between 1995 and 1998, combined with high management fees, caused many workers to lose money during this period. In 1998, the Chilean government asked workers to consider delaying retirement until the market recovered. As part of the 2008 reforms, the Chilean government restructured the poverty prevention tier to expand protection for low-income workers and workers who have contributed inconsistently, or not at all, to the individual account tier. In addition, to encourage participation in the third tier of voluntary savings, the 2008 reforms created bonuses for low-income workers and tax incentives for contributing employees and for employers who establish voluntary savings accounts and match employees' contributions to these accounts. Also in 2008, a subsidy was approved to encourage employers to hire workers between the ages of 18 and 35, on the principle that early contributions can have a significant impact on final pension amounts. The 2008 reforms also contained several measures intended to improve the adequacy of women's benefits from their individual accounts, given that women often earn lower wages than men and many leave the workforce temporarily or permanently for caregiving. The Chilean government deposits a bonus in a woman's private account at age 65 for every live birth or adopted child. For women who have not contributed to the pension system, the Chilean government makes a corresponding increase in the amount of the Solidarity minimum benefit. The bonus is equivalent to 10% (i.e., the contribution rate) of the monthly minimum wage at the time of the child's birth, times 18 months, plus the average net rate of return on individual account pension plans in the C Fund from the child's birth until the pension is claimed. Women's contributions are boosted somewhat above the statutory 10% rate by a 2008 provision that charges both sexes the same premium for survivor and disability insurance, but deposits the difference between the higher premium that would have been charged to men into women's individual accounts. Finally, reforms passed in 2008 allow a judge to transfer up to 50% of funds from one spouse's account to the other spouse's account in cases of divorce or annulment. Lessons from Chile's introduction of individual accounts may be helpful to other countries considering a similar transition, although not all of Chile's experiences are directly comparable to major Organisation for Economic Co-operation and Development (OECD) countries, such as the United States. For example, Chile's experience with high administrative costs may or may not be relevant to a second country, depending on whether the second country's public or private sector would manage account investments and the extent of financial-sector competition in the second country. Another difference between Chile and other countries may be the degree of public acceptance for the first, welfare tier of the system, which creates fiscal pressures similar to those of a pay-as-you-go system. Another political consideration is that Chile in the early 1980s, under General Pinochet, had considerable latitude to impose top-down reform of the pension system. Transition costs are another issue facing a country considering a move to a Chilean-type model. When Chile transitioned to a private account system in 1981, the earlier pay-as-you-go system was chaotic, insolvent, and unfair. At the same time, Chile's non-pension budget in the early 1980s was in surplus and available for financing transition costs, and high growth rates of economic growth in Chile during the 1980s reduced the burden of transition on the economy. The 2008 reforms to the poverty prevention tier (the Solidarity tier) are generally acknowledged as the most important component of the 2008 reform package. Chile's public pension system continues to face challenges after the 2008 reforms, however. Although the 2008 reforms will bring many self-employed workers into the public pension system, much of the informal sector remains outside the pension system. It remains to be seen whether reforms to AFPs will increase competition and lower costs.

In 1980, Chile was the first country to replace its pay-as-you-go public pension system with a system of individual accounts. The "Chilean model" has been widely studied as one possible model for public pension restructuring. Chile's public pension system consists of three tiers: a poverty prevention tier, an individual account tier, and a voluntary savings tier. The poverty prevention tier provides a minimum benefit to aged persons who did not participate in the public pension system and to retired workers whose monthly pensions financed by individual account assets (the second tier) do not reach certain thresholds. Workers contribute 10% of wage or salary income to an individual account in the second tier and choose a private-sector Administradora de Fondos de Pensiones (AFP) with which to invest their pension contributions. Employers are not required to contribute to employees' AFPs, although since 2008 employers have been required to pay the premiums for workers' survivor and disability insurance, which are provided by private insurance companies. Upon retirement, the worker may withdraw assets that have accumulated in the individual account as an immediate or deferred annuity or through programmed withdrawals. The third tier allows workers to supplement retirement income with voluntary, tax-favored savings. In 2008, Chile approved major reforms intended, among other goals, to increase participation in the public pension system, improve competition among the private-sector individual account managers, and bolster the poverty prevention tier. There has been concern that, as a result of low participation rates and underreporting, many workers could reach retirement with individual account balances that are too small to provide an adequate pension annuity. The 2008 reforms helped address these concerns by expanding the poverty prevention tier, phasing in coverage for most self-employed workers, and providing incentives for additional voluntary saving through the system's third tier. Other provisions approved in 2008 are intended to reduce high investment management fees (administrative costs) by increasing competition among AFPs.

As Congress debates the justification for comprehensive health reform and considers various proposals, some states have taken the initiative by enacting reforms to address concerns about health insurance coverage and health care costs, among other issues. Massachusetts is one such state. While Massachusetts has a legislative history full of reforms to its health care system, its most ambitious effort to date was enactment and implementation of a comprehensive health reform law that sought to provide universal health insurance coverage and reduce health care costs at the same time. This report provides background information on the main components of the state's reform law and the law's initial impact on coverage, costs, access to care, employers, and uncompensated care. In 2006, Massachusetts enacted a comprehensive health reform law that included provisions to expand eligibility for Medicaid and the State Children's Health Insurance Program (CHIP), provide premium subsidies for certain individuals with income below 300% of the federal poverty level (FPL), require the purchase of insurance by adult residents who can afford it ("individual mandate"), and require employers to make contributions towards health coverage ("employer mandate"). To comply with the individual mandate, individuals must enroll in insurance that meets "minimum creditable coverage" (MCC) standards. Firms with at least 11 full-time equivalent employees must (1) establish Section 125 plans which allow workers to buy health insurance on a pre-tax basis, and (2) pay an assessment ("fair share contribution" of up to $295 annually per employee) if they do not make "fair and reasonable" contributions to employee health benefits ("pay or play" provision). Employers may be subject to a "free rider surcharge" if they do not establish Section 125 plans but are required to, or if any one of their employees receives free care three or more times in a year or if a firm has five or more instances of employees receiving free care in a year. To make private health insurance plans more accessible, the state modified its insurance laws (e.g., merging the state's non-group and small group markets) and created a quasi-public entity called the Health Insurance Connector Authority ("Connector") whose duties include facilitating the purchase of insurance primarily by individuals who are not offered subsidized insurance by a large employer and are not eligible for public coverage (e.g., Medicaid). The Connector, governed by a board of directors, serves as an intermediary to assist individuals and small groups in acquiring health insurance through private insurance carriers. In this role, the Connector manages two programs: Commonwealth Care ("CommCare"), which offers public subsidies to individuals up to 300% FPL who are not otherwise eligible for traditional Medicaid or other coverage (e.g., Medicare, job-based coverage) for the purchase of Connector-approved plans (Plan Types 1, 2, and 3 based on income) offered by several health insurers; and Commonwealth Choice ("CommChoice"), which offers an unsubsidized selection of four benefit tiers (Gold, Silver, Bronze, and Young Adult), from a handful of insurers, to individuals and small groups. Before reform, Massachusetts administered the Uncompensated Care Pool (UCP). UCP paid for medical services provided by community health centers (CHCs) and acute care hospitals to eligible individuals with income up to 400% FPL. Under the reform law, UCP was renamed the Health Safety Net (HSN) and redesigned to finance services obtained by individuals with income up to 400% FPL who are not eligible for comprehensive coverage under MassHealth (the state's combined Medicaid program and State Children's Health Insurance Program), or Commonwealth Care. To partially pay for the reforms the state relied on a federally approved waiver of statutory Medicaid restrictions. The state redirected some existing Medicaid funding that was used to reimburse health care providers (primarily hospitals) for treating uninsured and other patients who generated uncompensated care costs. It obtained additional federal Medicaid and CHIP dollars, collected assessments from insurers and hospitals, used state general funds, and collected fair share contributions from employers. The stated goals of the reform plan as articulated by then-Governor Mitt Romney are so "every uninsured citizen in Massachusetts [would have] affordable health insurance and the costs of health care [would be] reduced." A typical approach to assess the impact of reform is to use a before-after framework, comparing data on coverage, cost and access prior to enactment with similar data after enactment. Some state-level data exists that has allowed researchers to do such comparisons. However, it would be erroneous to attribute data changes solely to the impact of the health reform law. For example, economic conditions tend to greatly impact the labor market, which, in turn, impacts the availability and cost of employer-sponsored health benefits. Access to providers is, in part, a function of the supply and mix of providers in the state, which is affected by non-reform factors such as the standard of living in a given area. Given the difficulty in attributing changes to coverage, cost, and access to the health reform law, apart from other factors, any analytical findings should be considered with caution. Moreover, implementation of the law's various components and rules has occurred in stages since enactment and still continues to some degree, which makes definitive statements about overall progress difficult to make. For example, while the two programs administered by the Connector each have been in operation for a full two years, the MCC standards developed by the Connector became effective in January 2009. In addition, the current penalty for violating the individual mandate is more substantial than the original penalty. To the extent that outcomes and impact of the reform law may be observed and quantified, reliable data may become available only after provisions have been implemented for some time so that the full effects may be captured. Notwithstanding the limitations of analysis, some research has been conducted to assess the initial impact of reform on health insurance coverage. According to the latest health coverage data, Massachusetts had an uninsurance rate of 2.7% in 2009. This compares with an uninsurance rate of 6.4% in 2006, the year of enactment. Since enactment, the number of newly insured persons has increased by approximately 430,000. Of this group, 34% were newly enrolled in private, employer-sponsored coverage, 9% had private, non-group coverage (through the traditional non-group market or CommChoice program), 18% had public coverage through MassHealth, and 38% had fully or partially subsidized coverage through Commonwealth Care. Certain subpopulations experienced statistically significant increases in coverage as compared to other groups. Given the focus of many components of health reform on lower-income adults, such individuals reported greater gains in coverage than higher-income individuals. In 2006, the uninsurance rate for nonelderly adults with income below 300% FPL was 19.5%; by 2009 that rate dropped to 6.2%. In contrast, for nonelderly adults with income at or above 300% FPL, the change in uninsurance rate went from 8.6% in 2006 to 2.0% in 2009. Another group that experienced significant gains in coverage during the initial implementation phase was young adults. The uninsurance rate for adults ages 18 to 34 was about 18% in 2006. A year later that rate had dropped to around 7%. This decrease in uninsurance may be attributed in large part to the availability of low-cost "Young Adult" plans offered through CommChoice, and the requirement that insurers allow dependents to remain on their parent's insurance policy up to age 25 or two years past the loss of their dependent status, whichever comes first. A likely correlation with the increase in coverage was an overall increase in health care use. From 2006 to 2008 there was a 4.5% increase in doctor visits and 6.6% increase for preventive care doctor visits for nonelderly adults (see Figure 1 ). There also has been a steady increase in visits to dentists, and more people have reported having a "usual source of care" (excluding the emergency department). Similar to their experience in coverage gains, lower-income (less than 300% FLP) adults had somewhat greater gains in access to care than higher-income adults. At the same time as the increase in health care use, there has been an overall mixed trend regarding reports of unmet medical need. As seen in Figure 2 , from 2006 to 2007, a smaller share of nonelderly adults reported problems accessing health care, but from 2007 to 2008, that share grew for all but one type of care reported. While these increases were generally slight, they were statistically significant for a couple of types of care (specialist care and medical tests, treatment, or follow-up care). Along with the rapid increase in health insurance coverage, the state has experienced higher than expected costs. Concerns about costs have focused primarily on the Commonwealth Care program. As seen in Figure 3 , original expenditure projections for the CommCare program in FY2007, FY2008, and FY2009 were $160 million, $400 million, and $725 million, respectively. While actual spending for FY2007 was less than originally projected, expenditures for FY2008 and FY2009 were greater than original projection amounts. The difference between projected and actual spending is due, in part, to greater than anticipated enrollment in the CommCare program, at least during initial implementation. One of the reasons is that the state originally underestimated the size of the uninsured population. According to 2006 state survey data, there were 395,000 individuals without coverage. This underestimated the number of uninsured persons in the state, especially in light of the previously mentioned coverage statistic that 430,000 individuals became newly insured since enactment. The 2006 uninsured estimate also understated the number of uninsured persons with income below 300% FPL--individuals who potentially could access subsidized coverage under CommCare. These factors, along with a successful outreach campaign, led to greater enrollment in the Commonwealth Care program than previously anticipated. Besides size of enrollee population, costs under CommCare were larger than expected because the subsidies provided under the program are more generous than originally specified. The law stated that full premium subsidies would go to enrollees with income up to 100% FPL. However, full premium subsidies have been provided to individuals with income up to 150% FPL since July 2007. Moreover, the program initially experienced some adverse selection. Enrollment began in October 2006 (FY2007) and grew steadily until November and December 2007 (FY2008) when it spiked due to increased public outreach and the advent of tax penalties for non-compliance with the individual mandate. The individuals who enrolled during the first year were less healthy than the uninsured population overall, and disproportionately enrolled in full-subsidy plans rather than across both fully and partially subsidized coverage. These factors taken together led to the large initial increase in spending under Commonwealth Care. However, it appears that enrollment and costs in the program have stabilized to some degree. According to the most recent data available, Commonwealth Care enrollment was 165,000 participants in March of this year, down from the peak of 176,000 enrollees in June 2008. Although still large, the increase in payments to insurers participating in CommCare was lower between FY2008 and FY2009. In FY2008 government payments increased by 15.4%, but for FY2009 the payment increase dropped by six percentage points to 9.4%. Nonetheless, the state has underlying cost problems that may end up undermining gains in coverage in the long run. For instance, Massachusetts has greater-than-average health care spending. Per capita health spending in the state is 26% higher than in the nation as a whole. In addition, health insurance premiums in Massachusetts grew nearly 9% per year from 2001 to 2007, slightly faster than the national average growth rate of 7.7%. Some researchers have suggested that Massachusetts's health care system is more expensive than the nation as a whole, in part, because either the state's use of medical services is increasing at a faster rate, technological innovations are adopted more quickly, or provider payments are growing faster. Notably, the state's health insurance market is characterized by dominant players in both the provider and insurance carrier markets. Some in the provider market enjoy marquee status as premier medical institutions, making negotiations with insurers on payments and network inclusion somewhat one-sided. This is particularly the case in the greater-Boston area. In past contract negotiations (prior to health reform) with carriers, "[provider] organizations with strong reputations and strong physician-hospital relationships [were] well positioned to prevail," ultimately leading to more expensive insurance products. For example, Partners HealthCare System, Boston's prestigious hospital system, had heated negotiations with local plans in 2000. In the end, Partners came away with "large payment increases that forced the plans to raise premiums significantly." While contract negotiations no longer are so contentious, providers still retain and wield tremendous market power. In addition, there is little competition over costs between the dominant providers and other provider systems in local markets, also contributing to the cost growth trend in the state. On the carrier side, the state, and to a great degree the whole of the Northeast, is dominated by Blue Cross Blue Shield both in terms of size and brand name appeal. Some observers have noted the difficulty that other insurers have competing with such a dominant player, coupled with the lack of incentive for the Blues to constrain premiums in order to gain market share, further exacerbate the state's long-term cost problem. From a broader economic perspective, typically as unemployment rises more people lose access to employer-sponsored health insurance. To the extent that such persons still have to comply with the individual mandate, this may increase the demand for subsidized health coverage, placing further demands on limited state resources. Massachusetts residents initially experienced gains in affordability during the first year after reform enactment. However, during the second year of reform, the percent of residents "reporting problems paying medical bills and problems with medical debt they were paying off over time moved back toward the fall 2006 levels for all adults." In addition, the share of family income spent to cover out-of-pocket health care costs has increased from the past year (see Table 1 ). Not surprisingly, a greater proportion of low-income adults (those with income below 300% of FPL) experienced these financial problems. This increase in financial burden likely had contributed to the aforementioned increase in unmet medical need from 2007 to 2008. One study concluded that there were "some increases in unmet need for care because of costs over that period." Commonwealth Care enrollees face different premium and cost-sharing structures depending on their income. By statute, persons with the lowest income receive full premium subsidies and face very few cost-sharing requirements. Individuals with higher income face a progressive scale of increased cost-sharing for copayments and premium contributions (see Table 2 ). According to the latest research on employer-provided health benefits in Massachusetts, it appears that reform has not led to a substitution of public coverage for job-based insurance ("crowd out"), at least during the initial implementation phase. A survey of Massachusetts employers in 2008 found that 79% offered health benefits, a slight increase from 73% in 2007. The increase in offer rate of health insurance was found across all firm size categories, including the smallest firms surveyed (firms with 3-10 workers and 11-50 workers). Moreover, 3% of Massachusetts firms surveyed in 2008 were "somewhat likely" to drop coverage next year; no firms indicated that they were "very likely" to do so. In contrast, 6% of firms across the nation indicated that they were either somewhat or very likely to drop coverage. A survey of individuals in the state found similar results regarding availability and enrollment in employer-provided health coverage. The share of workers in firms that provide health benefits to any worker have incrementally increased from 89.7% in 2006 to 91.3% in 2008 (see Table 3 ). Similarly, both the share of workers who qualify for coverage offered by their employer, and the share with employer-sponsored health insurance also increased over that time period. Overall, these findings reflect a general commitment by the business community to provide health benefits. According to a 2008 survey of Massachusetts employers, including those that did and did not offer coverage, 77% agreed with the sentiment that all firms bear some responsibility for offering health coverage to their employees. And to the extent that employers did offer coverage, the state made deliberate efforts under health reform to discourage workers from dropping employer-sponsored health benefits. For example, in order to be eligible for subsidized coverage under CommCare an individual must have low income and not have access to employer-sponsored insurance. Nonetheless, given the underlying cost pressures that are especially acute in Massachusetts's health care system, employer support of health reform may weaken over time. As health insurance premiums and health care costs continue to grow, more and more employers may find it difficult to continue to offer health benefits. Moreover, the offer dilemma may be further exacerbated if unemployment continues to remain high and health care costs continue to grow rapidly. To underscore such cost concerns, a coalition of business organizations and health plans submitted a letter to state legislative leadership in July 2008 in opposition to proposed employer assessments to further fund health reform. In the letter, the coalition argues that employer spending has increased by $500 million so far in response to direct and indirect requirements under health reform. Further, it questions the merit of new employer assessments in the midst of the downturn in the economy. At the same time, Massachusetts employers are facing greater benefit responsibilities under health reform. As previously mentioned, the Connector-defined minimum creditable coverage (MCC) standards for individuals became effective on January 1, 2009. To the extent that job-based coverage did not meet these standards prior to that date, those employers must now decide whether to expand their benefit offerings so that workers will be in compliance with the MCC requirements. The expectation is that employers will be pressured to offer coverage that meets these requirements. In doing so, firms would protect their employees from having either to obtain additional coverage or pay the tax penalty for non-compliance. Employer compliance with MCC standards may be expensive. For example, according to one estimate approximately 163,000 Massachusetts residents with health insurance did not have prescription drug coverage, one of the required benefits under the MCC standards. Of those residents, over 80% have employer-sponsored health insurance. One estimate of the cost to employers to meet the requirement to provide prescription drug coverage is $24 million. Financially vulnerable firms, especially small ones, "may decide that the requirements associated with offering their employees coverage are onerous or costly ... and may opt instead to forgo providing coverage" altogether. Or employers may pass along the cost of providing richer benefits to their workers in the form of lower wages, higher premiums, or greater cost-sharing. While employers generally are supportive of health reform, there is some evidence that workers in small firms are facing greater increases in premiums and cost-sharing relative to workers overall. In 2006, 13.3% of all workers had premium contributions that were at least twice the average employee contribution for health insurance, compared to 16.0% of workers in small firms (50 or fewer workers). By 2008, the share of workers with premium contributions that were twice the average were 15.7% for all workers and 24.6% for workers in small firms. A similar pattern emerges with respect to high out-of-pocket spending. In 2006, the share of workers reporting high out-of-pocket spending was 7.2% for all workers, and 4.7% for workers in small firms. By 2008, those shares had increased for all workers and workers in small firms to 10.3% and 14.6%, respectively. As previously mentioned, Massachusetts's health reform law established the Health Safety Net (HSN) program to provide access to medical care to low-income individuals ineligible for publicly subsidized health insurance coverage. For uninsured individuals with income up to 200% FPL who are eligible for HSN assistance, the program serves as their only payer. For eligible uninsured individuals with income between 200% and 400% FPL, HSN provides partial payments to cover costs associated with receiving medical care. HSN also is a secondary payer for eligible individuals with coverage, and provides payments towards emergency bad debt charges. Since enactment, HSN-financed hospital and community health center (CHC) visits have dropped. In the first six months of FY2008, there were 496,000 Health Safety Net-financed visits, a 36% drop from the same period in FY2007 when there were 777,000 Uncompensated Care Pool (UCP) visits (see Table 4 ). Likewise, program costs have also dropped. Comparing the same time periods, HSN payments to hospitals decreased from $620 million to $373 million (38%), and payments to CHCs decreased from $41 million to $37 million (10%). Since health insurance provides a broader range of care, including visits to private doctors and specialists, than the episodic visits paid through the pool, reductions in free-care spending will not cover the total cost of subsidies. From October 2006 to September 2008, more than 90,000 individuals who were formerly eligible for UCP assistance were determined to be eligible for subsidized coverage through the CommCare program. Nonetheless, HSN-financed medical facilities continue to provide a significant service to low-income people. In particular, CHCs "play a critical role in caring for newly insured patients while simultaneously serving as the primary care safety net for uninsured residents." For example, CHCs continue to serve a disproportionate share of uninsured individuals, even after reform enactment. One study found that CHCs served one-third of uninsured persons in 2007. Statements on the success or failure of Massachusetts health reform are far from final. The impact of the state's ambitious health reform plan may not be fully quantified and analyzed until the plan has been implemented and in operation for some time. However, the initial impact on coverage and costs simultaneously deserves attention and raises concerns. The drop in uninsurance is impressive by any measure, but long-term sustainability is seen as an open question especially with respect to costs. Massachusetts's experience also raises other relevant health system issues. In particular, what changes to the health delivery system may be necessary to fully support coverage expansions? For example, about 20% of nonelderly adults in the state reported problems obtaining care because the physician's office or clinic either were not accepting new patients or did not accept their type of insurance. This problem was much more common for lower-income adults and adults with public coverage, compared to adults with higher-income or private coverage. Consistent with these reported problems finding a health care provider or the previously mentioned difficulties regarding unmet need, there was "no change from pre-reform levels in emergency department (ED) use for nonemergency conditions. However, some of the reasons behind these findings may pre-date health reform. For instance, according to the Massachusetts Medical Society, there were severe to critical shortages in primary care providers (family medicine and internal medicine) in 2006. Nonetheless, these findings point to the limitations of comprehensive coverage reforms without equivalent changes to the health care delivery system.

As Congress debates the justification for comprehensive health reform and considers various proposals, some states have taken the initiative by enacting reforms to address concerns about health insurance coverage and health care costs, among other issues. Massachusetts is one such state. While Massachusetts has a legislative history full of reforms to its health care system, its most ambitious effort to date was enactment and implementation of a comprehensive health reform law that sought to provide universal health insurance coverage and reduce health care costs at the same time. In 2006, Massachusetts enacted a comprehensive health reform law that included provisions to expand eligibility for certain public coverage programs, provide premium subsidies for certain low-income individuals, require the purchase of insurance by adult residents who can afford it, and require employers to make contributions toward health coverage. To make private health insurance plans more accessible, it modified state insurance laws and created a quasi-public entity called the Health Insurance Connector Authority whose duties include facilitating the purchase of insurance primarily by individuals who are not offered subsidized insurance by a large employer and are not eligible for public coverage. Health reform's impact on health insurance coverage, health care costs and spending, and access to care have produced both promising results and troubling trends. Massachusetts has achieved near-universal coverage. The state had the lowest uninsured rate among all states in 2008, and by 2009, state survey data showed the insured rate was 97.3%. Along with the increase in health coverage, state residents have paradoxically reported increases in obtaining medical care and problems accessing health services. In addition, state costs associated with gains in coverage have exceeded initial projections, and consumers have experienced both increases and reductions in affordability of obtaining health care during the initial implementation phase of health reform. Statements on the success or failure of Massachusetts health reform are far from final. The impact of the state's ambitious health reform plan may not be fully quantified and analyzed until the plan has been implemented and in operation for some time. However, the initial impact on coverage and costs simultaneously deserves attention and raises concerns. The drop in uninsurance is impressive by any measure, but long-term sustainability is seen as an open question, especially with respect to costs. This report provides background information on the main components of the state's reform law and the law's initial impact on coverage, costs, access to care, employers, and uncompensated care. The report will be updated as circumstances warrant.

In a sweeping decision issued on June 26, 2003, the Supreme Court struck down a Texasstate statute that made it a crime for homosexuals to engage in certain private sex acts. Specifically,the Court's ruling in Lawrence v. Texas held that the due process privacy guarantee of the FourteenthAmendment extends to protect consensual gay sex. (1) Although the Court also considered whether the Texas state statuteviolated the constitutional right to equal protection, the Court ultimately based its ruling on broaderprivacy grounds. In addition, the Court also overturned its 1986 decision in Bowers v. Hardwick , acontroversial case in which the Court ruled that there was no constitutional right to privacy thatprotects homosexual sodomy. This report provides an overview of the Supreme Court's opinion in Lawrence v. Texas , coupled with a discussion of its implications for future cases involving gay rights in general and same-sex marriage in particular. For a more detailed discussion of currentdevelopments regarding gay marriage, see CRS Report RL31994 , Same-Sex Marriages: LegalIssues , by [author name scrubbed]. In 1998, sheriff's officers, responding to a false report of a weapons disturbance, entered theprivate residence of John Geddes Lawrence, found Lawrence and Tyron Garner engaged inconsensual sex, and arrested the two men for violating a Texas statute that prohibits homosexualsodomy. (2) Under the Texaspenal code, "a person commits an offense if he engages in deviate sexual intercourse with anotherindividual of the same sex;" (3) "deviate sexual intercourse" is defined to include oral or analsex. (4) Following their convictions, Lawrence and Garner challenged the statute on constitutionalequal protection and due process privacy grounds. Although a panel of the Court of Appeals of Texasruled in their favor, the full Court of Appeals, sitting en banc , reversed, thereby reaffirming theoriginal convictions. (5) When the Texas Court of Criminal Appeals refused to review the case, Lawrence and Garnerappealed to the U.S. Supreme Court. (6) The Supreme Court granted certiorari, (7) and ultimately struck downthe state statute, thereby reversing the Court of Appeals of Texas. (8) At the time of the Lawrence decision, twelve other states, in addition to Texas, hadanti-sodomy laws on their books. However, of the thirteen states with anti-sodomy laws, only fourstates, including Texas, had laws that criminalized sodomy between same-sex couples but notbetween heterosexual partners. (9) The remaining states with anti-sodomy laws criminalized sodomyfor all couples, regardless of whether they consisted of same-sex or opposite-sex partners. Notably, the number of states with anti-sodomy laws had declined significantly in the nearlytwo decades since the landmark Bowers v. Hardwick case upheld a Georgia law that outlawedhomosexual sodomy in 1986. At that time, 24 states and the District of Columbia had anti-sodomylaws on the books, but half of those states, including Georgia, subsequently legislatively repealedor judicially overturned their respective anti-sodomy statutes. (10) By overturning Bowers andby deciding Lawrence on privacy grounds, the Supreme Court simultaneously overturned all stateanti-sodomy laws, including statutes that do not distinguish between heterosexual and homosexualcouples. The Supreme Court's decision in Lawrence v. Texas marks one of the few instances in whichthe Court has agreed to participate in a wider legal debate surrounding "gay rights." Indeed, over thepast two decades, the Supreme Court has heard relatively few cases involving such issues. (11) Of the gay rights cases thatthe Court has heard, two cases, namely Bowers v. Hardwick (12) and Romer v. Evans , (13) are of particularsignificance to the outcome in Lawrence and are therefore discussed in greater detail in thissection. (14) In Bowers v. Hardwick , the Supreme Court considered a challenge to a Georgia statute thatcriminalized both homosexual and heterosexual sodomy. Ruling that the Due Process clause of theFourteenth Amendment did not provide a fundamental right to engage in consensual homosexualsodomy, even in the privacy of one's own home, the Court upheld the Georgia statute. (15) Although other SupremeCourt rulings have recognized a due process right of privacy that protects personal decisionsregarding activities such as marriage, contraception, and procreation from governmentinterference, (16) the Bowers decision essentially refused to recognize a similar right of privacy to protect individualsengaged in homosexual sodomy. The other Supreme Court case shaping the Court's decision in Lawrence is Romer v. Evans .Decided in 1996, Romer held that Amendment 2 of the Colorado Constitution, which barredlocalities from enacting civil rights protections on the basis of sexual orientation, violated the EqualProtection Clause of the Fourteenth Amendment. (17) Although classifications based on sexual orientation do notreceive the heightened constitutional scrutiny normally reserved for review of suspect classificationssuch as race or gender, the Court in this case nevertheless determined that the Colorado amendmentviolated the guarantee of equal protection because the law was motivated strictly by animus forhomosexuals and because there was otherwise no rational basis for enacting such a sweepingrestriction on the legal rights of gays and lesbians. According to the Court: We must conclude that Amendment 2 classifieshomosexuals not to further a proper legislative end but to make them unequal to everyone else. ThisColorado cannot do. A State cannot so deem a class of persons a stranger to its laws. Amendment2 violates the Equal Protection Clause. (18) Despite the fact that Bowers and Romer were decided on different constitutional grounds,both of the cases involved issues that were raised in the Lawrence case. Ultimately, the SupremeCourt overruled its decision in Bowers , holding that the due process right to privacy extends toprotect private, consensual sexual activity. Although Justice Sandra Day O'Connor, who originallyvoted with the majority to uphold the Georgia statute at issue in Bowers , did not join in the 5-4decision to overrule that case, she did agree with the majority's decision to strike down the Texasstatute for different reasons. In a separate opinion reminiscent of the Court's ruling in Romer ,O'Connor indicated that she was voting to strike down the Texas sodomy law as a violation of theconstitutional guarantee of equal protection (19) . The Court's opinion, O'Connor's concurrence, and the dissent'sargument are detailed in the following section. In their petition seeking Supreme Court review, attorneys for Lawrence and Garner posedthree questions to the Court: (1) did the Texas statute violate the Equal Protection Clause of theFourteenth Amendment; (2) did the Texas statute violate the right to privacy embedded in the DueProcess Clause of the Fourteenth Amendment; and (3) should Bowers be overruled? (20) The Court's considerationof these and other issues is discussed in the following section. Under the second question presented in Lawrence -- which formed the basis for the Court'seventual ruling -- the Supreme Court was faced with the question of whether or not the homosexualsodomy statute violates the right to privacy embedded in the Due Process Clause of the FourteenthAmendment. Because the Bowers v. Hardwick case specifically considered the same issue, theCourt's decision on the privacy question likewise affected the Court's decision on the third and finalquestion -- whether or not to overrule Bowers . The Court ultimately overruled Bowers and held thatgovernment interference with a private and intimate consensual adult activity is a violation of thedue process right to privacy. This section describes the Court's reasoning and discusses the dissent'sresponse. The Court began its analysis in Lawrence by summarizing its substantive due process privacydoctrine. Under the Supreme Court's privacy jurisprudence, the Court has recognized a constitutionalright to privacy despite the fact that this right is not specifically enumerated in the Constitution. In Bowers , for example, the Court noted that the Due Process right to privacy protects from governmentinterference a wide range of personal decisions regarding issues such as child rearing, familyrelationships, procreation, marriage, contraception, and abortion. (21) This right to privacy isgrounded in the notion that certain freedoms are so "fundamental" or "implicit in the concept ofordered liberty" that "neither liberty nor justice would exist if they were sacrificed." (22) Alternatively, certainliberties may be deemed fundamental because they are "deeply rooted in this Nation's history andtradition." (23) Becausethese two tests do not always articulate clear standards for determining when a liberty is so"fundamental" that it deserves constitutional protection under the Due Process Clause, extending theright to privacy to liberties that have not previously been deemed fundamental by the Court, such asa right to engage in consensual homosexual sodomy, can sometimes prove controversial. After outlining its privacy jurisprudence, the Court set forth its reasons for reconsidering itsdecision in Bowers . Of primary importance to the Court was the idea that the Bowers Court had"misapprehended the claim of liberty there presented to it." (24) In the Lawrence Court'sview, the issue in Bowers was about more than a fundamental right to engage in homosexualsodomy. Rather, the case was about whether or not individuals have the right to make personalchoices regarding their intimate relationships free of government interference. (25) Although the Lawrence Court did not explicitly deem homosexual sodomy to be a fundamental right, the Court nonethelessconcluded that the Bowers Court had failed to properly define the liberty interests at stake whenindividuals make private, consensual choices about their sexual conduct. The Court criticized the Bowers decision on several additional grounds. First, the Court notedthat Bowers had relied in part on a history of condemnation of homosexuality, but the Courtcountered that argument by citing several legal and historical sources demonstrating that "there isno longstanding history in this country of laws directed at homosexual conduct as a distinctmatter." (26) Second,although many believe homosexuality to be immoral, the Court noted that public perceptions on thisissue have shifted over time. The Court pointed to changing trends in state law and international lawas evidence of an "emerging awareness that liberty gives substantial protection to adult persons indeciding how to conduct their private lives in matters pertaining to sex." (27) Indeed, half the states withanti-sodomy laws have legislatively repealed or judicially overruled such statutes over the last twodecades, including Georgia, the state whose anti-sodomy statute was upheld by the Court in Bowers ,and a number of Western democracies have recognized the right to sexual privacy. (28) Finally, the Court notedthat its own constitutional doctrine has evolved over the years that have elapsed since the Bowers decision was handed down, specifically citing its decisions in Romer and in Planned Parenthood ofSoutheastern Pa. v. Casey , a privacy case involving abortion rights. (29) In addition to thesecriticisms of the Bowers decision, the Court also took special note of the stigma imposed by statelaws that criminalize sodomy. (30) After finishing this critique of Bowers , the Court next considered whether or not to overturnthe case. In determining whether or not to overrule precedent, the Supreme Court typically considersfour factors: (1) whether the precedent establishes a workable rule, (2) whether the public has reliedon the rule, (3) whether legal doctrine has changed, and (4) whether facts in the case or publicperception of such facts has changed. (31) Although the Court, which recognizes a need for continuity andrespect for the rule of law, does not lightly overrule precedent, neither is the Court willing to refrainfrom doing so when it determines that a previous case has been incorrectly decided. (32) In Lawrence , the Courtdetermined that: [T]here has been no individual or societal reliance on Bowers of the sort that could counsel against overturning its holding once there are compellingreasons to do so. Bowers itself causes uncertainty, for the precedents before and after its issuancecontradict its central holding. The rationale of Bowers does not withstand careful analysis. . . . Bowers was not correct when it was decided, and it is not correct today. It ought not to remainbinding precedent. Bowers v. Hardwick should be and now is overruled. (33) After noting that the Lawrence case involved a consensual relationship and did not involveminors, public conduct, prostitution, or other legitimate state concerns, the majority concluded itsopinion with the following strongly worded statement in support of its holding: The petitioners are entitled to respect for their privatelives. The State cannot demean their existence or control their destiny by making their private sexualconduct a crime. Their right to liberty under the Due Process Clause gives them the full right toengage in their conduct without intervention of the government. It is a promise of the Constitutionthat there is a realm of personal liberty which the government may not enter. The Texas statutefurthers no legitimate state interest which can justify its intrusion into the personal and private lifeof the individual. (34) In an equally strongly worded dissent, Justice Antonin Scalia criticized the majority'sdecision in Lawrence . He accused the majority of being inconsistent for failing to adhere to theprecedent established in Bowers after some of the same Justices had insisted on strong adherenceto the rules of precedent in the 1992 Casey decision, in which the Court upheld abortion rights andrefused to overturn Roe v. Wade . (35) He also accused the majority of misapplying the Court'ssubstantive due process doctrine, asserting that homosexual sodomy has not achieved the status ofa fundamental constitutional right in the years since Bowers was decided, (36) and he warned that themajority's opinion signaled "the end of all morals legislation." (37) Arguing that the Court "hastaken sides in the culture war," the dissent concluded by arguing that the majority's opinion opensthe door to legal challenges against an array of laws that regulate sexual activity and personalrelationships, including laws that prohibit same-sex marriage. (38) Although Justice O'Connor did agree that the Texas statute was unconstitutional, she did notagree with the majority's reasoning. Rather than ruling on due process privacy grounds, O'Connorbased her concurring opinion on the Equal Protection Clause of the Fourteenth Amendment. (39) Under the Supreme Court's equal protection jurisprudence, "the general rule is that legislationis presumed to be valid and will be sustained if the classification drawn by the statute is rationallyrelated to a legitimate state interest." (40) Laws based on suspect classifications such as race or gender,however, typically receive heightened scrutiny and require a stronger, if not compelling, state interestto justify the classification. (41) Because sexual orientation is not considered to be a suspectcategory, a state need only advance a rational reason for enacting a statute that treats individualsdifferently depending on their sexual orientation. (42) Since Lawrence involved a statute that criminalized sodomy when engaged in by same-sexcouples but not identical conduct by different-sex couples, O'Connor's concurring opinion relied onthe rational basis standard of review. Acknowledging that most laws that are reviewed under therational basis standard survive constitutional scrutiny, O'Connor nevertheless noted that "[w]hen alaw exhibits such a desire to harm a politically unpopular group, we have applied a more searchingform of rational basis review to strike down such laws under the Equal Protection Clause." (43) Citing Romer , O'Connorextended this argument further, contending that "[m]oral disapproval of this group, like a bare desireto harm the group, is an interest that is insufficient to satisfy rational basis review under the EqualProtection Clause. . . . The Texas sodomy law raises the inevitable inference that the disadvantageimposed is born of animosity toward the class of persons affected." (44) As with the Coloradoconstitutional amendment at issue in Romer , therefore, O'Connor concluded that the Texas statuteviolated the Equal Protection Clause. Despite this conclusion, O'Connor was careful to note that notall laws that distinguish between heterosexuals and homosexuals would violate equal protection,specifically noting that an interest in preserving national security or the traditional institution ofmarriage could constitute a legitimate governmental interest. (45) Although no other member of the Court signed on to O'Connor's concurring opinion, themajority opinion, which found the equal protection argument "tenable," appeared to favor the privacyapproach because of its broader effect. (46) The dissent, however, disagreed with O'Connor's equal protectionanalysis, arguing that the Texas statute does not discriminate because it applies equally to men andwomen, as well as to heterosexuals and homosexuals, all of whom are subject to the sameprohibition against engaging in same-sex sodomy. (47) Because many observers had expected the Court to issue a ruling on the more narrow equalprotection grounds favored by O'Connor, the Court's privacy ruling was more sweeping thanpredicted. (48) The broaddecision in Lawrence is sure to have lasting consequences for other cases involving, among otherissues, sexual privacy and gay rights. Some of these potential consequences are highlighted below. One immediate effect of the Court's ruling in Lawrence was to invalidate all thirteen of theexisting state anti-sodomy laws, regardless of whether they applied to homosexual couples only orto all couples both heterosexual and homosexual. Had the Court issued its ruling on the more narrowequal protection grounds favored by O'Connor, the effect of the decision would have been toinvalidate only those state statutes that discriminated against gays by prohibiting homosexualsodomy exclusively. Since the Court issued a broader ruling that the government cannot criminalizeprivate, consensual, adult sexual behavior, the Lawrence case appears to create a more expansiveright to sexual privacy that prohibits the states from making sodomy a crime for anyone, homosexualor heterosexual. In another development, the Court also vacated the Kansas Court of Appeals' ruling in Limonv. Kansas , a similar case involving an equal protection challenge to a state law that treatshomosexuals and heterosexuals differently. (49) Under Kansas law, sodomy with a child between the ages of 14and 16 is punishable with probation if the partner is an older teenager of the opposite sex, but thesame act is punishable with a prison sentence if the partner is an older teenager of the same sex. Asa result of the Kansas statute, 18-year old Matthew Limon received a 17-year sentence for engagingin consensual gay sex with a 14-year old boy, despite the fact that he would have received a farlighter sentence for engaging in similar conduct with a youth of the opposite sex. The Supreme Courtordered the Kansas court to reconsider the case in light of the Lawrence ruling, (50) but the Court of Appealsof Kansas distinguished the Lawrence case and upheld the sentence, ruling that the state's interestin protecting children provided a rational basis for criminalizing homosexual sodomy more severelythan heterosexual sodomy. (51) The Kansas Supreme Court subsequently issued a petition toreview the lower court's decision, but has not yet ruled in the case. (52) The Court's broad decision in Lawrence is likely to prompt a series of challenges to an arrayof governmental policies involving privacy interests and/or gay rights. Indeed, the case, whichappears to greatly expand constitutional protection for sexual privacy, may give rise to challengesagainst statutes that prohibit same-sex marriage, gay adoption, gays in the military, or similar issues.How the courts will resolve these controversies, however, remains unclear. On the one hand, the Court's ruling emphasized that "our laws and tradition affordconstitutional protection to personal decisions relating to marriage, procreation, contraception,family relationships, child rearing, and education" and that "persons in a homosexual relationshipmay seek autonomy for these purposes." (53) If Lawrence is viewed as establishing a broad constitutional rightto sexual privacy, then the Court's decision may be interpreted as supporting challenges to laws thatprohibit activities such as same-sex marriage or gay adoption. On the other hand, the Court also distinguished the Lawrence decision from cases involvingminors or prostitution, and it noted that the case "does not involve whether the government must giveformal recognition to any relationship that homosexual persons seek to enter." (54) Indeed, the courts maypoint to other government interests, such as an interest in preserving marriage or national securityfor example, to distinguish the private sexual conduct involved in Lawrence from the issues at stakein cases involving gay marriage or gays in the military. Like the courts, Congress may also respond to the Lawrence decision. For example, severallegislators in the 108th Congress introduced proposals to amend the Constitution to prevent same-sexmarriage, and similar proposed constitutional amendments have been introduced during the 109thCongress. (55)

In a sweeping decision issued on June 26, 2003, the Supreme Court struck down a Texasstate statute that made it a crime for homosexuals to engage in certain private sex acts. Specifically,the Court's ruling in Lawrence v. Texas held that the due process privacy guarantee of the FourteenthAmendment extends to protect consensual gay sex. Although the Court also considered whether theTexas state statute violated the constitutional right to equal protection, the Court ultimately basedits ruling on broader privacy grounds. In addition, the Court also overturned its 1986 decision in Bowers v. Hardwick , a controversial case in which the Court ruled that there was no constitutionalright to privacy that protects homosexual sodomy. This report provides an overview of the SupremeCourt's opinion in Lawrence v. Texas , coupled with a discussion of its implications for future casesinvolving gay rights in general and same-sex marriage in particular. For a more detailed discussionof current developments regarding gay marriage, see CRS Report RL31994 , Same-Sex Marriages:Legal Issues , by [author name scrubbed].

The First Amendment to the U.S. Constitution provides that "Congress shall make no law ... abridging the freedom of speech, or of the press." This provision limits the government's power to restrict speech. In 1976, the Supreme Court issued its landmark campaign finance ruling in Buckley v. Vale o. In Buckley , the Court found that limits on campaign contributions, which involve giving money to an entity, and expenditures, which involve spending money directly for electoral advocacy, implicate rights of political expression and association under the First Amendment. A number of principles contributed to the Court's analogy between money and speech. First, the Court found that candidates need to amass sufficient wealth to amplify and effectively disseminate their message to the electorate. Second, restricting political contributions and expenditures imposes a restriction on the amount of money that a candidate can spend on communications, thereby reducing the number and depth of issues discussed and the size of the audience reached. This is because almost all modes of communicating ideas in a mass society require the spending of money. The Court further observed that the primary purpose of the First Amendment is to increase the quantity of public expression of political ideas. From these general principles, the Court concluded that contributions and expenditures facilitate an interchange of ideas, and cannot be regulated as mere conduct unrelated to their underlying act of communication. The Court in Buckley , however, afforded different degrees of First Amendment protection to contributions and expenditures. Contribution limits are subject to more lenient review, the Court found, because they impose only a marginal restriction on speech and will be upheld if the government can demonstrate that they are a "closely drawn" means of achieving a "sufficiently important" governmental interest. On the other hand, expenditure limits are subject to strict scrutiny because they impose a substantial restraint on speech. That is, limits on expenditures must be narrowly tailored to serve a compelling governmental interest. Therefore, in Buckley and its progeny, the Court has generally upheld limits on contributions, finding that they serve the governmental interest of protecting elections from corruption, while invalidating limits on independent expenditures, finding that they do not pose a risk of corruption. Importantly, the Court's recent case law has announced that only quid pro quo corruption or its appearance constitute a sufficiently important governmental interest to justify limits on contributions and expenditures. Quid pro quo corruption involves an exchange of money or something of value for an official act. Although the Supreme Court's campaign finance jurisprudence has shifted over the years, the basic Buckley framework has generally been applied when determining whether a campaign finance limit violates the First Amendment. This report discusses current Supreme Court and other case law evaluating the constitutionality of limits on contributions and expenditures in various contexts. First, it examines contribution limits, covering base limits, aggregate limits, limits on candidates whose opponents self-finance, minors, and super PACs. As noted above, the Court has generally upheld limits on contributions, but the report examines exceptions to this general rule. It also examines a recent case that distinguishes between judicial and political elections in upholding a ban on the personal solicitation of contributions by judicial candidates. Then the report discusses expenditure limits, including limits on expenditures by candidates, political parties, and corporations and labor unions. The Court has determined that limits on expenditures are subject to strict scrutiny review, and accordingly, has found them to be unconstitutional. The Supreme Court has generally upheld the constitutionality of reasonable limits on how much money a donor may contribute to a candidate. These contribution limits are known as "base limits." In contrast, as discussed in the section below, "aggregate limits" restrict how much money a donor may contribute in total to all candidates, parties, and political committees. In Buckley v. Valeo , the Court upheld the constitutionality of a Federal Election Campaign Act (FECA) limit on individuals making contributions to candidates. While finding that limits on both contributions and expenditures implicate rights of political expression and association under the First Amendment, the Court distinguished between the two. Unlike expenditure limits, which reduce the amount of expression, contribution limits involve "little direct restraint" on the speech of a contributor. The Court acknowledged that a contribution limit restricts an aspect of a contributor's freedom of association, that is, his or her ability to support a candidate. Nonetheless, the Court found that they still permit symbolic expression of support, and do not infringe on a contributor's freedom to speak about candidates and issues. Reasonable contribution limits, the Court noted, still permit people to engage in independent political expression, associate by volunteering on campaigns, and assist candidates by making limited contributions. Therefore, the Court found, limits on contributions are permissible so long as they are "closely drawn" to serve a "sufficiently important interest." In Buckley , the Court found that the government had demonstrated that preventing corruption or its appearance was sufficiently important to justify the FECA contribution limits. The Court recognized that contribution limits serve as one of FECA's primary means to combat improper influence on candidates by contributors. Thus, the Court concluded that both the reality and appearance of corruption as a result of large campaign contributions was a sufficiently compelling interest to warrant infringements on First Amendment liberties "to the extent that large contributions are given to secure a quid pro quo from [a candidate.]" Regarding whether the contribution limit was closely drawn, the Court found that it was relevant to examine the amount of the limit. Limits that are too low could significantly impede a candidate or political committee from amassing the necessary resources for effective communication. The Court concluded, however, that the FECA contribution limit at issue in Buckley would not negatively impact campaign funding. Since Buckley , the Court has similarly upheld the constitutionality of other contribution limits. In Nixon v. Shrink Missouri Government PAC , the Court upheld a state law imposing contribution limits on candidates running for state office. The Court observed that while contribution limits must be closely drawn to a sufficiently important interest, the amount of the limitation "need not be 'fine tuned.'" Under Buckley , the Court noted, a key inquiry regarding whether a contribution limit is too low is whether there is evidence demonstrating that the limit prevents a candidate from amassing sufficient funds for effective advocacy. Applying that principle, the Supreme Court has determined that certain contribution limits are too low and invalidated them under the First Amendment. In Randall v. Sorell , in a plurality opinion, the Court invalidated a Vermont law that included a limit of $400 on individual, party, and political committee contributions to certain state candidates, per two-year election cycle. The law did not provide for inflation adjustment. While unable to reach consensus on a single opinion, six Justices agreed that the contribution limits violated First Amendment free speech guarantees. The plurality opinion written by Justice Breyer, joined by two other Justices, found that the contribution limits in this case were substantially lower than limits it had previously upheld as well as limits in effect in other states, and that they were not narrowly tailored. The opinion also concluded that the limits substantially restricted candidates, particularly challengers, from being able to raise the funds necessary to run a competitive campaign; impeded parties from getting their candidates elected; and deterred individual citizens from volunteering on campaigns (because the law counted certain volunteer expenses toward a volunteer's individual contribution limit). The Supreme Court has held that aggregate limits on contributions are unconstitutional under the First Amendment. Aggregate limits restrict how much money a donor may contribute in total to all candidates, parties, and political committees. Characterizing them as a ban on further contributions once the aggregate amount has been reached, the Court has determined that they violate the First Amendment by infringing on political expression and association rights, without furthering the governmental interest of preventing quid pro quo corruption or its appearance. In McCutcheon v. F ederal E lection C ommission , the Supreme Court invalidated Section 307(b) of the Bipartisan Campaign Reform Act of 2002 (BCRA), which amended FECA, imposing biennial limits on aggregate contributions. These limits were adjusted for inflation each election cycle. For example, during the 2011-2012 election cycle, the law prohibited individuals from making contributions to candidates totaling more than $46,200, and to parties and political action committees (PACs) (with the exception of "super PACs") totaling more than $70,800. The base limits on contributions established by the BCRA were not at issue in this case and remain in effect. As a threshold matter, the plurality opinion in McCutcheon determined that it was unnecessary to revisit the contribution/expenditure distinction established in Buckley v. Valeo , and the differing standards of review applicable to each. According to the opinion, regardless of whether strict scrutiny or the "closely drawn" standard applies, the analysis "turns on the fit" between the government's stated objective and the means to achieve it. Applying that analysis to the aggregate contribution limits, the opinion found a "substantial mismatch" between the two, and concluded that even under the more lenient standard of review, the limits could not be upheld. Importantly, the opinion announced that throughout the Court's campaign finance cases dating back 40 years, it has identified only one legitimate governmental interest for restricting campaign financing: the prevention of quid pro quo corruption or its appearance. Essentially, quid pro quo corruption captures the notion of "a direct exchange of an official act for money." While acknowledging that the Court's campaign finance jurisprudence has not always discussed the concept of corruption clearly and consistently, and that the line between quid pro quo corruption and general influence may sometimes seem vague, the opinion said that efforts to ameliorate "influence over or access to" elected officials or political parties do not constitute a permissible governmental interest. According to the opinion, the spending of large sums of money in connection with elections, but absent an effort to control how an officeholder exercises his or her official duties, does not give rise to quid pro quo corruption. Further, the opinion notes that the Court has consistently rejected campaign finance regulation based on other governmental objectives, such as goals to "level the playing field," "level electoral opportunities," or "equaliz[e] the financial resources of candidates." Although the Court did not expressly adopt a stricter standard of review for contribution limits, its announcement that only quid pro quo corruption or its appearance serve as a compelling governmental interest may impact the degree to which contribution limits are upheld in future rulings. In Buckley v. Valeo , the Court had upheld the constitutionality of a $25,000 federal aggregate contribution limit, then in effect. While acknowledging that it imposed an ultimate restriction upon the number of candidates and committees with which an individual can associate, the Court in Buckley characterized it as a "quite modest restraint" that served to prevent evasion of base limits. The plurality in McCutcheon distinguished the Buckley precedent and concluded that it did not control. In Buckley , the plurality opinion observed, the Court had engaged in minimal analysis of aggregate limits. Further, the limits at issue in McCutcheon , which were enacted in 2002, established a different statutory regime and operated under a distinct legal backdrop. Since Buckley was decided, the opinion observed, statutory and regulatory safeguards against circumvention have been enacted. The opinion also outlined additional safeguards that Congress could enact to prevent circumvention of base contribution limits, such as targeted restrictions on transfers among candidates and political committees or enhanced restrictions on earmarking, but cautioned that the opinion was not meant to evaluate the validity of any particular proposal. Further distinguishing the holding in Buckley , the ruling emphasized that aggregate contribution limits restrict how many candidates and committees that an individual can support, which is not a "modest restraint." Once an individual contributed $5,200 each to nine candidates, the aggregate limits were triggered and, as the opinion calculates, the individual was then prohibited from making further contributions, up to the maximum permitted by the base limits, to other candidates. This "outright ban" on further contributions, the opinion concludes, unconstitutionally restricts both free speech and association rights. In response to a point made by the dissent, the opinion stated that the proper focus of First Amendment protections is on the individual's right to engage in political speech, not on a generalized concept of the public good through "collective speech." The Supreme Court has ruled that a statute establishing a series of staggered increases in contribution limits for candidates whose opponents significantly self-finance their campaigns violates the First Amendment. In Davis v. Federal Election Commission , the Supreme Court invalidated such a provision, finding that the penalty it imposed on expenditures of personal funds is not justified by the compelling governmental interest of lessening corruption or its appearance. The provision at issue in this case was enacted as part of BCRA and is known as the "Millionaire's Amendment." Until it was invalidated by the Davis ruling, the complex statutory formula provided (using limits that were in effect at the time the case was considered) that if a candidate for the House of Representatives spent more than $350,000 of personal funds during an election cycle, individual contribution limits applicable to his or her opponent were 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 raised 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 were eliminated when parity in spending was reached between the two candidates. The Court noted that while it has long upheld the constitutionality of limits on individual contributions, it has definitively rejected any limits on a candidate's expenditure of personal funds to finance campaign speech. In Buckley v. Valeo , the Court noted, it had determined that such limits impose a significant restraint on a candidate's right to advocate for his or her own election that are not justified by the compelling governmental interest of preventing corruption. That is, instead of preventing corruption, it had determined that the use of personal funds actually lessens a candidate's reliance on outside contributions and thereby counteracts coercive pressures and risks of abuse that contribution limits seek to avoid. While acknowledging that the Millionaire's Amendment does not directly impose a limit on a candidate's expenditure of personal funds, the Court concluded that it nonetheless imposed an "unprecedented penalty on any candidate who robustly exercises that First Amendment right." Further, the Court said that it required a candidate to make a choice between the right of free political expression and being subjected to discriminatory contribution limits. Indeed, the Court concluded that if a candidate vigorously exercises the right to use personal funds, the law creates a fundraising advantage for his or her opponents. In contrast, if the law had simply increased the contribution limits for all candidates--both the self-financed candidate as well as the opponent--the Court opined that it would have passed constitutional muster. In response to the Federal Election Commission's (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 campaign finance precedent offers no support for this rationale serving as a compelling governmental interest. According to the Court, preventing corruption or its appearance are the only legitimate compelling governmental interests identified so far that justify restrictions on campaign financing. Quoting Buckley , the Court reiterated that restricting the speech of some, in order to enhance the relative speech of others, is "wholly foreign to the First Amendment." Intrinsically, candidates have different strengths based on factors such as personal wealth, fundraising ability, celebrity status, or a well-known family name. By attempting to level electoral opportunities, the Court observed, Congress is deciding which candidate strengths should be allowed to impact an election. Using election law to influence voters' choices, the Court warned, is "dangerous business." The Supreme Court has decided that a prohibition on contributions by minors age 17 or younger violates the First Amendment. In McConnell v. F ederal Election Commission , by a unanimous vote, the Court invalidated Section 318 of BCRA, which prohibited individuals age 17 or younger from making contributions to candidates and political parties. Determining that minors enjoy First Amendment protection and that contribution limits impinge on such rights, the Court determined that the prohibition was not closely drawn to serve a sufficiently important interest. In response to the government's assertion that such a prohibition protects against corruption by conduit--that is, parents donating through their minor children to circumvent contribution limits--the Court found little evidence to support the existence of this type of evasion. Furthermore, the Court postulated that such circumvention of contribution limits may be deterred by the FECA provision prohibiting contributions in the name of another person and the knowing acceptance of contributions made in the name of another person. Even assuming arguendo, that a sufficiently important interest could be provided in support of the prohibition, the Court determined that it is over inclusive. The Court observed that various states have found more tailored approaches to address this issue, for example, by counting contributions by minors toward the total permitted for a parent or family unit, imposing a lower cap on contributions by minors, and prohibiting contributions by very young children. The Court, however, expressly declined to decide whether any alternatives would pass muster. The U.S. Court of Appeals for the District of Columbia has held that limits on contributions to groups that make only independent expenditures are unconstitutional. In SpeechNow.org v. F ederal E lection C ommission, the court concluded that because the Supreme Court in Citizens United v. Federal Election Commission determined that independent expenditures do not give rise to corruption, contributions to groups making only independent expenditures do not give rise to corruption. Citizens United is discussed in greater detail below, in the portion of the report examining limits on expenditures. In Citizens United , the Court relied, in part, on its ruling in Buckley v. Valeo . In Buckley , it determined that expenditures made "totally independently"--in other words, not coordinated with any candidate or party--do not create a risk of corruption or its appearance, and therefore, cannot be constitutionally limited. Accordingly, the Court in SpeechNow.org reasoned that the government does not have an anti-corruption interest in limiting contributions to groups that make only independent expenditures. It further concluded that FECA contribution limits are unconstitutional as applied to such groups. Such groups have come to be known as "super PACs" or "Independent Expenditure-only Committees." Since SpeechNow was decided, the Federal Election Commission has issued advisory opinions (AOs) providing guidance regarding the establishment and administration of super PACs. For example, the FEC concluded that a tax-exempt SS 501(c)(4) corporation may establish and administer a political committee that makes only independent expenditures, and may accept unlimited contributions from individuals. It confirmed that such committees may also accept unlimited contributions from corporations, labor unions, and political committees, in addition to individuals. The FEC also determined that when fundraising for super PACs, federal candidates, officeholders, and party officials are subject to FECA fundraising restrictions. That is, they can only solicit contributions up to $5,000 from individuals (other than foreign nationals or federal contractors) and federal PACs. The Supreme Court has upheld a Florida canon of judicial conduct that prohibits the personal solicitation of campaign contributions by judges and judicial candidates, finding that it does not violate the First Amendment. At the outset, it is important to note that this case does not address the constitutionality of a contribution limit, but a ban on the personal solicitation of contributions. Furthermore, it involves the regulation of judicial candidates, not candidates in the political arena, a pivotal distinction made by the Court. Williams-Yulee v. Florida Bar , decided by a 5-4 vote, found that a state judicial candidate's speech must be subject to "the highest level of First Amendment protection." In a rare instance for free speech jurisprudence, the Court concluded that the regulation passes even the most heightened scrutiny because it protects judicial integrity, and maintains the public's confidence in an impartial judiciary. In an earlier ruling, Republican Party of Minnesota v. White , the Court had struck down a state's canon of judicial conduct restricting judicial candidates from announcing their views on legal and political issues. Although the Court in White had also evaluated the restriction under strict scrutiny--requiring that a restriction be narrowly tailored to serve a compelling governmental interest--and similarly recognized the risks to impartiality posed by electing judges, it suggested that concerns about judicial integrity should be directed at the process of selection. In contrast, the opinion in Williams-Yulee, written by Chief Justice Roberts, clarified that concerns about impartiality could at least in part be achieved through strict regulation of judicial candidates, rather than by altering the selection process as a whole. This 2015 decision stands in contrast to the Court's recent campaign finance rulings. For example, as discussed in this report, in 2014, the Court in McCutcheon invalidated aggregate limits on campaign contributions to federal candidates, PACs, and parties. In 2010, in Citizens United , it invalidated limits on independent spending by corporations and labor unions. Both of those cases were also 5-4 decisions in which, notably, Chief Justice Roberts voted with the majority in concluding that a campaign finance regulation violated the First Amendment. In Williams-Yulee , however, the Court emphasized the distinction between judges and "politicians." Even though they are elected, the Court concluded, judicial candidates are different than campaigners for political office. Unlike politicians who are expected to be "appropriately responsive" to the preferences of their supporters, judges must be completely independent of their supporters' preferences. Furthermore, the Court found that a state's interest in maintaining public confidence in its judiciary "extends beyond its interest in preventing the appearance of corruption in legislative and executive elections." Therefore, the Court determined that its precedents applying the First Amendment to political elections do not apply in this context. In terms of potential impact, it appears that this ruling will increase the likelihood that the regulation of contribution solicitations in the context of judicial elections will be upheld. It is unclear, however, how it will affect the constitutionality of other types of judicial campaign finance regulation such as spending limits. Likewise, its impact, if any, on the constitutionality of campaign finance regulation in political elections remains to be seen. The Supreme Court has ruled that limits on candidate expenditures are unconstitutional in violation of the First Amendment. In Buckley v. Valeo , the Court held that in contrast to contribution limits, expenditure limits impose significantly greater restrictions on First Amendment protected freedoms of political expression and association. Expenditure limits impose a restriction on the amount of money that a candidate can spend on communications, thereby reducing the number and depth of issues discussed and the size of the audience reached. Such restrictions, the Court found, are not justified by an overriding governmental interest. That is, because expenditures do not involve money flowing directly to the benefit of a candidate's campaign fund, the risk of quid pro quo corruption does not exist. Further, the Court rejected the government's asserted interest in equalizing the relative resources of candidates, and in reducing the overall costs of campaigns. Upon a similar premise, the Court rejected the government's interest in limiting a wealthy candidate's ability to draw upon personal wealth to finance his or her campaign, and struck down a law limiting expenditures from personal funds. When a candidate self-finances, the Court pointed out, his or her dependence on outside contributions is reduced, thereby lessening the risk of corruption. Likewise, in Randall v. Sorrell , the Court struck down as unconstitutional a Vermont statute imposing expenditure limits on state office candidates. In support of the limits, the state argued that they served the governmental interest in reducing the amount of time that candidates spend raising money in order for candidates to have more time to engage in public debate and meet with voters. Further, supporters of the law argued that in Buckley , the Court did not consider this time saving rationale and had it done so, it would have upheld expenditure limitations in that decision. While unable to reach consensus on a single opinion, six Justices agreed that the expenditure limits violated First Amendment free speech guarantees. Announcing the Court's judgment and delivering an opinion, joined by two other Justices, Justice Breyer found that there was not a significant basis upon which to distinguish the expenditure limits struck down in Buckley from the expenditure limits at issue in Randall. According to the opinion, it was not likely that fuller consideration of the "time protection rationale" would have changed the result of Buckley because the Court in that case recognized the link between expenditure limits and a reduction in the time needed by a candidate for fundraising, but nonetheless struck down the expenditure limits. Therefore, Justice Breyer's opinion concluded, given the continued authority of Buckley , the Court must likewise strike down Vermont's expenditure limits. The Supreme Court has decided that limits on independent expenditures by political parties are unconstitutional under the First Amendment. Federal campaign finance law defines an independent expenditure to include spending for a communication that expressly advocates the election or defeat of a clearly identified candidate, and is not made in cooperation or consultation with a candidate or a political party. In Colorado Republican Federal Campaign Committee v. F EC (Colorado I) , the Court held that independent expenditures do not raise heightened governmental interests in regulation because the money is deployed to advance a political point of view separate from a candidate's viewpoint and, therefore, cannot be limited under the First Amendment. The Court emphasized that the "constitutionally significant fact" of an independent expenditure is the absence of coordination between the candidate and the source of the expenditure. In contrast, in Colorado II , the Court ruled that a political party's coordinated expenditures--that is, expenditures made in cooperation or consultation with a candidate--may be constitutionally limited in order to minimize circumvention of contribution limits. According to the Court, unlike independent expenditures, coordinated party expenditures have no "significant functional difference" from direct party candidate contributions. The Court has also determined that a requirement that political parties choose between making coordinated and independent expenditures is unconstitutional. In McConnell v. FEC , the Court held that Section 213 of BCRA, which required political parties to choose between coordinated and independent expenditures after nominating a candidate, burdened the First Amendment right of parties to make unlimited independent expenditures. The Supreme Court has held that limits on corporate, and it appears labor union, expenditures that are made independently of any candidate or political party are unconstitutional under the First Amendment. Such expenditures are protected speech, regardless of whether the speaker is a corporation. Permitting a corporation to engage in independent electoral speech through a political action committee (PAC) does not allow the corporation to speak directly, and does not alleviate the First Amendment burden created by such limits. In Citizens United v. F ederal E lection C ommission , the Court invalidated two prohibitions on independent electoral spending. It struck down the long-standing prohibition on the use of corporate general treasury funds for "independent expenditures," and Section 203 of BCRA prohibiting the use of such funds for "electioneering communications." The prohibitions are codified in FECA at 52 U.S.C. SS 30118. Independent expenditures are communications that expressly advocate the election or defeat of a clearly identified candidate, and are not coordinated with any candidate or party. Electioneering communications are broadcast, cable, or satellite transmissions that refer to a clearly identified federal candidate and are made within 60 days of a general election or 30 days of a primary, and are not coordinated with any candidate or party. To mitigate concerns that the law could prohibit First Amendment protected issue speech--known as issue advocacy--a 2007 Supreme Court decision, FEC v. Wisconsin Right to Life, Inc. (WRTL II ) , narrowed the definition of an electioneering communication. In WRTL II , the Court determined that the term encompassed only express advocacy (for example, communications stating "vote for" or "vote against") or the "functional equivalent" of express advocacy. That is, communications that could reasonably be interpreted as something other than an appeal to vote for or against a specific candidate were not considered electioneering communications. Despite the limiting principle imposed by WRTL II , the Court in Citizens United found that both prohibitions were a "ban on speech" in violation of the First Amendment. In comparison to the prohibitions at issue in Citizens United , which include criminal penalties, the Court pointed out that it has invalidated even less restrictive laws under the First Amendment, such as laws requiring permits and impounding royalties. The statute prohibiting corporate expenditures contained an exception. It permitted corporations to use their treasury funds to establish, administer, and solicit contributions to a PAC in order to make expenditures. The Court, however, rejected the argument that permitting a corporation to establish a PAC mitigated the complete ban on speech that the law imposed on the corporation itself. A corporation and a PAC are separate associations, the Court reasoned, and allowing a PAC to speak does not translate into allowing a corporation to speak. Enumerating the "onerous" and "expensive" reporting requirements associated with PAC administration, the Court announced that even if a PAC could permit a corporation to speak, "the option to form a PAC does not alleviate the First Amendment problems" with the law. Further, the Court pointed out that such administrative requirements may prevent a corporation from having enough time to create a PAC in order to communicate its views in a given campaign. After determining that the law bans free speech, the Court explained that it is subject to a strict scrutiny analysis, requiring the government to demonstrate that the restriction is narrowly tailored to further a compelling governmental interest. Employing that analysis, the Court noted that in Buckley v. Valeo , it found that while large campaign contributions create a risk of quid pro quo candidate corruption, large independent expenditures do not. In Buckley , the Court explained, it had found that limits on independent expenditures fail to serve the governmental interest in stemming the reality or appearance of corruption. Of significance, the Court in this case found that it was faced with conflicting precedent. On one hand, its 1978 decision of First National Bank of Boston v. Bellotti had reaffirmed that the government cannot restrict political speech because the speaker is a corporation. On the other hand, its 1990 decision of Austin v. Michigan Chamber of Commerce had permitted a restriction on such speech in order to avoid corporations having disproportionate economic power in elections. In Bellotti , the Court struck down a state law prohibiting corporate independent expenditures related to referenda. Notably, Bellotti did not consider the constitutionality of a ban on corporate independent expenditures in support of candidates . Even if it had, the Court in Citizens United said, such a restriction would also have been unconstitutional in order to be consistent with the main tenet of Bellotti , "that the First Amendment does not allow political speech restrictions based on a speaker's corporate identity." In contrast, the Court in Austin upheld a state law prohibiting, and imposing criminal penalties on, corporate independent expenditures that supported or opposed any candidate for state office. According to the Court in Citizens United , in order to "bypass Buckley and Bellotti ," the Court in Austin identified a new governmental interest justifying limits on political speech, the "antidistortion interest." That is, the Court in Austin determined that "the corrosive and distorting" impact of large amounts of money that were acquired with the benefit of the corporate form, but were unrelated to the public's support for the corporation's political views, constituted a sufficiently compelling governmental interest to justify such a restriction. The Court rejected the antidistortion rationale it had relied upon in Austin . Independent expenditures, the Court announced, including those made by corporations, do not cause corruption or the appearance of corruption. The Austin precedent "interferes with the 'open marketplace' of ideas protected by the First Amendment" by permitting the speech of millions of associations of citizens--many of them small corporations without large aggregations of wealth--to be banned. The Court found that the First Amendment prohibits restrictions that allow the speech of some, but not of others, and said it was "irrelevant for purposes of the First Amendment that corporate funds may 'have little or no correlation to the public's support for the corporation's political ideas,'" noting that all speakers--including individuals and the media--are financed with monies derived from the economic marketplace. In its prior jurisprudence, the Court observed, it has determined that the protections of the First Amendment extend to the political speech of corporations. Specifically, the Court noted that it has rejected the argument that the political speech of corporations or other associations should be treated differently under the First Amendment "simply because such associations are not 'natural persons.'" Notably, the Court also found that supporting the ban on corporate expenditures would have the "dangerous" and "unacceptable" result of permitting Congress to ban the political speech of media corporations. Although media corporations were exempt from the federal ban on corporate expenditures, the Court announced that upholding the antidistortion rationale would allow their speech to be restricted, in violation of First Amendment precedent. In sum, the Supreme Court in Citizens United overruled its holding in Austin and the portion of its decision in McConnell v. FEC upholding the facial validity of the BCRA prohibition on electioneering communications, finding that the McConnell Court relied on Austin . The Supreme Court has clarified that its holding in Citizens United applies to state and local law. In American Tradition Partnership v. Bullock , the Court rejected arguments made by the State of Montana attempting to distinguish a Montana law from the federal law invalidated by Citizens United . Reversing a Montana Supreme Court ruling, the Supreme Court found that the arguments proffered by the state either had already been rejected in Citizens United or did not distinguish that ruling in a meaningful way. The Court reiterated that "political speech does not lose First Amendment protection simply because its source is a corporation." Throughout the history of its campaign finance jurisprudence, the U.S. Supreme Court has found that limits on contributions are afforded less rigorous scrutiny under the First Amendment than limits on expenditures. As a result, with some notable exceptions, the trend of the Court has been to uphold limits on contributions, but invalidate limits on expenditures. Its most recent rulings, however, have announced that only quid pro quo corruption or its appearance constitute a sufficiently important governmental interest to justify limits on both contributions and expenditures. Spending large sums of money in connection with elections without attempting to control how an officeholder exercises his or her official duties does not give rise to corruption, the Court has found. Further, government interests in lessening influence over or access to elected officials have been soundly rejected, as well as interests in lessening the costs of campaigns and equalizing financial resources among candidates. As a result, in 2014, the Court overturned limits on aggregate contributions. Although the Court did not expressly adopt a stricter standard of review for contribution limits, the Court's finding may have a doctrinal impact on the constitutionality of contribution limits in future rulings.

The First Amendment to the U.S. Constitution provides that "Congress shall make no law ... abridging the freedom of speech, or of the press." This provision limits the government's power to restrict speech. In 1976, the Supreme Court issued its landmark campaign finance ruling in Buckley v. Valeo. In Buckley, the Court determined that limits on campaign contributions, which involve giving money to an entity, and expenditures, which involve spending money directly for electoral advocacy, implicate rights of political expression and association under the First Amendment. In view of the fact that contributions and expenditures facilitate speech, the Court concluded, they cannot be regulated as mere conduct. The Court in Buckley, however, afforded different degrees of First Amendment protection to contributions and expenditures. Contribution limits are subject to more lenient review because they impose only a marginal restriction on speech, and will be upheld if the government can demonstrate that they are a "closely drawn" means of achieving a "sufficiently important" governmental interest. On the other hand, expenditure limits are subject to strict scrutiny because they impose a substantial restraint on speech. That is, limits on expenditures must be narrowly tailored to serve a compelling governmental interest. Therefore, in Buckley and its progeny, the Court has generally upheld limits on contributions, finding that they serve the governmental interest of protecting elections from corruption, while invalidating limits on independent expenditures, finding that they do not pose a risk of corruption. Importantly, the Court's recent case law has announced that only quid pro quo corruption or its appearance constitute a sufficiently important governmental interest to justify limits on contributions and expenditures. Although the Supreme Court's campaign finance jurisprudence has shifted over the years, the basic Buckley framework has generally been applied when determining whether a campaign finance limit violates the First Amendment. This report discusses current Supreme Court and other case law evaluating the constitutionality of limits on contributions and expenditures. For example, while the Court has generally upheld reasonable limits on contributions, it has invalidated them when it found that they were too low, prohibited minors age 17 or under from contributing, and after determining that aggregate contribution limits serve as a complete ban once the aggregate amount has been reached. The Court has also ruled that a series of staggered increases in contribution limits for candidates whose opponents significantly self-finance their campaigns are unconstitutional. An appellate court has held that limits on contributions to groups making only independent expenditures are unconstitutional, which resulted in the creation of super PACs. Cases including McConnell, Davis, SpeechNow.org, McCutcheon, and Williams-Yulee are examined. The Supreme Court has overturned limits on candidate expenditures, including limits on candidates using personal wealth to finance campaigns, as well as on independent expenditures by political parties. Further, the Court has held that requiring parties to choose between coordinated and independent expenditures after nominating a candidate is unconstitutional because it burdens the right of parties to make unlimited independent expenditures. On the other hand, the Court has upheld limits on party coordinated expenditures because they are functionally similar to contributions. The Court has also invalidated a long-standing prohibition on corporations, and it appears labor unions, using treasury funds for independent expenditures, finding that regardless of the speaker being a corporation, such expenditures are protected speech. Cases including Colorado Republican Federal Campaign Committee, Randall, Wisconsin Right to Life, and Citizens United are discussed.

T he U.S. Food and Drug Administration (FDA) ensures the safety of all food except for meat, poultry, and certain egg products over which the U.S. Department of Agriculture (USDA) has regulatory oversight. Under the Federal Food, Drug, and Cosmetic Act (FFDCA), the FDA has the authority to regulate the manufacturing, processing, and labeling of food, with the primary goal of promoting food safety. Congress has granted the FDA with the authority to take both administrative and judicial enforcement actions. The agency initiates and carries out administrative enforcement actions while judicial enforcement actions, including seizures and injunctions, require some type of involvement by the courts. Additionally, administrative enforcement actions, such as inspections and warning letters, tend to precede any judicial enforcement action. The Food Safety Modernization Act (FSMA) expanded the FDA's enforcement authority with new and broader measures. The FDA's implementation of FSMA and related delays in the rulemaking process, in addition to general oversight of FSMA's new food safety provisions, are of continuing interest to Congress. This report focuses on the FDA's statutory authority to initiate the following administrative enforcement actions: inspections, warning letters, recalls, suspension of registration, administrative detention, and related legal issues. Section 301 of the FFDCA prohibits the violation of any of the substantive provisions of the act and serves as the basis for the FDA's enforcement actions. Under Section 301, "causing" any of the prohibited acts as well as the act itself is prohibited. The specific enforcement mechanisms available to the agency to enforce the FFDCA are found throughout the act. Private citizens do not have the right to sue to enforce the FFDCA. Section 310(a) states that "all ... proceedings for the enforcement, or to restrain violations, of this [act] shall be by and in the name of the United States." The FDA conducts inspections of regulated facilities in order to oversee a firm's compliance with the FFDCA and corresponding regulations. The FFDCA grants the agency with the enforcement authority to inspect both facilities and records. However, courts have generally held that inspections properly executed under the FFDCA do not violate the Fourth Amendment rights against search and seizure of the facility owners. This section examines the inspection enforcement authority of both facilities and records. Because of FSMA's mandate to increase the number of inspections by the FDA, this section also discusses the tools and methods used by the agency to target inspection resources effectively and efficiently. The section concludes by analyzing the Fourth Amendment protections embedded within this particular enforcement authority. The FFDCA authorizes designated FDA employees to enter "at reasonable times and within reasonable limits and in a reasonable manner" any factory, warehouse, or establishment in which food is manufactured, processed, packed, or held for introduction into interstate commerce. Generally, courts have interpreted "reasonableness" in this context by considering whether the inspection meets the statutory requirements outlined in Sections 703 and 704 of the FFDCA. This inspection authority covers all pertinent equipment, finished and unfinished materials, containers, and labeling at these locations. The FDA inspector must present the appropriate credentials and a written notice to the owner, operator, or agent in charge before entering the facility. However, the act does not require the FDA to include the reasons for the inspection in this notice. After the inspection, the FDA employee presents the owner, operator, or agent in charge with a written report setting forth the conditions or practices observed. This report notes any food that contains filthy, putrid, or decomposed substances, or whether the food has been prepared, packed, or held under insanitary conditions, leading to contamination that may be injurious to a consumer's health. The FDA employee also provides the owner, operator, or agent in charge with a receipt for any samples obtained during the inspection. Refusal to permit an FDA inspector to duly enter and inspect a regulated facility violates the FFDCA and may lead to the FDA seeking further judicial enforcement action, such as an inspection warrant issued by a district court. If the FDA reasonably believes that an article of food is likely to be adulterated and presents a threat of serious health consequences or death to humans and/or animals, then the FDA may inspect the records related to that food. According to the FDA, such determinations are fact specific, and thus are made on a case-by-case basis. The holder of the relevant records must make the records accessible to the FDA within 24 hours from the receipt of the official FDA request. The holders of these records include those who manufacture, process, pack, distribute, receive, hold, or import the food. The FFDCA generally exempts farms, restaurants, and some retail food establishments from these record requirements. FSMA directed the FDA to increase the frequency of inspections at all facilities. For domestic high-risk facilities, the FDA must inspect each facility at least once between January 4, 2011, and January 4, 2016, and then once every three years after January 4, 2016. For domestic facilities that are not high risk, the FDA must inspect each facility once between January 4, 2011, and January 4, 2018, and then once every five years after January 4, 2018. FSMA required the FDA to create "risk profiles" of certain foods susceptible to microbial contamination in order to assist the FDA with scheduling inspections and allocating resources to accommodate this increased frequency of food facility inspections. A risk profile incorporates known safety risks of the food that is manufactured, processed, packed, or held at the facility. The profile also addresses the compliance history of the facility, and the effectiveness of the facility's hazard analysis and risk-based preventative controls. Generally, government inspections are a form of a search, and thus are constrained by the Fourth Amendment's prohibition against "unreasonable searches and seizures." However, courts have held that the FDA is not required to obtain a search warrant to inspect a facility under Section 704 of the FFDCA as long as the FDA conducts the inspection reasonably as to time, place, and method. In a case involving the inspection authority pursuant to the Gun Control Act of 1968, the U.S. Supreme Court in U.S. v. Biswell stated that a warrantless inspection is reasonable under the Fourth Amendment when a statute provides the authority to conduct an inspection in a carefully limited manner. The Court expanded on this principle in New York v. Burger by holding that an owner of commercial premises in a closely regulated industry has a reduced expectation of privacy regarding inspections by the government. Therefore, according to the Court in Burger , a warrantless inspection of the commercial premises by the government may be reasonable under the Fourth Amendment. The Court in this case outlined three criteria that would deem a warrantless government inspection as reasonable under what the Court referred to as the Colannade-Biswell doctrine. First, a substantial government interest must support the regulatory inspection scheme. Second, the warrantless inspections must be "necessary to further [the] regulatory scheme." Finally, the regulatory statute must function as a warrant by limiting the discretion of the inspecting officers and by advising the owner of the commercial premises that the government may conduct a search within the properly defined scope of the law. Applying the Colannade-Biswell doctrine to FDA inspections, lower courts have concluded that these inspections generally further a federal interest in food safety, and thus may proceed without a warrant despite the potential threat to privacy. In U.S. v. New England Grocers Supply Co., the court held that neither a warrant nor consent was required to inspect the defendant's warehouse because the government's interest in food safety underlies the FDA's inspection regulations and the agency conducted the searches reasonably as to time, manner, and scope. Although considering the search and seizure of veterinary drugs, the Ninth Circuit in U.S. v. Argent Chemical Laboratories, Inc. held that an FDA inspection pursuant to the relevant FFDCA provisions satisfied the Colannade-Biswell doctrine because a substantial government interest is present regarding the safety and effectiveness of the product; unannounced, warrantless inspections further the regulatory scheme by having a deterrent effect; and finally the FFDCA and accompanying regulations define the scope of the search and serve as a "[C]onstitutionally adequate substitute for a warrant." Section 309 of the FFDCA permits the FDA to decline to institute formal enforcement proceedings for "minor violations of this [act] whenever [the agency] believes that the public interest [would] be adequately served by a suitable written notice or warning." These warning letters give recipient firms an opportunity to take voluntary corrective actions before the FDA initiates more formal enforcement action. A warning letter sent by the FDA also establishes prior notice and documents prior warning if adequate corrections are not made and further enforcement action is necessary. The FDA may consider issuing a warning letter if the agency has found evidence that a firm or product violates the FFDCA and that failure to correct such a violation may lead to the agency's consideration of further formal enforcement action. The agency may favor a warning letter as a more efficient enforcement option if the agency reasonably expects that the responsible firm or persons would take prompt corrective action after receiving such a letter. Warning letters include two types of correspondence: a regulatory letter and a report of investigation finding. A regulatory letter warns the violator that formal enforcement is likely in the absence of voluntary compliance. A report of investigation finding (also referred to as an information letter) requests voluntary correction by the addressee. Both methods of communication are informal and advisory. An FDA warning letter typically is labeled as such and includes the dates of the inspection during which the agency discovered the statutory violation(s). The letter would also request the recipient to institute corrective action(s) and to return a written response to the agency's warning letter. The FDA generally includes a warning in the letter that failure to correct the violation promptly may result in additional enforcement action. FDA warning letters are informal and advisory. A warning letter may communicate the FDA's position on a certain issue but does not commit the agency to taking any further enforcement action. Thus, the FDA has concluded that a warning letter does not qualify as a final agency action subject to judicial review under the Administrative Procedure Act. Courts generally agree with this interpretation of the legal status of warning letters. In Holistic Candlers and Consumers Ass'n v. FDA, the D.C. Circuit found that the agency's warning letters requesting that the addressee take prompt action to correct certain FFDCA product violations did not qualify as final agency action, and thus could not serve as the basis for the addressee's legal claim against the agency. The D.C. Circuit further articulated that in order for any agency action to be "final" the action must mark the beginning of the agency's decision-making process, and that the action must be one from which "legal consequences will flow." According to the court, an FDA warning letter is not final because it provides firms with an opportunity to take voluntary corrective action before the FDA decides to initiate any enforcement action. Additionally, the court concluded that "legal consequences" cannot arise from warning letters due to their informal and advisory nature. Similarly, the Ninth Circuit in Biotics Research Corp. v. Heckler emphasized the point that FDA regulatory letters do not constitute final administrative determinations subject to judicial review due to the absence of any commitment on behalf of the FDA to follow the correspondence with additional enforcement actions. The recall process permits the FDA to enforce the adulteration and misbranding provisions of the FFDCA by encouraging industry participants to remove the product and correct the violation. This section addresses this FDA recall enforcement authority by first analyzing the various triggers of the recall process and then by examining the FDA recall process itself. This section concludes with an analysis of the due process concerns related to the mandatory recall enforcement authority. FDA regulations define a "recall" as a firm's removal or correction of a marketed product that the FDA considers to be in violation of the laws it administers and against which the agency would initiate legal action, such as a seizure. Under these regulations, a "recall" is different from a "market withdrawal." A market withdrawal is a firm's removal or correction of a distributed product that involves a minor violation that would not be subject to legal action by the FDA. A market withdrawal may not involve an FFDCA violation at all. Normal stock rotation practices and routine equipment adjustments and repairs may prompt a market withdrawal. The FDA may assist a firm issuing a market withdrawal when the cause for withdrawal may not be obvious or clearly understood, but the deficiency of the product is apparent (for example, when a consumer complains of adverse reactions to the product). A common reason for a recall is an undeclared ingredient. These recalls typically violate FFDCA's labeling provisions that require food labels to declare major food allergens. A food label subject to such type of recall may not include a statement after the ingredient list disclosing that the food contains a major food allergen, or the label may list the major food allergen in the ingredients but not by the common or usual name. For example, Whole Foods Market recalled its organic creamy spinach dip in December 11, 2013, because the label did not disclose that the dip contained eggs, a major food allergen. Another common trigger of a recall is the detection of microbiological contamination, such as Salmonella enteritidis and L isteria monocytogenes . For example, Flat Creek Farm & Dairy recalled 200 pounds of Heavenly Blue Cheese in November 26, 2013, due to potential contamination with Salmonella enteritidis. Recalls due to microbiological contamination often arise because of a firm's violation of the FDA's Current Good Manufacturing Practices (CGMPs). CGMPs outline the methods, equipment, facilities, and controls to produce safe and wholesome food. If the FDA determines that there is a reasonable probability that an article of food is adulterated or misbranded and the use or exposure to such article of food will cause serious health consequences or death to humans or animals, the FDA then provides the responsible party with the opportunity to cease distribution and recall such article of food voluntarily. While most recalls are "voluntary" or "requested by the FDA," FSMA granted the FDA with the authority to issue mandatory recalls. If the responsible party does not cease distribution or recall such an article of food within the time and manner prescribed by the FDA or refuses to act at all, the FDA may require the responsible party to immediately cease distribution of the violative product. The FDA must provide the responsible party with the opportunity to initiate a voluntary recall before the agency issues the mandatory recall order. After receiving the mandatory recall order, the responsible party then notifies the following people of the recall: those involved in manufacturing, processing, packing, transporting, distributing, receiving, holding, importing, or selling of the product. The responsible party must also provide third-party warehouses with sufficient information to identify the article of food covered by the recall. FDA guidance outlines five broad phases as part of the recall process for both voluntary and mandatory recalls. The five phases are as follows: initiation, classification, notification, monitoring, and termination. The recalling firm and the FDA take different steps to initiate the recall depending on whether the recall is voluntary, requested by the FDA, or mandated by the FDA. When a company voluntarily initiates a recall, FDA regulations recommend that the recalling firm immediately contact the FDA. At this phase, the recalling firm provides the FDA with the following information: identity of the product involved in the recall; reason for removal; an evaluation of the risk; total amount of such products produced and distributed; distribution information; and a proposed strategy for conducting the recall. The FDA may request a recall if a product presents a risk of illness, injury, or gross consumer deception; the firm has not initiated a recall of the product; and agency action is necessary to protect public health and welfare. If the FDA has requested the recall, the FDA notifies the firm that has the primary responsibility for the manufacture or marketing of the product of the need to recall the product immediately. The firm then provides the agency with similar information to that described in the above paragraph. If the FDA has issued a mandatory recall, the FDA then issues a written order to the firm to recall the product. The order includes the provision of the act violated by the firm that prompted the recall, the basis for FDA's authority to issue the recall, a description of the product, and a time frame for the firm to reply. After either the FDA or the firm initiates the recall, the FDA evaluates the health hazard presented by the product and looks at whether a precedent exists to guide strategy based on this specific health hazard. Relying on the information from the evaluation, the FDA classifies the recall according to the health hazard presented by the recalled product. A reasonable probability of serious adverse health risks and/or death triggers a Class I recall. A Class II recall covers products that may cause a temporary or medically reversible adverse health outcome. A Class III recall includes violative products that are unlikely to cause an adverse health outcome. When classifying a recall, an ad hoc committee of FDA scientists may take into account the following factors: "(1) Whether any disease or injuries have already occurred from the use of the product. (2) Whether any existing conditions could contribute to a clinical situation that could expose humans or animals to a health hazard.... (3) Assessment of hazard to various segments of the population ... who are expected to be exposed to the product being considered, with particular attention paid to the hazard to those individuals who may be at greatest risk. (4) Assessment of the degree of seriousness of the health hazard to which the populations at risk would be exposed. (5) Assessment of the likelihood of occurrence of the hazard. (6) Assessment of the consequences (immediate or long-range) of occurrence of the hazard." In conjunction with the classification, the FDA reviews the recall strategy presented by the firm. The strategy addresses the depth and scope of the recall, a communication plan to warn the public, and methods used to measure the effectiveness of the recall. After classification, the firm must then notify affected parties. FDA regulations state that the format, content, and extent of the recall communication should reflect the hazard of the product being recalled as well as the strategy for that particular recall. Recall communications should convey information that identifies the product in question and the reason for the recall and provide instructions regarding any specific actions that should be taken with the product. FDA guidance also outlines the scope of recipients. These recipients may include the wholesale distributor, retail vendor, or the consumer, depending on how far the violative product has been distributed in commerce. In addition to recall communications issued by the firm, the FDA also notifies other federal agencies and state and local governments of the recall and relevant information. Additionally, the FDA agency publicly discloses all recalls on its website, and may also notify consumers by issuing a press release for Class I recalls. The FDA lists each recall and accompanying information in its weekly FDA Enforcement Report. The agency does not include market withdrawals or stock recoveries in this report. The recalling firm has the legal responsibility to monitor the effectiveness of the recall. As part of this monitoring, the firm must submit recall status reports to the appropriate FDA district office, generally every two to four weeks. These reports update the agency on the number of individuals who were notified, the response to these notifications, and the number of products returned. The FDA can provide assistance with monitoring the effectiveness of the recall if some substantial difficulty is present, such as when the product is widely dispersed on the consumer level. The FDA may also audit the recall independently of this assistance to ensure that the recall action has been effective. The FDA terminates a recall when the firm has completed all recall activity, as required by the previous phases. When the FDA makes such a final determination, the agency provides a written notification of the termination to the recalling firm. Generally, the agency officially terminates a successful recall within three months of the recalling firm's completion of the recall activities. Before Congress granted the FDA with the mandatory recall authority under FSMA, commentators speculating about the possibility of this method of enforcement raised concerns about due process. Commentators were particularly concerned with the protection of a firm's interests against a potentially arbitrary mandatory recall order. FSMA's provision mandating that the FDA shall provide the responsible party subject to a mandatory recall order with the opportunity for an informal hearing addresses these due process concerns. This informal hearing must occur no later than two days after the mandatory recall order. The hearing is designed to address the actions required by the order. The recalling firm also has the opportunity at the hearing to argue against the recall and to articulate reasons for its termination. After the hearing, the FDA may then amend the order to specify a timetable for the recall and to require periodic reports, submitted by the responsible party, updating the agency on the recall's progress; or the agency may vacate the order if the agency determines at the hearing that adequate grounds do not exist for the recall. The FFDCA requires all food facilities to register with the FDA and to renew such registration biennially so that the agency may effectively oversee all areas of food production. To register, facilities must submit the following information to the FDA: the name (including trade names), address, and phone number of the facility, and the food product categories associated with that facility. All food facilities that manufacture, process, pack, or hold food for consumption in the United States must complete this registration process. However, FDA regulations exempt foreign facilities, where the food from such facility undergoes further manufacturing or processing by another facility outside the United States. Farms, retail food establishments, restaurants, and meat and egg facilities that are regulated exclusively by the USDA are also exempted from these requirements. The FFDCA authorizes the FDA to suspend the registration of a food facility to enforce the public health and safety provisions of the act. If the FDA determines that a food manufactured, processed, packed, received, or held by a facility has a reasonable probability of causing serious adverse health consequences or death to humans or animals, the agency may suspend the registration of a facility that created, caused, or was otherwise responsible. The agency may also order a registration suspension of a facility that knew of or had reason to know of such reasonable probability of harm and packed, received, or held such food. With its registration suspended, a facility cannot import or export food into the United States or introduce food into interstate or intrastate commerce in the United States. Any distribution of food products from such facility violates the FFDCA and may lead to the FDA taking further enforcement action. Food facility registration and the suspension of such registration enable the agency to determine the location and source of an outbreak of food-borne illnesses and thus notify facilities that may be affected quickly and efficiently. Similar to other enforcement actions, the suspension provision in the FFDCA offers due process protections for a facility subject to a registration suspension. The FDA must provide a registrant with the opportunity for an informal hearing no less than two business days after issuing a suspension order. The hearing gives the registrant an opportunity to present reasons for reinstating the registration. If at the hearing, the FDA determines that a suspension is necessary, the registrant must then submit a corrective action plan to the agency. The FDA will reinstate a registration if the agency determines, based on the evidence presented at the hearing, that adequate grounds do not exist to continue the suspension of the registration. When the FDA determines that adequate grounds do not exist to continue the suspension, the FDA will then vacate the order suspending the facility's registration and reinstate the registration for that particular facility. Under Section 304 of the FFDCA, a designated FDA employee may order the detention of any article of food that is found during an FDA inspection if the employee has reason to believe that such article is adulterated or misbranded. Under this administrative detention authority, FDA may prevent holders of illegal articles from moving the food before a federal district court issues a warrant permitting the agency to seize the food. This enforcement authority also permits the agency to prevent consumption of the illegal articles in an effort to ensure public safety. The FDA may detain the food under an administrative detention for a reasonable period, generally measured by the time necessary to institute a seizure action. The FFDCA states that such period cannot exceed 30 days. Any person, who is entitled to claim the article, may file an appeal of the detention order. The claimant must file the appeal within two calendar days upon receipt of the detention order for perishable food and within four calendar days upon receipt of the detention order for nonperishable food. Upon such appeal, the FDA must then grant the claimant the opportunity for an informal hearing. At the informal hearing, the agency can either terminate or confirm the order, which serves as a final agency action. Generally, federal courts lack jurisdiction over agency actions committed under the agency's discretion as granted by law, including, for example, most of the statutory enforcement authorities discussed in this report. However, a federal court may exercise judicial review of an agency's activities, if such an activity is a final agency action; the party subject to the agency action has exhausted the procedures provided by the agency; and no other remedies at law are present. Therefore, the agency's termination or confirmation of an administrative detention order may be subject to judicial review.

The U.S. Food and Drug Administration (FDA) ensures the safety of all food except for meat, poultry, and certain egg products over which the U.S. Department of Agriculture (USDA) has regulatory oversight. Under the Federal Food, Drug, and Cosmetic Act (FFDCA), the FDA has the authority to regulate the manufacturing, processing, and labeling of food with the primary goal of promoting food safety. Congress has granted the FDA the authority to take both administrative and judicial enforcement actions. The agency initiates and carries out administrative enforcement actions while judicial enforcement actions, including seizures and injunctions, require some type of involvement by the courts. Additionally, administrative enforcement actions, such as inspections and warning letters, tend to precede any judicial enforcement action. The Food Safety Modernization Act (FSMA) expanded the FDA's enforcement authority with new and broader measures. This report focuses on the statutory authority and legal issues relating to the following administrative enforcement actions: inspections, warning letters, recalls, suspension of registration, and administrative detention. Inspections: The FDA conducts inspections of regulated facilities in order to oversee a firm's compliance with the FFDCA and corresponding regulations. The FFDCA grants the agency with the enforcement authority to inspect both facilities and records. However, the act narrowly tailors this authority in order to balance the protection of the facility owners' Fourth Amendment rights and the promotion of public health. Warning Letters: Under the FFDCA, the FDA also has the ability to decline to institute formal enforcement proceedings for minor violations of the act if the agency believes that it could adequately serve public interest through written correspondence to violators. These warning letters give recipient firms an opportunity to take voluntary corrective actions before the FDA initiates a more formal enforcement action. Recalls: The recall process permits the FDA to enforce the adulteration and misbranding provisions of the FFDCA by encouraging industry participants to remove the product and correct the violation. FDA regulations outline several steps that both the firm and agency must take when issuing either a voluntary or mandatory recall. FSMA granted the FDA the authority to issue a mandatory recall. FSMA also established the opportunity for an informal hearing, at which a firm may dispute these types of recalls, in order to protect the due process rights of the recalling firms. Suspension of Registration: The FFDCA requires all food facilities to register with the FDA so that the agency may effectively oversee all areas of food production. If the FDA determines that a food manufactured, processed, packed, received, or held by a registered facility has a reasonable probability of causing serious adverse health consequences or death to humans or animals, the agency may suspend the registration of a facility that created, caused, or was otherwise responsible. This enforcement authority is intended to permit the agency to determine the location and source of an outbreak of food-borne illness and thus notify facilities that may be affected quickly and efficiently. Administrative Detention: Under the FFDCA, an FDA employee may order the detention of any article of food that is found during an FDA inspection if the employee has reason to believe that such article is adulterated or misbranded. Under this administrative detention authority, the FDA may prevent illegal articles from being moved or consumed until the court grants a seizure order.

The price of crude oil rose sharply in 2007 and the first half of 2008, sparking widespread concern about energy prices, their effect on the world economy, and consequences for household consumption. Prices then fell sharply between July and December, from a peak of $145 per barrel to just over $30. To some observers, fundamentals of the oil market and macroeconomic conditions provide an adequate explanation for these price movements--the financial crisis deepened in the summer of 2008, leading to sharply reduced estimates of economic growth in much of the world and lowered projections of energy demand. Others, however, doubt that supply and demand conditions justified an 80% price plunge and argue that financial speculators had created artificially high prices. Figure 1 shows trends in U.S. regular retail gasoline prices since 1990, as well as a predicted price based on the price of Brent crude oil, a key benchmark in petroleum markets. In 2011 and 2012, crude oil prices again rose sharply, reviving the debate on whether oil price trends are mostly driven by speculation or by changes in supply and demand fundamentals. Economists and market regulators have not reached a consensus as to the causes of oil price movements in recent years. A number of studies attribute volatility to such supply and demand factors as turmoil in oil-producing countries, reduced production in some major oil fields, and the growth of demand from China, India, and industrializing middle-income countries. An interagency task force led by the Commodity Futures Trading Commission (CFTC) found that "the increase in oil prices between January 2003 and June 2008 [was] largely due to fundamental supply and demand factors" and that "analysis to date does not support the proposition that speculative activity has systematically driven changes in oil prices." Others, such as CFTC Commissioner Bart Chilton, have contended that oil price gyrations are likely the result of speculative trading. A frequent argument has been that increasing investment flows from financial investors have affected prices. Some analysts have sharply criticized those claims. One econometric analysis that incorporated oil supply and energy demand effects concluded that speculation did not explain increases in oil prices in the 2003-2008 period, although the study suggested that speculation may have played some role in previous oil price spikes. On June 20, 2011, Senator Maria Cantwell announced that the Federal Trade Commission (FTC) had notified her that it had opened an investigation of anticompetitive practices in crude oil and petroleum product markets. The FTC has conducted several prior analyses of oil, gas, and petroleum markets. The Energy Independence and Security Act of 2007 (EISA; P.L. 110-140 ) gave FTC broader powers to prevent market manipulation in the wholesale petroleum industry. In August 2009, FTC issued a Final Rule on Prohibitions on Market Manipulation, which became effective on November 4, 2009. Legislation before the 112 th Congress ( S. 1200 ) would authorize and direct the CFTC to take certain actions to reduce the volume of speculation in oil and related energy commodities. This report provides background on futures and options markets for crude oil and presents data analysis of a possible relationship between market activities of speculative traders and oil prices. The data presented in this report cannot explain causes of oil price movements, but are intended to provide a context for evaluating arguments about the impact of speculation. A crude oil futures contract is an agreement to buy or sell 1,000 barrels of oil at some future date at a price set today. Thus, the contract gains or loses value as prices fluctuate. A contract to buy oil (called a long contract) gains value if the price rises, because the holder is entitled to buy at the old, lower price. Conversely, a short contract requires the holder to sell at today's price, and gains value if prices fall, because the holder may sell at above the market price. A long position in futures may be described as a bet that prices will rise; a short position is a bet that they will fall. Each futures contract has a long and a short side--whatever one trader gains, the other loses. Hedgers use futures not to bet on the price, but to avoid price risk. For example, a long contract in effect provides insurance to an oil refinery against an increase in the price of crude oil; if prices rise, the firm will pay more for oil on the physical (or "spot") market, but appreciation in the futures position offsets the price increase. Thus, the firm can use futures to lock in the price that prevailed when it entered into its position. Futures contracts and options on futures are traded on a number of exchanges around the world, linked to several different grades of crude oil. The most popular crude oil contract is traded on the New York Mercantile Exchange (or Nymex, now part of the CME Group, Inc.). The contract represents 1,000 barrels of West Texas Intermediate (WTI) grade crude oil, deliverable at Cushing, Oklahoma. Although Nymex WTI contracts call for physical delivery of 1,000 barrels at the time the contract expires, in practice nearly all contracts are settled for cash, without either party taking or making delivery. A trader may exit the market at any time by simply purchasing an offsetting position. That is, the holder of a long contract purchases a short contract with the same expiration date--since his obligation is then to buy and sell the same commodity at the same time, his net exposure is zero, and he is said to be "evened up," or out of the market. Nymex offers an oil contract expiring each month through the end of 2016. Most trading is in the contract expiring soonest, called the "near month." An identical WTI crude contract trades on the ICE Futures Europe exchange in London. Most trading on the futures exchanges is short-term. Many traders prefer to even out their positions before the close of trading each day in order to avoid overnight price risk. Some traders, however, take longer-term positions, either to hedge transactions expected to take place months or years in the future, or to speculate on long-term price movements. The number of contracts outstanding at the end of the trading session is called the "open interest." The Commitments of Traders (COT) report published by the Commodity Futures Trading Commission (CFTC) shows the open interest in futures and options on futures, broken down by several classes of market participant, distinguishing between commercial hedgers and speculators. These data, though limited in important ways (discussed below), are the best public source of information on the activity of speculators in the crude oil market. COT data, usually published each Friday in the late afternoon, reflect the open interest, or the number of contracts outstanding, as of close of trading on the previous Tuesday. Thus, comparing week-to-week COT figures shows whether classes of traders have increased or decreased the size of their long, short, or spread positions. The COT figures do not show how much trading has gone on during the week, or whether a position has been liquidated and then built back up, but simply offer a snapshot of positions at the market close on Tuesday. Another significant limitation of COT data is that they do not cover swap contracts--another form of oil derivative contract not traded on exchanges. Thus, COT figures arguably cover only a subset of oil derivatives, all of which play a role in setting prices. The Dodd-Frank Wall Street Reform and Consumer Protection Act ( P.L. 111-203 ) gave the CFTC new regulatory authority over the swaps market. In the future, COT reports may reflect swap positions, but the data surveyed in this report cover only exchange-traded futures and options on futures. COT data show the aggregate positions of hedgers and several classes of speculators, as follows: Producer/Merchant/Processor/User . These are entities that predominantly engage in the production, processing, packing, or handling of crude oil and use the futures markets to manage or hedge risks associated with those activities. Swap Dealers are entities that deal primarily in swaps for a commodity and use the futures markets to manage or hedge the risk associated with those swap transactions. The swap dealer's counterparties may be speculative traders, like hedge funds, or traditional commercial clients that are hedging risk arising from their dealings in the physical commodity. Thus, swap dealer positions represent both hedging and speculation. Money Managers , for the purposes of the COT reports, are registered commodity trading advisors (CTAs), registered commodity pool operators (CPOs), or unregistered funds identified by the CFTC. These traders, which include hedge funds, manage and conduct futures trading on behalf of clients. Other Reportables. Every other reportable trader not placed into one of three categories above is put into the "other reportables" category. These may include floor traders and exchange members who trade for their own accounts. Nonreportable positions include all traders whose holdings are below the 350-contract reporting threshold. These may be hedgers or speculators. Table 1 shows the breakdown of open interest in crude oil futures and options, for Nymex and ICE Futures Europe WTI crude contracts, as of May 24, 2011. The data in Table 1 suggest that speculators account for most of the open interest in crude oil contracts . The long and short hedging positions of the "Producer/Merchant" category accounted for only 27.1% of open interest. Some observers believe that the limited presence of commercial hedgers itself indicates excessive speculation in the market. The proportions by themselves, however, do not appear to explain recent oil price changes because they have been relatively constant since mid-2006, when the disaggregated COT data series begins. Indeed, the total level of open interest has been relatively constant since 2006, as the data in Figure 2 and Figure 3 indicate. Thus, the data do not appear to support an argument that recent oil price spikes are the result of large, sudden inflows of speculative funds. Figure 2 and Figure 3 plot total crude oil open interest against the price of oil between August 2007 (when oil prices began to rise to their 2008 peak) and May 2011. Figure 2 ends on July 28, 2009; Figure 3 begins the following week. Figure 2 reports only Nymex positions, whereas Figure 3 shows the sum of Nymex and ICE Futures Europe positions (which the CFTC did not report earlier). As noted above, the ICE and Nymex contracts are identical, so positions on the two exchanges have been added together. While the total level of open interest appears to be more stable than the price of oil, the aggregate figures mask significant fluctuations in the size of positions held by different classes of traders. Figure 4 and Figure 5 break down open interest positions for the various types of traders holding reportable positions. The time periods covered are the same as in Figure 2 and Figure 3 . Figure 4 shows Nymex positions; Figure 5 shows Nymex plus ICE. Even though the aggregate open interest fluctuates within fairly narrow bounds, the number of contracts held by particular classes of traders may change significantly, as Figure 4 and Figure 5 indicate. For example, commercial hedgers' positions (both long and short) shrank significantly beginning in June 2008, when oil prices neared their peak. Between June 10 and August 26, 2008, combined long and short positions of commercial hedgers fell by 49.7%. Meanwhile, the price of oil peaked at $145.32 per barrel on July 3, 2008, stood at $116.31 on August 26 (when the size of hedgers' positions reached a low point), and ultimately bottomed out at $30.28 on December 23, 2008. In another example, money managers' long positions averaged 211,000 contracts during the second quarter of 2010, but increased by 46.4% to an average of 309,000 during the first quarter of 2011, when there was a significant upswing in the price of oil. Are changes in futures positions statistically related to price changes? Is the relationship the same for different classes of traders? The next section of this report examines how changes in crude oil futures and options positions correlate with changes in price. Analysis of COT data suggests that week-to-week changes in managed money long positions are positively correlated with changes in oil prices. Figure 6 shows a scatter plot between week-to-week changes in managed money long positions and weekly changes in oil prices. Each point in the figure represents a single week's data: changes over the previous week in the size of the long position are shown on the X-axis, price changes on the Y-axis. Points below zero on the Y-axis represent weeks when the price has fallen, while points to the right of zero on the X-axis show weeks when positions have increased. Thus, points in the lower left quadrant of the graph represent weeks when the price fell and money managers reduced their short positions. Points in the upper right indicate that prices rose that week and money managers increased their long positions. The distribution of the points in Figure 6 suggests a trendline rising from left to right. In other words, price rises are positively correlated with increased long positions, price falls with smaller positions. Figure 7 shows a similar scatter plot for managed money short positions. Week-to-week changes in managed money short positions show a weaker negative correlation with changes in oil prices. In other words, money managers tended to increase short positions, which gain value as prices fall, when prices did fall, although the trend is not as clear as on the long side shown in Figure 6 . Figure 8 shows a scatter plot with changes in swap dealers' long positions, and Figure 9 shows a scatter plot with changes in producer/merchant long positions. Note that while the changes in producer/merchant long positions are generally much larger than for managed money long positions, changes in producer/merchant long positions are not correlated with oil price changes. Scatter plots make visible the relationship between two variables and are especially useful in identifying outlier observations, which can have disproportionate influence on statistical models. For example, outliers seen in Figure 6 and Figure 7 include the week following the Lehman Brothers bankruptcy in September 2008 and the weeks just after oil prices reached their lowest level in years in late December 2008. One limitation of scatter plots is that the effects of control variables are not shown. An evident correlation between two variables could result from the influence of a unseen third, confounding variable. Alternatively, a relationship between two variables might only emerge after appropriate control variables were added. Correlations evident in Figures 5 and 6 , however, also appear in regressions that account for the time-series nature of the data and control for seasonal variations, interest rates, and other financial variables. This section presents results from a time-series regression, reported in the Appendix , used to investigate possible effects of trading positions on the price of oil. This analysis uses the same weekly COT data discussed in the report, along with monthly seasonal controls and other financial controls. Correlations between changes in managed money positions and percentage changes in oil prices are robust, and appear in a variety of specifications. While this analysis addresses some statistical issues associated with time-series data, a more thorough investigation would be required to disentangle the relationship between trading positions, prices, and macroeconomic conditions. Control variables include a measure of bond yields and the euro/dollar exchange rate. The Corporate AAA Bond index may signal changes in market expectations of long-term economic growth. Oil investments may have been used as hedges against exchange rate risks for the U.S. dollar. In addition, fluctuations in the euro/dollar exchange rate affect the relative price of oil in Europe. Percentage changes in the euro/U.S. dollar exchange rate are therefore included as a control. Control variables are measured as changes or as percentage changes. Results show a statistically significant positive correlation between managed money long positions and oil prices. The negative correlation between managed money short positions and oil prices is about as large, although less precisely estimated. Swap dealers' positions show a similar pattern, although the estimated size of the effects are about two-thirds smaller and are less precisely estimated. While changes in long and short positions of swap dealers and producer/merchant hedgers are not correlated with price changes when considered individually, controlling for changes in short positions does produce positive correlations between long positions and prices for swap dealers and producer/merchants, as well as for money managers. When controlling for long position changes, short position changes appear to be correlated to prices, and vice versa. These statistical relationships are discussed further in the Appendix . The correlations between managed money long and short positions and oil prices, as estimated with these controls, are about twice as strong as those for producer/merchant traders. That is, an increase in managed money traders' long or short positions is associated with a percentage price change twice as large as for a change in producer/merchant positions. For swap dealers' position changes, the effect on prices is about 30% larger than for producer/merchant trades. While all of the position changes are estimated to have statistically significant effects, those for managed money positions, which are those held by professionally managed investment vehicles such as commodity pools and hedge funds, are more precisely measured. Coefficients for corporate bond yields and the euro/dollar exchange rate are also statistically significant and have the expected signs. Correlation between changes in managed money positions and oil price movements, even with the introduction of control variables, does not show causation. Prices might rise because money managers buy, or trading decisions by money managers may reflect price changes. To use the terminology of a classic study on hedging and speculation, are money managers driving the price of oil, or are they hitchhikers along for the ride? Interpretations on either side of the question are plausible. The argument that money managers cause price movements faces certain difficulties. Any increase in a long position is equivalent to a purchase of the underlying commodity and thus tends to raise the price. However, money market long positions are a fairly small fraction of the total open interest positions. That adjustments to this small market share would trigger discernible price movements might be considered surprising, especially when comparable or larger position changes by other market participants are not correlated with price swings. One hypothesis is that money managers' trades may have a unique impact on intraday trading, which the weekly open interest data fail to capture. Short-term traders might observe and seek to copy the strategies of certain money managers who are regarded as especially capable of identifying new information that might be expected to move prices, or who simply have achieved superior returns in the past. If significant numbers of short-term speculators copy money manager trades, the impact of those trades on prices would be magnified. In effect, under this scenario, money managers may have market power beyond what the size of their positions would suggest. Under this interpretation of the data, it would not matter whether hedge funds trade based on relevant fundamental information or not. If their trades trigger a significant number of similar transactions by others, they become a kind of self-fulfilling prophecy. Such "herding behavior" among speculators, if it exists, would support arguments that the oil price often includes a "speculative premium" above and beyond the price justified by the fundamentals. An alternative explanation is that money managers do trade on fundamental information and that they are more adept than others at identifying information that is going to move prices. If money managers are consistent in their ability to identify new and relevant information that will affect prices (and trade on that information before others do), one result would be the observed correlation. A potential objection to this explanation is that it implies that some financial speculators are better analysts of the oil market than actual producers and end-users of oil, who also trade in the futures market. Money managers might also profit by following price trends. Rather than cause price changes, they may buy when prices are rising and sell when they fall. But why would money managers' trading patterns, and not those of other market participants, be correlated with price changes in this way? Other market participants may have longer investment time horizons or be less sensitive to price changes. Hedgers, for example, are generally less affected by price changes, because whatever they may lose on their futures positions, they make back in the spot market (because, for example, the physical commodity they produce will have gone up in price). Similarly, swap dealer positions may reflect long-term index investments by pension funds and other institutional investors who are seeking to allocate part of their portfolio to an asset class that is not correlated to other assets they hold, such as stocks and bonds. Since the object of such investment is portfolio diversification, such investors are less likely to buy or sell in reaction to short-term price movements. Hedge funds, by contrast, are known for taking aggressive positions in search of high yields and for seeking to extract the maximum return from any price trend. A 2008 CFTC study referred to speculators "who take positions based on price expectations over a period of days, weeks, or months" as "trend followers." Trading with this time horizon would be captured by the weekly COT reports, and may be more typical of money managers than other traders in oil futures and options. Another possibility is that swap dealer COT data may represent the net of proprietary and customer positions, potentially masking the relationship between positions and price. It may be that swap dealers' trading for their own accounts would be correlated with prices, just as managed money positions are, but their trading on behalf of customers may follow a different pattern. Money managers may follow prices in other ways. Some hedge funds apparently use "momentum trading" strategies to identify pricing blips that signal market activities of traders who are informed but lack the backing of major financial resources. For example, a scientist may understand the implications of a new technology, but may lack the ability to capture the full value of that information in markets. If that scientist bought shares of a company based on that knowledge, a hedge fund might infer something about that scientist's realization. The hedge fund, however, would be able to harness substantial financial leverage to exploit that information. Certain hedge funds trading in oil markets might thus bootstrap information gleaned from trades of specialist traders who lack the financial resources to take full advantage of their informational advantages. Some contend that hedge funds and other sophisticated traders have used advantages in trade execution to benefit from slow-footed rivals. The potential of money managers' trades to move prices does not necessarily raise any policy issue. If some commodity trading advisors or hedge funds are better or faster than others at trading on new information, the effect should be to make pricing more efficient. If too much "copycat" trading occurs, the market price may overshoot, but it is not clear why any such overshooting would not soon correct itself. One study found that open interest positions are highly correlated with macroeconomic activity. This might suggest that traders with better information on macroeconomic trends, which strongly influence energy demand, take more aggressive positions, which would then influence oil prices. This interpretation suggests that speculative traders may have better information about market fundamentals, such as expectations of future economic growth, and thus help channel the effects of changes in current and future energy demand into market prices. Some argue that money managers who are not involved in the physical oil business trade on information that is not fundamental and that this distorts prices. This effect would be exacerbated by copycat trading. Specifying which information is fundamental and which is irrelevant noise, however, is difficult. Experts may express opinions about what the fundamental price should be, given current supply and demand conditions, but a basic axiom of classical economics is that free markets do a better job of weighing information and determining prices than any group of experts. On the other hand, asset markets can be susceptible to price bubbles, in which rising prices convince some traders that future prospects are rosier than previously thought. Some have contended that identifying asset bubbles before a readjustment to fundamental levels (i.e., a crash) may be difficult. Even if some traders understood that asset values exceeded fundamental values, it might be impossible given financing constraints to exploit that information to a degree sufficient to prevent the formation of bubbles. Policy tools to address speculation that is viewed as excessive or destabilizing are generally blunt instruments. It is possible to prohibit trading in derivative instruments based on oil (or other energy commodities). With the Onion Futures Act (P.L. 85-39), Congress enacted a ban on onion futures, which remains in force, although it is not clear that onion prices have become more stable as a result. Other policy options (included in S. 1200 ) are steps to reduce the size of speculative positions, either by raising the costs of speculative trading or by limiting the number of contracts that speculators can hold. These measures could certainly reduce the volume of speculative trading in oil, but it is not clear that the effect would be to lower prices, for two reasons. First, the curbs would fall on short as well as long traders, making the net effect unpredictable. Second, oil is a global commodity, and a parallel futures market exists in London. ICE Futures Europe trades contracts based on U.S. oil, suggesting that oil speculation would continue despite any U.S. restrictions. The regression results presented below show the correlation between changes in long and short positions held by money managers, swaps dealers, and commercial hedgers (producer/merchants). While producer/merchant long and short positions are uncorrelated with price changes when considered individually, they are jointly correlated with price changes. Moreover, producer/merchant traders' long and short positions strongly correlate with each other, as Figure A-1 shows. This result is counterintuitive, since long and short hedgers face opposite price risks. That is, when prices are rising, or expected to rise, long hedgers such as airlines or utilities would appear to have greater incentives to hedge the risk of further price rises, while short hedgers, such as oil companies, might be expected to reduce their hedging position to reap the full benefits of higher prices. But in fact, long and short hedgers appear to change their positions in tandem, whatever the prevailing price trend. (An example is discussed in the text: when oil prices peaked and began to fall in mid-2008, both long and short hedgers reduced the size of their positions.) Long and short positions for swap dealers and managed money traders, by contrast, are not strongly correlated. The coefficient ("Coef." in Column 2) shows the marginal (i.e., incremental) effect of independent (control) variables on the dependent variable (here, changes in the log crude oil price). Changes in logs are one way to calculate variables in percentage change terms. For example, the regression results suggest that a 1% change in the Euro/U.S. dollar exchange rate results in a 1.08% increase in the oil price. Results for month variables, included as seasonal controls, and a constant term are not reported. (See text for variable definitions and notes.)

Dramatic swings in crude oil prices have led Congress to examine the functioning of the markets where prices are set. A particular concern is that financial speculators may at times drive prices above the level justified by supply and demand. Most oil speculators produce no commercial quantities of oil and take no deliveries; rather, they trade financial contracts whose value is linked to the price of oil. These derivative contracts--futures, options, and swaps--allow speculators to profit if they can forecast price trends or exploit new arbitrage opportunities. Derivatives also permit oil companies, airlines, utilities, and other energy-consuming or energy-producing firms to reduce or "hedge" price risk by locking in today's price for transactions that will occur in the future. Hedgers and speculators trade on regulated futures exchanges in a continuous auction market. Prices set there serve as benchmarks for many physical oil transactions. Some contend that oil speculators do not always trade on fundamental information related to supply and demand, but are nonetheless able to drive up prices by flooding the market with cash and overwhelming the influence of commercial hedgers who actually deal in physical oil. On the other hand, most empirical studies suggest that speculation does not generally increase price volatility, although the occasional emergence of speculative "bubbles," when market prices may diverge significantly from fundamental values, is well known. Neither economists nor regulators have reached a consensus as to the causes of oil price movements in recent years--some point to the fundamentals (where both demand and supply are inelastic in the short run, and questions exist about the capacity to meet growing global demand in the long run), while others focus on financial markets. Both are possible sources of price volatility. This report examines the relationship between the price of oil and the positions of various classes of traders in crude oil futures and options. Position data come from the Commitments of Traders report, published weekly by the Commodity Futures Trading Commission (CFTC). A statistically significant correlation is evident between changes in positions held by "money managers" (a category of speculators that includes hedge funds) and the price of oil. In other words, during weeks when money managers have been net buyers of oil futures and options (or increased the size of their long positions), the price has tended to rise. Price falls, conversely, have tended to coincide with reductions in money managers' long positions. This statistical relationship is weaker for other classes of speculators and for commercial hedgers. There are several possible explanations for why money managers' trades might be more closely linked to prices. Money managers might identify information that will affect prices (and trade on that information) more quickly or accurately than other market participants. Other traders might copy the trades of certain hedge funds viewed as market leaders, driving prices further in the same direction. In this way, money managers' trades could move the price, even though their positions account for a relatively small share of the total market. Causation could also run in the opposite direction--perhaps on average money managers chase price trends rather than set them. Other traders whose positions appear in the Commitments of Traders data, such as commercial hedgers or swap dealers, may be less price-sensitive than hedge funds and react more slowly to price changes. Data presented in this report cannot explain causes of oil price movements, but are intended to provide a context for evaluating arguments about the impact of speculation. This report will be updated as events warrant.

Non-elderly, non-disabled, non-working residents of public housing are subject to a community service and self-sufficiency requirement (referred to as the CSSR or community service requirement). Specifically, all adult residents of a household who are not otherwise exempted are required to participate in eight hours per month of either community service or economic self-sufficiency activities in order to maintain their eligibility for public housing. Exempted residents include those who are 62 years or older; blind or disabled and can certify that they cannot comply with the community service requirement; caretakers of a person with a disability; engaged in work activities; exempt from work activities under the Temporary Assistance for Needy Families program (TANF) or a state welfare program; and/or members of a family in compliance with TANF or a state welfare program's requirements. According to data released by HUD, of the 1.86 million individuals living in public housing, approximately 812,000, or (44%) are potentially subject to the community service requirement. It requires that residents of public housing, unless exempted, participate in eight hours of community service and/or economic self-sufficiency activities per month. PHAs have broad discretion in defining what counts as community service or economic self-sufficiency activities. Allowable activities may include, among others, volunteer work at a local public or nonprofit institution; caring for the children of other residents fulfilling the community service requirements; participation in a job readiness or training program; or attending a two- or four-year college. However, public housing tenants required to fulfill the community service requirements cannot supplant otherwise paid employees of the PHA or other community service organizations. PHAs must review and verify each member of a household's compliance 30 days prior to the end of the household's annual lease. Each nonexempt family member is required to present a signed certification on a form provided by the PHA of CSSR activities performed over the previous 12 months. This form is developed and standardized by the PHA and the submitted form is verified by a third party. In 2016, as a part of a broader set of administrative streamlining actions, HUD began to permit PHAs to adopt policies to allow families to self-certify their compliance with the CSSR, subject to validity testing. If any member of the household fails to comply with the community service requirement, the entire household is considered out of compliance. The tenant must agree to make up the community-service deficit in the following year in order to renew the household's lease through a signed "work-out agreement" with the PHA. If the tenant does not come into compliance, the PHA may not renew the household's lease. However, PHAs may not terminate a household's lease for noncompliance before the lease has expired. Noncompliant tenants may file a grievance to dispute the PHA's decision to terminate tenancy. Each PHA must develop a local policy for administering the community service and economic self-sufficiency requirements and include the policy in its agency plan. PHAs may administer community service activities directly, partner with an outside organization or institution, or provide referrals to tenants for volunteer work or self-sufficiency programs. The community service and economic self-sufficiency requirement applicable to public housing residents originated with the housing reform debates of the 1990s and parallel debates at the time about the role of work and welfare reform. Following several years of legislative effort, in 1997, H.R. 2 , the Housing Opportunity and Responsibility Act of 1997, and S. 462 , the Public Housing Reform and Responsibility Act of 1997, were introduced. They sought to reform HUD's low-income housing programs by consolidating the public housing program into a two-part block grant program; denying occupancy to applicants with a history of drug-related activity; and requiring residents of public housing to meet a community service requirement. The community service and economic self-sufficiency requirement was among the most controversial elements of the sweeping bills. While neither H.R. 2 nor S. 462 became law, a compromise version was enacted as the Quality Housing and Work Responsibility Act of 1998 (QHWRA), Title V of the FY1999 Departments of Veterans Affairs and Housing and Urban Development (VA-HUD) appropriations bill ( H.R. 4194 ), signed into law by then-President Bill Clinton ( P.L. 105-276 ). QHWRA contained many provisions from H.R. 2 and S. 462 , including a version of the community service and economic self-sufficiency requirement. HUD did not issue regulations to implement the community service provisions of QHWRA until March 29, 2000. The regulations took effect beginning on October 1, 2000, and were in effect for just over one year. Language added to the FY2002 VA-HUD appropriations bill ( P.L. 107-73 ), which was enacted in November 2001, prohibited HUD from using any FY2002 funds to enforce the community service and self-sufficiency requirements. The suspension of the provision ended when the FY2003 appropriations bill ( P.L. 108-7 ) was signed into law on February 21, 2003. HUD issued new guidance to the local public housing authorities (PHAs) that administer public housing on June 20, 2003, instructing them to reinstate the community service requirement for public housing residents beginning on August 1, 2003. Following full implementation of the community service requirement, legislation was introduced in several Congresses to repeal the community service requirement, although it was not enacted. As is evident in its legislative and regulatory history, the community service and economic self-sufficiency requirement for residents of public housing has been controversial since its inception. It is consistent with the movement toward required work and self-sufficiency activities that characterized the welfare reform debates of the same era, which culminated in the creation of the Temporary Assistance for Needy Families (TANF) program. Supporters of mandatory work policies have argued that low-income families should earn the benefits or subsidies they are receiving. They have also argued that by compelling families into self-sufficiency activities, such policies can improve the lives of poor families and their children by potentially increasing their incomes. Those who have argued against mandatory work requirements contend that such requirements are paternalistic and do not promote real self-sufficiency, but rather, low-wage work that may not be sustainable. All of these disagreements manifested during debate over the provision, and additional arguments were made specifically for and against the public housing requirement. Proponents of the community service requirement cited concerns about a perceived negative culture at public housing developments and the possibility for the community service requirement to help change that culture. Opponents of the provision argued specifically against the idea of a community service "requirement" for public housing residents, arguing it is akin to the forced community work mandated of criminals. Additionally, critics raised questions about the fairness of applying this requirement only to residents of public housing and not to recipients of Section 8 Housing Choice Vouchers or Section 8 project-based rental assistance, since the programs serve similar populations. During debate over the provision, concerns were repeatedly raised that the community service requirement would be administratively burdensome or an unfunded mandate. Although only a small number of tenants may actually be subject to the community service requirement at a given PHA, the PHA must certify either the participation or exemption status of every resident of public housing. Furthermore, the grievance and/or eviction process for tenants who are found to be noncompliant with the community service requirement may be costly. Industry groups contended that this requirement is an unreasonable burden for PHAs, that, they argue, are chronically under-funded. Some of the opponents of the policy speculated that PHAs would not aggressively implement the provision; rather, they would try to exempt as many families as possible and set a very broad definition of eligible activities in order to avoid costly grievances and evictions and keep administrative burdens low. Differences of opinion were also expressed regarding whether the community service requirement would be complementary to, or duplicative of, the work requirements that had recently been adopted for cash assistance recipients under the Temporary Assistance for Needy Families program. There has also been some controversy surrounding HUD's implementation of the community service requirement. The statute states that in order to meet one of the exemption criteria, tenants must be engaged in work activities, as defined in the Social Security Act. The Social Security Act definition of work activities does not include a minimum number of hours a person must perform the listed activities in order to be considered engaged in work activities. HUD's 2003 Notice to PHAs encouraged them to consider a tenant engaged in work activities, and therefore exempt from the community service requirement, only if they were working at least 30 hours per week. This guidance initially prompted confusion as to whether PHAs were required to set a 30-hour standard. While the guidance states that PHAs are encouraged to set a 30-hour standard, they are not required to set such a standard. In March 2008, HUD's Inspector General released an audit of HUD's implementation and enforcement of the community service requirement. The audit was performed in response to media reports that the community service requirement was rarely enforced. The audit found that HUD did not have adequate controls to ensure that PHAs properly administered the community service requirement, and the audit estimated that at least 85,000 households living in public housing were ineligible as a result of noncompliance with the community service requirement. In response to these findings, in November 2009, HUD published additional guidance to PHAs regarding the administration of the community service requirements. The guidance largely restated existing requirements, although it did provide enhanced guidance on reporting. It also reiterated steps PHAs may take to enforce the community service requirement, as well as steps HUD may take to sanction PHAs for failing to enforce the community service requirement. In February 2015, HUD's Inspector General released a new audit of HUD's implementation and enforcement of the community service requirement. The audit found that HUD subsidized housing for 106,000 units occupied by noncompliant tenants out of nearly 550,000 units potentially subject to the community service requirement nationwide. As a result, the OIG contended that the agency paid more than $37 million in monthly subsidies for public housing units occupied by noncompliant tenants. The audit recommended that the agency develop and implement a written policy for the community service requirement to ensure adequate compliance and create training and further clarified reporting mechanisms. In response to the audit, HUD issued a notice to PHAs on August 13, 2015, with further guidance related to the statutory/regulatory requirements for administering the community service requirement; data collection and reporting requirements; action to take against noncompliant tenants; and penalties against PHAs that do not comply. The notice also provided clarification that HUD has interpreted the statutory exemptions for compliance with the community service requirement to include the Supplemental Nutrition Assistance Program (SNAP). Therefore, if a tenant is a member of a family that receives SNAP, and has been found to be in compliance with SNAP program requirements, then the tenant is exempt from the community service requirement. This clarification is particularly notable because the 2015 OIG report contended that PHAs were incorrectly classifying families as exempt from the community service requirement because of their SNAP participation. Since HUD has now clarified that SNAP families are exempt, the OIG's estimate of the number of noncompliant families is likely overstated to some degree. In August of 2016, HUD published on its website summary data reflecting compliance with the CSS requirement. Those data report that of the 1.86 million people living in public housing, the community service requirement is applicable to 44%, or 812,000 residents. Of those residents to whom the community service requirement applies, approximately 68% are exempt (i.e., are already working, have a disability, etc.). Of the remaining 32% who are not exempt (257,000 residents, or 13% of all people living in public housing), 48% were reported to be in compliance (124,000 individuals, or 7% of all public housing residents), 32% were reported as pending verification by the PHA (83,000 individuals or 4% of all public housing residents), and 19% were reported as being out of compliance (48,000 individuals, or 3% of all public housing residents).

The Quality Housing and Work Responsibility Act of 1998 (P.L. 105-276) included provisions designed to promote employment and self-sufficiency among residents of assisted housing, including a mandatory work or community service requirement for residents of public housing. Non-elderly, non-disabled, non-working residents of public housing are required to participate in eight hours per month of either community service or economic self-sufficiency activities in order to maintain their eligibility for public housing. The community service requirement has been controversial since its inception. Supporters of the provision believe that it is consistent with the goals of welfare reform and that it will promote civic engagement and "giving back" among residents of public housing; detractors argue that it is punitive, unfairly applied, and administratively burdensome. In February 2015, the Department of Housing and Urban Development (HUD) Inspector General released an audit critical of HUD's implementation and enforcement of the community service requirement. In response to the report, HUD issued further guidance in August 2015 related to the statutory/regulatory requirements for administering the community service requirement; data collection and reporting requirements; action to take against noncompliant tenants; and penalties against PHAs that do not comply. Recent HUD data indicate that approximately 14% of public housing residents are subject to the community service requirement and not otherwise exempt. Of those nonexempt residents, approximately 19% were reported as noncompliant (or about 3% of all public housing residents).

Changing economic, social, and political conditions at home and abroad have led some analysts to question whether the United States will remain globally competitive in the coming decades. The possibility that the United States has lost or could lose its historical advantages in scientific and technological advancement--and the prosperity and security attributed to that advancement--has become a primary rationale for a portfolio of otherwise disparate federal programs, policies, and activities. Sometimes identified as "innovation" or "competitiveness" policy, these programs, policies, and activities address research and development, education, workforce development, tax, patent, immigration, economic development, telecommunications, or other policy issues perceived as critical to the U.S. scientific and technological enterprise. The 2007 America COMPETES Act ( P.L. 110-69 ) is an example of this type of policymaking. Designed to "invest in innovation through research and development, and to improve the competitiveness of the United States," the law authorized $32.7 billion in appropriations between FY2008 and FY2010 for programs and activities in physical sciences and engineering research and in science, technology, engineering, and mathematics (STEM) education. Congress reauthorized certain provisions of P.L. 110-69 --including funding for physical sciences and engineering research and STEM education--when it passed the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ). The 2010 COMPETES Act authorized $45.5 billion in appropriations between FY2011 and FY2013. Given the pivotal role that funding levels played in the design, implementation, and congressional debate about the COMPETES Acts, policymakers have paid close attention to trends in these accounts. This report, which was written to aid Congress in tracking these trends, includes two tables summarizing authorization levels and funding for selected COMPETES-related accounts across both authorization periods (i.e., FY2008 to FY2010 and FY2011 to FY2013). Readers interested in an analysis of the COMPETES Acts and related policy issues are referred to the following publications: CRS Report R41819, Reauthorization of the America COMPETES Act: Selected Policy Provisions, Funding, and Implementation Issues , by [author name scrubbed]. CRS Report R42642, Science, Technology, Engineering, and Mathematics (STEM) Education: A Primer , by [author name scrubbed] and [author name scrubbed]. CRS Report R42470, An Analysis of STEM Education Funding at the NSF: Trends and Policy Discussion , by [author name scrubbed]. CRS Report R41951, An Analysis of Efforts to Double Federal Funding for Physical Sciences and Engineering Research , by [author name scrubbed] CRS Report R43061, The U.S. Science and Engineering Workforce: Recent, Current, and Projected Employment, Wages, and Unemployment , by [author name scrubbed] This report has been updated to reflect FY2009 to FY2013 final funding for COMPETES-related accounts.

Changing economic, social, and political conditions at home and abroad have led some analysts to question whether the United States will remain globally competitive in the coming decades. In response to these and closely related concerns, Congress enacted the 2007 America COMPETES Act (P.L. 110-69), as well as its successor, the America COMPETES Reauthorization Act of 2010 (P.L. 111-358). These acts were broadly designed to invest in innovation through research and development and to improve U.S. competitiveness. More specifically, the acts authorized increased funding for certain physical science and engineering research accounts and STEM (science, technology, engineering, and mathematics) education activities. Congressional debate about the COMPETES Acts focuses closely on authorized and appropriated funding levels. To aid this debate, this CRS report tracks accounts and activities authorized by the 2007 and 2010 COMPETES Acts during each act's authorization period. It includes only those accounts and activities for which the acts provide a defined (i.e., specific) appropriations authorization. Table 1 includes FY2008 to FY2010 authorizations and final funding for accounts in the 2007 COMPETES Act; Table 2 includes FY2011 to FY2013 authorizations and final funding for accounts in the 2010 COMPETES Act.

The federal budget consists of four basic fund groups--the general fund, special funds, revolving funds, and trust funds. The first three are often referred to as the federal funds group. General funds are not earmarked for a specific purpose and, consequently, there is no direct link between revenues (primarily tax revenues) and the goods and services paid for out of those funds. Both special and revolving funds receive dedicated monies for spending on specific purposes. Trust funds are an accounting mechanism that records revenues, offsetting receipts, or collections earmarked for the purpose of the specific fund. Trust funds generally share three common features: (1) they are established for programs serving long-term purposes, (2) monies are used for a single purpose, and (3) users are charged to finance the trust fund. Federal trust funds are an important part of the budget. About 40% of all federal outlays were through trust funds and about 37% of all federal receipts came to trust funds in fiscal year (FY) 2012. Despite the name, federal trust funds do not necessarily share all the same attributes as private sector trust funds. A trust in the private sector is "a fiduciary relationship in which one person (the trustee) holds property for the benefit of another (the beneficiary)." The trustee must follow the express terms of the trust instrument and administer the trust for the benefit of the beneficiary. In contrast, most federal trust funds are not based on a legal fiduciary relationship. Congress creates trust funds that involve a commitment to use monies for a specific purpose, but can alter the terms (e.g., receipts, outlays, or purpose) of the trust fund at any time. The Office of Management and Budget tracks approximately 120 trust funds and trust fund aggregates. While most trust funds are associated with a particular program, some trust funds were established to carry out a conditional gift or bequest. Many trust funds are relatively small with balances of less than $100 million. A federal trust fund often represents a long-term commitment to use specific funds for a certain purpose. It has been argued that the creation of a trust fund is one way for Congress to politically "commit" future Congresses to fund a specific program or "to make long-term promises stick." Generally, the largest source of funds for the trust fund is charges to users or future users. Most receipts for the two Social Security trust funds come from payroll taxes on current workers. In FY2012, payroll tax receipts to the Old-Age and Survivors Insurance trust fund amounted to 67% of total cash income. Payroll tax receipts amounted to 76% of the total for the Disability Insurance trust fund in the same year. The same is true for the Hospital Insurance trust fund (one of the two Medicare trust funds) with 81% of receipts coming from payroll taxes. Funds for the Airport and Airway trust fund come mainly from taxes on passengers and other users (98% of receipts). However, this is not true for all trust funds. For example, only about 26% of receipts for the Supplementary Medical Insurance trust fund come from premiums on current users and over 70% come from general revenues. The promise by Congress to fund a specific program in the future is not a legally binding commitment, but is more of a political commitment that future Congresses may find difficult to overturn. It has been argued that trust fund programs couple "the benefits and costs of these programs more closely, and it also lends a degree of assurance to beneficiaries and grantees that trust fund benefit or grant schedules once established will be protected." It has further been argued that, in addition to the expectations deriving from this political commitment, "a trust fund is only as secure as its beneficiaries are powerful." For example, in the creation of Social Security and unemployment insurance, President Franklin D. Roosevelt insisted that workers pay payroll taxes. Roosevelt reportedly said "[w]e put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program." Roosevelt's rhetoric indicates he wanted to create a large and powerful constituency for the program--workers and beneficiaries. The use of user fees or other earmarked revenues for trust fund programs may help explain why trust funds generally run an annual surplus whereas federal funds generally run annual deficits. Taxpayers may be more willing to pay earmarked taxes because they know what the taxes are used for, whereas they may have little idea of how general revenues are spent. Alice Rivlin, former director of the Congressional Budget Office and the Office of Management and Budget, argued that taxpayers may believe that general revenues are "spent wastefully or even fraudulently, or that a substantial part of it goes for services of which they disapprove." Each year, numerous bills are introduced in the House and Senate to create new trust funds. A trust fund can be created by simply designating it as such in the legislation by including a provision similar to the following language: "There is established in the Treasury of the United States a trust fund to be known as ... " Setting aside the political effects described above, whether a certain fund is designated as a trust fund or part of the federal funds group can be arbitrary and, in many cases, may not fundamentally affect the use of those funds or the operation of the program intended for use of those funds. Once a trust fund is created with a dedicated revenue source, Congress does not necessarily take a hands-off approach to the program. Congress frequently changes these programs, often to better align receipts with outlays, and in at least one instance to terminate the program (e.g., the General Revenue Sharing trust fund). Prior to FY1969, the federal budget consisted of three different budget concepts: the administrative budget, the cash budget, and the national income accounts budget. Much of the congressional, press, and public attention was focused on the administrative budget, which did not measure all federal government activities. The administrative budget omitted receipts and expenditures of federal trust funds. The 1967 President's Commission on Budget Concepts noted that the administrative budget, the consolidated cash budget, and the national income accounts budget have often been used as competing measures of the total scope of Federal activity; they are not unified and can be used together only with fairly elaborate reconciliation that tends to confuse more than it enlightens. In 1968, the Johnson Administration adopted the unified budget concept to account for all receipts and expenditures of the federal government. Subsequent administrations have continued using the unified budget concept, and focus on the surplus or deficit of all federal and trust funds together. In the annual appropriations process, Congress appropriates money, which gives agencies budget authority to enter into obligations (i.e., legal commitments to make a payment). Most trust fund based programs have permanent budget authority and all monies in the trust fund are available for obligation. Most trust funds lack the authority to incur obligations that exceed the monies in the trust fund. Some trust funds, however, are authorized to borrow from the general fund. Receipts in excess of outlays are added to the balance of the trust funds. The trust funds surplus (i.e., revenues in excess of outgo) in FY2012 amounted to $89.9 billion. This surplus is mostly invested in government obligations and transferred to the general fund to pay for other spending. By law, all trust funds except the Railroad Retirement fund must invest balances in government obligations. The Railroad Retirement fund is allowed to invest its balance in equities. The government securities held by trust funds are part of federal debt that is subject to the statutory federal debt limit. At the end of FY2012, the trust funds held $4,388.5 billion in government securities. The federal funds deficit for FY2012 was $1,176.8 billion, but because of the trust funds surplus, the unified federal budget deficit (what is widely reported in the press) was $1,087.0 billion. Trust fund receipts come from a variety of sources. Almost all trust funds receive monies from current or future beneficiaries. Most trust funds receive general revenues through direct payments or interest payments. In addition, some trust funds receive payments from other trust funds. For example, some railroad retirement benefits are financed by a payment from one of the Social Security trust funds (Old-Age and Survivors Insurance trust fund) to the Railroad Retirement trust fund. Table 1 shows the trust fund receipts coming from federal funds in FY2012, which amounted to $715.4 billion. The balances of the trust funds do not represent real resources available for spending. Rather they are future obligations of the federal government, and the federal government will have to divert revenues or borrow money from the public to redeem those obligations when they come due. Likewise, the interest on trust fund balances does not represent real resources available for spending--these payments are simply bookkeeping entries debiting one federal account and crediting another. If these interest payments to the trust funds are excluded, the trust funds would show a $38.6 billion deficit instead of an $89.9 billion surplus. Transfers between trust funds and federal funds, however, do not change the unified budget deficit or the level of federal debt. Figure 1 displays the evolution of trust fund surpluses since FY1962 and projections of trust fund balances through FY2018. With the exception of FY1962 (with a $299 million deficit), the trust funds have been in surplus. As a percentage of gross domestic product (GDP), the trust fund surplus reached a high of 2.4% in FY2000. The large increase in the trust fund surplus after 1982 is due to the 1983 Social Security amendments, which moved Social Security from primarily pay-as-you-go to partial prefunding by increasing the payroll tax rate and taxing Social Security benefits. The surplus fell dramatically from FY2009 through FY2013 because of the increased unemployment benefits paid and reduced payroll tax revenue due to the severe recession, which began in December 2007. Though the size of the trust fund surplus is projected to rebound over the next few years, the downward trajectory is set to resume near the end of the decade primarily due to the demands on trust fund outgo, primarily as a result of the retirement of the Baby Boomers. Interest payments to the trust funds are also shown in Figure 1 . These payments increased from about 0.2% of GDP in FY1962 to 1.5% of GDP by FY2002. Excluding interest payments from the calculation of the trust funds surplus produces a modified trust funds surplus. The modified trust fund surplus compares trust fund outgo with trust fund revenues (earmarked taxes, user fees, and legislatively dedicated general fund revenue). The modified trust fund surplus essentially shows the real resources of the federal government available for spending. The modified trust fund surplus, while following the same trend as the trust fund surplus, was negative in FY1962, FY1976, FY1980-1982, and FY2009-FY2013. Modified trust fund deficits are also projected for FY2014 and FY2015 before a projected return to surplus thereafter. The Office of Management and Budget (OMB) estimated that in FY2013 the trust funds would cumulatively collect $1,879 billion in revenue ($1,721 billion in non-interest revenue and $159 billion in interest revenue) and would outlay $1,811 billion. This would result in an overall $67.6 billion surplus in FY2013. Non-interest revenue to the trust funds would be $90.8 billion less than trust fund program expenditures--the modified trust fund surplus would be negative. OMB projects an aggregate $690.0 billion surplus over the FY2014-FY2018 period. Over the five-year period from FY2014-FY2018, non-interest revenues are projected to be $55.7 billion less than expenditures. The FY2012 income, outgo, and balances of the 13 largest trust funds are reported in Table 2 . The list represents those trust funds with balances in excess of $10 billion and account for over 99% of the balances of all trust funds. These 13 trust funds had a combined positive balance totaling $4,368.5 billion at the end of FY2012. Nine trust funds had income exceeding outgo in FY2012. The other four trust funds had a deficit. The largest deficits in FY2012 were in the Social Security Disability trust fund (-$29.7 billion) and the Medicare Hospital Insurance trust fund (-$16.5 billion). These trust funds are likely to remain in deficit on an annual basis until their projected insolvency unless action is taken to increase revenue to the trust funds or decrease expenditures. While nine of these trust funds recorded a surplus in FY2012, only six would still have been in surplus if interest payments from federal funds were excluded (military retirement, employees life insurance, employees and retired employees health benefits, foreign military sales, airport and airway, and railroad retirement). In total, the 13 trust funds would have had a FY2012 deficit of about $50 billion if interest payments were excluded. A brief description of the largest trust funds is provided in Table 3 , below. Overall, there were 39 trust funds with a deficit in FY2012. Together, these deficits totaled $58 billion. If interest payments from federal funds are excluded, the combined deficit of these 39 trust funds would be $80 billion. Most of this deficit (81%), however, is due to two trust funds--the Medicare Hospital Insurance (HI) and the Social Security Disability Insurance (DI) trust funds. Fifty trust funds had a FY2012 surplus with a combined surplus of $148 billion, but this would be only $41 billion if interest payments from federal funds were excluded (and five would be in deficit). Over the past few years, large budget deficits and the desire for fiscal sustainability have led to renewed efforts to reform the federal budget. This discussion included debate over how to address entitlements and related trust funds. Because entitlement spending comprises a major portion of federal outlays, significant changes to these programs may be included in a comprehensive reform package. Congress has often taken actions to increase a trust fund's revenues or reduce its outgo when it has faced imminent insolvency or exhaustion of its balances. Examples include the Social Security trust fund in 1983 and, more recently, the airport and airway trust fund. Policymakers can prevent insolvency of any trust fund simply by raising taxes and fees or by injecting general revenues into it. For example, injecting general revenue into a trust fund means reducing spending elsewhere in the budget, increasing the federal deficit, or raising taxes. Alternatively, payments to beneficiaries could be reduced. Making changes to the revenue or outlay structure of a trust fund often requires policymakers to face difficult choices that affect revenues and spending now and in the future. Table 4 , below, shows the income, outgo, and balances of all federal trust funds. In FY2012, total trust fund balances increased by $91 billion to $4,388.5 billion. Most trust funds had a positive balance at the end of FY2012. A handful of trust funds (15) had a zero balance at the end of the fiscal year. Eight of these trust funds had no income and outgo, three had income equal to outgo, and four had surpluses or deficits which resulted in balances of zero. In addition, seven trust funds had a positive end of FY2012 balance, but no income and outgo. Four trust funds--the Railroad Social Security Equivalent Benefit (SSEB) account, the Black Lung Disability trust fund, the Unemployment trust fund, and the Limitation on Administrative Expenses for the Social Security Administration--had negative balances at the end of FY2012 (totaling $20.2 billion). The Administration estimates the status of the larger trust funds for the upcoming fiscal year and the five subsequent years in its annual budget submission. In addition, the Social Security and Medicare Trustees produce two annual reports that project the financial status of the Social Security and Medicare trust funds for the next 75 years. According to OMB projections, by the end of FY2018, all but one of the trust funds listed in Table 2 are projected to have a positive balance. However, several of the balances in these trust funds remain flat or shrink over this period. Specifically, the balances of the Railroad Retirement, Medicare Hospital Insurance (HI), and Social Security Disability Insurance (DI) trust funds are expected to decrease. In the 2013 Trustees reports, the Trustees project that the Social Security and Medicare trust funds will be exhausted within the next 30 years: the Old-Age and Survivors Insurance (OASI) trust fund in 2035, the Disability Insurance (DI) trust fund in 2016, and the Hospital Insurance (HI) trust fund in 2026. The Supplementary Medical Insurance (SMI) trust fund is projected to be adequately financed indefinitely because under current law general fund financing is automatically provided to meet next year's expected costs. Once the trust funds are exhausted, the trust fund programs in any year will have the authority to obligate only the revenues received that year (in the absence of any legislation). For example, after trust fund exhaustion in 2033, Social Security will have tax revenue sufficient to pay about 75% of scheduled benefits, which would entail reducing Social Security beneficiaries' monthly benefits by 25%, absent other changes. Trust funds and trust fund programs can have both short-term and long-term effects on the economy. In the short term, many trust fund programs provide monetary benefits through outlays to the public, which are in turn spent on goods and services. A change in these benefits will increase or decrease consumer spending and thus economic activity. For example, government spending for unemployment compensation increases during recessions, which acts as a short-term fiscal stimulus. Unemployment compensation is what is known as an automatic stabilizer. The long-term effect is through the impact the trust funds have on national saving. Saving is the portion of national output that is not consumed and represents resources that can be used to increase, replace, or improve the nation's capital stock. Consequently, saving can increase the productive capacity of the nation, future income, and the amount of goods and services consumed in the future. National saving is the sum of private saving (by households and businesses) and public saving (by federal, state, and local governments). It has been argued that trust funds and trust fund programs (especially Social Security) can adversely affect both private and public saving. First, in a widely cited and influential article, Martin Feldstein estimated that Social Security has had the effect of lowering personal saving (a component of private saving) by 20% - 50% through an asset-substitution effect and the inducement-to-retire effect. However, Feldstein's results were questioned by Dean Leimer and Selig Lesnoy who found that Feldstein's work was flawed because of a computer programming error. After correcting the error, they concluded that the data show that Social Security had very little effect on personal saving. In a subsequent paper, Feldstein reestimated his model with updated data and obtained essentially the same results as in his earlier paper. Dennis Coates and Brad Humphreys, and Philip Meguire, however, showed that Feldstein's results are not robust to alternative specifications. In a review of the literature, the Congressional Budget Office (CBO) concluded that for each dollar of Social Security wealth, private wealth is reduced by between zero and 50 cents; however, CBO could not rule out higher or lower effects. Second, two studies suggest that trust fund surpluses in general and the Social Security trust funds in particular tend to increase federal deficits and reduce public saving. Kent Smetters estimated that for each dollar increase in the Social Security surplus, the non-Social Security federal budget deficit increased by more than $2.00. Sita Nataraj and John Shoven examined all trust fund surpluses rather than just the Social Security trust fund surplus and estimated that each dollar increase in trust fund surpluses is offset by a $1.50 increase in the federal funds deficit. The authors blame the shift to the unified budget concept after FY1969. Subsequent research, however, has questioned these findings. Peter Orszag showed that the results of Nataraj and Shoven are sensitive to the variables used and time period examined. Thomas Hungerford shows that previous researchers (Smetters, and Nataraj and Shoven) paid insufficient attention to the statistical properties of their variables, and, consequently, their results appear to be spurious. After correcting the methodological problems, he found no support for the argument that trust fund surpluses increased federal funds deficits. The mixed evidence seems to support the claim that trust fund surpluses reduce the federal government deficit and increase public saving. This becomes important at the time when trust funds need to redeem the Treasury obligations held by the trust fund to cover outgo. The Treasury obligations in the trust fund are claims on the government and the government will have to find real resources (by raising revenue, decreasing spending, or issuing more debt) to cover these claims when the obligations are redeemed.

The federal budget consists of four basic fund groups--the general fund, special funds, revolving funds, and trust funds. The first three are often referred to as the federal funds group. Trust funds are an accounting mechanism that records revenues, offsetting receipts, or collections earmarked for the purpose of the specific fund. Trust funds generally share three common features: (1) they are established for programs serving long-term purposes, (2) monies are used for a single purpose, and (3) users are charged to finance the trust fund. About 40% of all federal outlays were through trust funds and about 37% of all federal receipts came to trust funds in fiscal year (FY) 2012. A federal trust fund often represents a long-term commitment to use specific funds for a certain purpose. It has been argued that the creation of a trust fund is one way for Congress to "commit" future Congresses to fund a specific program or "to make long-term promises stick." Dedicated revenues are used to fund the program and the revenues usually come from the beneficiaries of the program. The Office of Management and Budget tracks approximately 120 trust funds and trust fund aggregates. The 13 largest trust funds account for nearly all (over 99%) of the income to, outgo from, and balances of all trust funds. Trust fund receipts come from a variety of sources. Almost all trust funds receive monies from current or future beneficiaries. Most trust funds receive general revenues in terms of direct payments or interest payments. In addition, some trust funds receive payments from other trust funds. Most trust fund programs have permanent budget authority and all monies in the trust fund are available for obligation. The outgo of a trust fund is comprised of payments made to the public or to another trust fund. Cumulatively, trust fund surpluses (i.e., revenues in excess of outgo) in FY2012 amounted to $89.9 billion. This surplus is mostly invested in government obligations and transferred to the general fund to pay for other spending. By law, all trust funds except the Railroad Retirement fund must invest balances in government obligations. The Railroad Retirement fund is allowed to invest its balance in equities. The government securities held by trust funds are part of federal debt that is subject to the statutory federal debt limit. At the end of FY2012, the trust funds held $4,388.5 billion in government securities. The federal funds deficit for FY2012 was $1,176.8 billion, but because of the trust fund surplus, the unified federal budget deficit (what is widely reported in the press) was $1,087.0 billion. Some observers have argued that trust fund programs increase the federal deficit and reduce national saving. There is evidence, however, to support the claim that trust fund surpluses reduce the federal government deficit and increase public saving. This becomes important when a trust fund's revenues are less than its outgo and the Treasury securities held by the trust fund need to be redeemed to cover outgo. The Treasury securities in the trust fund are claims on the government and the government will need to find real resources (by raising revenue, decreasing spending, or issuing more debt) to cover these claims when the obligations are redeemed.

On March 12, 2008, the EPA Administrator signed revisions to the National Ambient Air Quality Standards (NAAQS) for ozone. The revisions appeared in the March 27, 2008 issue of the Federal Register . Because they have widespread implications for public health and for the pollution control measures that will be imposed on sectors of the economy, the revisions (released in proposed form in June 2007) have stirred congressional interest and led many Members of Congress and state and local officials to comment on the Administrator's proposal. The Clean Air and Nuclear Safety subcommittee of the Senate Environment and Public Works Committee held a hearing on the proposal July 11, 2007. The House Oversight and Government Reform Committee plans a hearing April 24, 2008. This report provides background on NAAQS, the process used to establish them, the pre-existing ozone standard, and EPA's revisions, as well as information regarding the revisions' potential effects. As defined in Section 109 of the Clean Air Act, NAAQS are standards that apply to ambient (outdoor) air. The act directs EPA to set both primary and secondary standards. Primary NAAQS are standards, "the attainment and maintenance of which in the judgment of the [EPA] Administrator ... are requisite to protect the public health," with "an adequate margin of safety." Secondary NAAQS are standards necessary to protect public welfare, a broad term that includes damage to crops, vegetation, property, building materials, etc. NAAQS are at the core of the Clean Air Act, even though they do not directly regulate emissions. In essence, they are standards that define what EPA considers to be clean air. Once a NAAQS has been set, the agency, using monitoring data and other information submitted by the states, identifies areas that exceed the standard and must, therefore, reduce pollutant concentrations to achieve it. After these "nonattainment" areas are identified, state and local governments have three years to produce State Implementation Plans which outline the measures they will implement to reduce the pollution levels and attain the standards. Depending on the severity of the pollution, ozone nonattainment areas have anywhere from 3 to 20 years to actually attain the standard. EPA also acts to control many of the NAAQS pollutants wherever they are emitted, through national standards for products that emit them (particularly mobile sources, such as automobiles) and emission standards for new stationary sources, such as power plants. Thus, establishment or revision of a NAAQS sets in motion a long and complicated implementation process that has far-reaching impacts for public health, for sources of pollution in numerous economic sectors, and for states and local governments. The pollutants to which NAAQS apply are generally referred to as "criteria" pollutants. The act defines them as pollutants that "endanger public health or welfare," and whose presence in ambient air "results from numerous or diverse mobile or stationary sources." Six pollutants are currently identified as criteria pollutants: ozone, particulates, carbon monoxide, sulfur dioxide, nitrogen oxides, and lead. The EPA Administrator can add to this list if he determines that additional pollutants meet the act's criteria, or delete them if he concludes that they no longer do so. The act requires the agency to review each NAAQS every five years. That schedule is rarely met, but it often triggers lawsuits that force the agency to undertake a review. In the case of ozone, the previous review of the NAAQS was completed in 1997. The American Lung Association filed suit over EPA's failure to complete a review in 2003, and a consent decree established the schedule EPA ultimately followed. Reviewing an existing NAAQS is a long process that is described elsewhere in more detail. To summarize briefly, EPA scientists review the scientific literature published since the last NAAQS revision, and summarize it in a report known as a Criteria Document. The review process for ozone identified 1,700 scientific studies on topics as wide-ranging as the physics and chemistry of ozone in the atmosphere; environmental concentrations, patterns, and exposure; dosimetry and animal-to-human extrapolation; toxicology; interactions with co-occurring pollutants; controlled human exposure studies; epidemiology; effects on vegetation and ecosystems; effects on UVB exposures and climate; and effects on man-made materials. A second document that EPA prepares, the Staff Paper, summarizes the information compiled in the Criteria Document and provides the Administrator with options regarding the indicators, averaging times, statistical form, and numerical level (concentration) of the NAAQS. To ensure that these reviews meet the highest scientific standards, the 1977 amendments to the Clean Air Act required the Administrator to appoint an independent Clean Air Scientific Advisory Committee (CASAC). CASAC has seven members, largely from academia and from private research institutions. In conducting NAAQS reviews, their expertise is supplemented by panels of the nation's leading experts on the health and environmental effects of the specific pollutants that are under review. These panels can be quite large. The ozone review panel, for example, had 23 members. CASAC and the public make suggestions regarding the membership of the panels on specific pollutants, with the final selections made by EPA. The panels review the agency's work during NAAQS-setting and NAAQS-revision, rather than conducting their own independent reviews. The ozone standard affects a larger percentage of the population than any of the other NAAQS. Nearly half the U.S. population currently lives in ozone nonattainment areas, 140 million people in all. Since the standard has been strengthened as a result of the current review, more areas will be affected, and those already considered nonattainment may have to impose more stringent emission controls. The pre-existing primary (health-based) standard, promulgated in 1997, was set at 0.08 parts per million (ppm), averaged over an 8-hour period. Allowing for rounding, EPA considered areas with readings as high as 0.084 ppm (84 parts per billion) to have attained the standard. The review just completed found evidence of health effects, including mortality, at levels of exposure below the 0.08 ppm standard. As a result, both EPA staff and the Clean Air Scientific Advisory Committee (CASAC) recommended strengthening the standard. According to CASAC, "There is no scientific justification for retaining the current [0.08 ppm] primary 8-hr NAAQS...." The panel unanimously recommended a range of 0.060 to 0.070 ppm for the primary 8-hour standard. EPA staff also recommended strengthening the standard, in wording not quite so direct. The staff stated, "The overall body of evidence on ozone health effects clearly calls into question the adequacy of the current standard." They recommended "considering a standard level within the range of somewhat below 0.080 parts per million (ppm) to 0.060 ppm." Based on these recommendations, and his own judgment regarding the strength of the science, the Administrator proposed to tighten the primary standard to a level within the range of 0.070-0.075 ppm in June 2007, and ultimately chose to finalize the standard at 0.075 ppm (75 parts per billion). The revision will add a large number of counties to those showing nonattainment. As shown in Figure 1 , using 2004-2006 data (the latest available), 85 counties had monitors showing violation of the 0.08 ppm primary standard. Figure 2 shows what happens when the standard is strengthened to 0.075 ppm, again using 2004-2006 data: under the new standard, 345 counties, more than four times as many, show violations. EPA notes that nonattainment designations will not actually be made until 2010 at the earliest, and will use data for the period 2006-2008. Given the trend toward cleaner air in recent years, and regulations on both mobile and stationary sources that will be taking effect in the next few years, the agency expects the number of counties exceeding the standard to be less than indicated by these projections. Nevertheless, because a strengthening of the standard will result in some (perhaps a substantial number of) additional areas being designated nonattainment, and will mean that current nonattainment areas may have to adopt additional pollution control measures in order to reach attainment, numerous industry groups are reported to have challenged the scientific conclusions in meetings with Administration officials. As part of its recent review, EPA also assessed the secondary (public welfare) NAAQS for ozone, which was identical to the previous 0.08 ppm primary standard. Ozone affects both tree growth and crop yields, and the damage from exposure is cumulative over the growing season. In order to provide protection against ozone's adverse impacts, EPA staff recommended a new seasonal (3-month) average for the secondary standard that would cumulate hourly ozone exposures for the daily 12-hour daylight window (termed a "W126 index"). The staff recommended a standard in a range of 7 - 21 parts per million-hours (ppm-hrs). CASAC's ozone panel agreed unanimously that the form of the secondary standard should be changed as the staff suggested, but it did not agree that the upper bound of the range should be as high as 21 ppm-hours. The Administrator's June 2007 proposal was in line with the staff recommendation, 7-21 ppm-hrs, but his final March 2008 choice was to duplicate the new primary standard. He set a secondary standard at 0.075 ppm averaged over 8 hours, rejecting the advice of both CASAC and his staff. The secondary standard carries no deadline for attainment and has never been the subject of penalties or sanctions for areas that failed to meet it (unless they also violated a primary standard). Nevertheless, there appears to have been substantial disagreement between EPA and the White House over the form in which this standard should be set. The preamble to the final regulation repeats the arguments for a new form of standard (the W126 index), concluding: The CASAC, based on its assessment of the same vegetation effects science, agreed with the Criteria Document and Staff Paper and unanimously concluded that protection of vegetation from the known or anticipated adverse effects of ambient O3 [ozone] "requires a secondary standard that is substantially different from the primary standard in averaging time, level, and form," i.e. not identical to the primary standard for O3 (Henderson, 2007). The preamble also cites comments the agency received from the National Park Service that "... the NPS supports both the conclusion that a seasonal, cumulative metric is needed to protect vegetation, and that the W126 is a more appropriate metric ...," and it adds "EPA agrees with these comments." Nevertheless, the agency appears to have lost this argument. The preamble states that: On March 11, 2008, the President "concluded that, consistent with Administration policy, added protection should be afforded to public welfare by strengthening the secondary ozone standard and setting it to be identical to the new primary standard, the approach adopted when ozone standards were last promulgated. This policy thus recognizes the Administrator's judgment that the secondary standard needs to be adjusted to provide increased protection to public welfare and avoids setting a standard lower or higher than is necessary." The statement that the policy "recognizes the Administrator's judgment" is not EPA's wording. It is a direct quotation from the White House Office of Management and Budget. Controlling ozone pollution is more complicated than controlling many other pollutants, because ozone is not emitted directly by pollution sources. Rather, it forms in the atmosphere when volatile organic compounds (VOCs) react with nitrogen oxides (NOx) in the presence of sunlight. The ozone concentration is as dependent on the temperature and amount of sunshine as it is on the presence of the precursor gases. Ozone is a summertime pollutant, in general. Other factors being equal, a cool, cloudy summer will produce fewer high ozone readings than a warm, sunny summer. There are also complicated reactions that affect ozone formation. In general, lower emissions lead to less ozone, particularly lower emissions of VOCs. But under some conditions, higher emissions of NOx lead to lower ozone readings. This makes modeling ozone air quality and predicting attainment more difficult and contentious than the modeling of other air pollutants. Most stationary and mobile sources are considered to be contributors to ozone pollution. Thus, there are literally hundreds of millions of sources of the pollutants of concern and control strategies require implementation of a wide array of measures. Among the sources of VOCs are motor vehicles (about 40% of total emissions), industrial processes, particularly the chemical and petroleum industries, and any use of paints, coatings, and solvents (about 40% for these sources combined). Service stations, pesticide application, dry cleaning, fuel combustion, and open burning are other significant sources of VOCs. Nitrogen oxides come overwhelmingly from motor vehicles and fuel combustion by electric utilities and other industrial sources. EPA is prohibited from taking cost into account in setting NAAQS, but to comply with an executive order, the agency generally produces a Regulatory Impact Analysis (RIA) analyzing in detail the costs and benefits of new or revised NAAQS standards. The agency released an RIA for the final standards on March 14; the major conclusions regarding benefits and costs were also included in text slides dated March 12 that were posted on the agency's website. The RIA shows a wide range of estimates for benefits, from a low of $2 billion annually to a high of $19 billion annually in 2020. Costs of implementing the standard were estimated to range from $7.6 billion to $8.8 billion annually, also in 2020. The benefit range is so wide that it is difficult to reach any general conclusions regarding whether projected benefits exceed costs or vice versa. The public health benefits of setting a more stringent ozone standard are the monetized value of such effects as fewer premature deaths, fewer hospital admissions, fewer emergency room visits, fewer asthma attacks, less time lost at work and school, and fewer restricted activity days. An EPA Fact Sheet that accompanied the standards states that the benefits of an 0.075 ppm primary standard might include the avoidance of 260 to 2,300 premature deaths annually in 2020. Other annual benefits in 2020 would include preventing the following: 380 cases of chronic bronchitis 890 nonfatal heart attacks 1,900 hospital and emergency room visits 1,000 cases of acute bronchitis 11,600 cases of upper and lower respiratory symptoms 6,100 cases of aggravated asthma 243,000 days when people miss work or school 750,000 days when people must restrict their activities. In the RIA, the agency notes that, "There are significant uncertainties in both cost and benefit estimates." Among the uncertainties are unquantified benefits (the effects of reduced ozone on forest health and agricultural productivity, for example) and unquantified disbenefits (reduced screening of UVB radiation and reduced nitrogen fertilization of forests and cropland). The benefits will also vary, depending on which of the precursor pollutants nonattainment areas choose to control. The RIA also states, "Of critical importance to understanding these estimates of future costs and benefits is that they [are] not intended to be forecasts of the actual costs and benefits of implementing revised standards." If past experience is any guide, this is likely to mean that costs will not be as great as they are projected to be. In the agency's words, "Technological advances over time will tend to increase the economic feasibility of reducing emissions, and will tend to reduce the costs of reducing emissions." Benefits, meanwhile, will remain difficult to quantify, in part because of the difficulty of quantifying and valuing lives lost prematurely due to exposure to pollution. The major issues raised by the new standards concern whether the Administrator has made appropriate choices, i.e., whether his choices for the primary and secondary standards are backed by the scientific studies. The Administrator's choice for the primary standard is weaker than any part of the range proposed by CASAC. The secondary standard does not follow the form that CASAC unanimously recommended. In explaining the Administrator's choice for the primary standard, the preamble stresses the uncertainty that the Administrator found at lower levels of ozone exposure: The Administrator noted that at exposure levels below 0.080 ppm there is only a very limited amount of evidence from clinical studies, indicating effects in some healthy individuals at levels as low as 0.060 ppm. The great majority of the evidence concerning effects below 0.080 ppm is from epidemiological studies. The epidemiological studies do not identify any bright-line threshold level for effects. At the same time, the epidemiological studies are not in and of themselves direct evidence of a causal link between exposure to O 3 and the occurrence of the effects. Thus, he concluded that within his proposed range of 0.070 to 0.075 ppm, the choice was essentially a policy judgment. Taking into account the uncertainties that remain in interpreting the evidence from available controlled human exposure and epidemiological studies at very low levels, the Administrator notes that the likelihood of obtaining benefits to public health with a standard set below 0.075 ppm O3 decreases, while the likelihood of requiring reductions in ambient concentrations that go beyond those that are needed to protect public health increases. The Administrator judges that the appropriate balance to be drawn, based on the entire body of evidence and information available in this review, is a standard set at 0.075. CASAC, in a letter to the Administrator dated October 24, 2006, appeared to disagree with this conclusion. The letter states: Furthermore, we have evidence from recently reported controlled clinical studies of healthy adult human volunteers exposed for 6.6 hours to 0.08, 0.06, or 0.04 ppm ozone, or to filtered air alone during moderate exercise (Adams, 2006). Statistically-significant decrements in lung function were observed at the 0.08 ppm exposure level. Importantly, adverse lung function effects were also observed in some individuals at 0.06 ppm (Adams, 2006). These results indicate that the current ozone standard of 0.08 ppm is not sufficiently health-protective with an adequate margin of safety. It should be noted these findings were observed in healthy volunteers; similar studies in sensitive groups such as asthmatics have yet to be conducted. However, people with asthma, and particularly children, have been found to be more sensitive and to experience larger decrements in lung function in response to ozone exposures than would healthy volunteers. In past years, the Administrator has generally chosen standards within CASAC's ranges, but not always--a recent example being the NAAQS for particulate matter promulgated in October 2006. That standard is currently being challenged in the D.C. Circuit Court of Appeals. It would not be surprising if the new ozone standard is also challenged. In setting the secondary standard, as described earlier, the Administrator's choice also disregarded the advice of CASAC, and apparently EPA's staff as well. The preamble contains EPA statements both opposing and supporting the final form of the standard, and it appears to indicate substantial involvement by the White House Office of Management and Budget in the final days before promulgation. Other issues will undoubtedly be raised as affected industries, state environmental agencies, public interest and environmental groups, and the Congress review what EPA has promulgated, including the potential impacts of the new standards on public health and on the economy. In looking at potential impacts, EPA projected air quality to the year 2020, incorporating the expected reductions in emissions from a slew of federal regulations, including the Clean Air Interstate Rule (CAIR), the Clean Air Visibility Rule, the Tier 2 auto and light truck emission standards, several rules affecting diesel engines, and some state and local measures. Even with these controls, the agency projected that 28 counties in 10 states (counties that include some of the nation's biggest cities) would violate the 0.075 standard in 2020. Furthermore, most nonattainment areas will not be given until 2020 to attain the standards: for most, the deadline will be 2013 or 2016 (based on the degree to which pollutant concentrations exceed the new standard). This suggests a mismatch between the full impact of federal regulations on specific categories of emission sources and the requirement that local areas demonstrate attainment. This mismatch could support a case for stronger federal controls on the sources of ozone precursors or a reexamination of the attainment deadlines. Another issue arises from a close inspection of EPA's maps: i.e., whether the current monitoring network is adequate to detect violations of a more stringent standard. Only 639 of the nation's 3,000 counties have ozone monitors in place. With 345 of them (54%) showing violations of the new standard, using current data, how confident is the agency that the 2,400 counties without monitors would all be in attainment? For the past three years, the President's budget has requested significant reductions in grants to states and local governments for air quality management, which includes funding for monitoring. Given these reductions, increasing the number of monitors would appear to be a task that the agency views as falling on state and local government resources. The current monitors are generally found in urban areas, because of the larger population potentially affected, and because most of the sources of ozone precursor emissions are located in such areas. But, as noted earlier, ozone is not emitted directly by polluters. It forms in the atmosphere downwind of emission sources. Thus, rural areas can have high ozone concentrations, unless they are located a substantial distance from any urban area. In addition to the potential health impacts of ozone in rural areas, the controversy over the setting of the secondary ozone NAAQS might suggest a need for additional monitoring in rural areas.

EPA Administrator Stephen Johnson signed final changes to the National Ambient Air Quality Standard (NAAQS) for ozone on March 12, 2008; the proposal appeared in the Federal Register on March 27. NAAQS are standards for outdoor (ambient) air that are intended to protect public health and welfare from harmful concentrations of pollution. By changing the standard, EPA has concluded that protecting public health and welfare requires lower concentrations of ozone pollution than it previously judged to be safe. This report discusses the standard-setting process, the specifics of the new standard, and issues raised by the Administrator's choice, and it describes the steps that will follow EPA's promulgation. The ozone standard affects a large percentage of the population: nearly half the U.S. population currently lives in ozone "nonattainment" areas (the term EPA uses for areas that violate the standard), 140 million people in all. As a result of the standard's strengthening, more areas will be affected, and those already considered nonattainment may have to impose more stringent emission controls. The revision lowers the primary (health-based) and secondary (welfare-based) standards from 0.08 parts per million (ppm) averaged over 8 hours to 0.075 ppm averaged over the same time. Using the most recent three years of monitoring data, 345 counties (54% of all counties with ozone monitors) would violate the new standards. Only 85 counties exceeded the pre-existing standards. Thus, the change in standards will have widespread impacts in areas across the country. (The 345 counties that would exceed the standard are shown in Figure 2 of this report.) The revision follows a multi-year review of the science regarding ozone's effects on public health and welfare. The new standards will set in motion a long and complicated implementation process that has far-reaching impacts for public health, for sources of pollution in numerous economic sectors, and for state and local governments. The first step, designation of nonattainment areas is expected to take place in 2010, with the areas so designated then having 3 to 20 years to reach attainment. The new standards raise a number of issues, including whether the choices for the primary and secondary standards are backed by the available science. Not only are the Administrator's choices weaker than those proposed by his scientific advisers, but the administrative record makes clear that, in part, they were dictated by the White House over the objections of EPA. Whether the standards should lead to stronger federal controls on the sources of pollution is another likely issue. Current federal standards for cars, trucks, power plants, and other pollution sources are not strong enough to bring all areas into attainment, thus requiring local pollution control measures in many cases. EPA, the states, and Congress may also wish to consider whether the current monitoring network is adequate to detect violations of a more stringent standard. Only 639 of the nation's 3,000 counties have ozone monitors in place. With half of those monitors showing violations of the new standards, questions arise as to air quality in unmonitored counties.

At the Obama Administration's request, in December 2011 Congress enacted into law a new, joint State Department and Department of Defense (DOD) Global Security Contingency Fund (GSCF) to assist countries with urgent security and stabilization needs. The Administration proposed the GSCF with its FY2012 budget submission as a "pilot project" for State and the DOD to jointly fund and plan security-related assistance. Its stated purpose was to enable the United States to better "address rapidly changing, transnational, asymmetric threats, and emergent opportunities." "Pooled" DOD and State Department funds would be used to develop interagency responses to build the security capacity of foreign states, to prevent conflict, and to stabilize countries in conflict or emerging from conflict. Congress, demonstrating its interest in the experiment, provided GSCF authority as Section 1207 of the FY2012 National Defense Authorization Act ( P.L. 112-81 ) for four fiscal years rather than the three years requested. As enacted, Section 1207 also contains two transitional authorities for counterterrorism operations in Africa and one for Yemen, all expiring at the end of FY2012. Many see the GSCF as an innovative first step in addressing problems inherent in the current agency-based budgeting and program development systems. Although some view the GSCF primarily as a means to transfer funds from DOD to the State Department, with its relatively smaller budget, others look to it as a possible means to foster more timely, coherent, and effective U.S. government responses to emerging threats and opportunities and to provide an impetus for improving interagency coordination in security and stabilization missions. This report provides basic information on the GSCF legislation. It starts with a brief discussion of the conceptual origins of the legislation and then summarizes the legislation's provisions. It concludes with a short analysis of salient issues. Although the GSCF was proposed as a means to secure flexible funding for emerging needs, the GSCF concept has its origins in long-standing perceptions that multiple deficiencies in current national security structures and practices have undermined U.S. efforts abroad. A core problem is the U.S. government's current agency-centric national security system that inhibits rational budgeting and planning for national security efforts that require contributions from multiple agencies. Analysts have long proposed changes to address deficiencies along the following lines: Provide the State Department with a flexible funding account to respond to emerging needs and crises situations . For many years, the George W. Bush Administration repeatedly sought a State Department emergency response fund that would facilitate immediate responses to crises and emerging threats. Congress denied such requests several times, but in 2005 it authorized DOD to transfer up to $100 million of its own funds to the State Department for such purposes. (Section 1207 of the FY2006 NDAA, P.L. 109-163 , as amended.) This "Section 1207" authority expired at the end of FY2010. Congress established a U.S. Agency for International Development account, the Complex Crises Fund in FY2011 for similar purposes, with a $50 million appropriation in FY2011 and $40 million in FY2012, but has not made a similar account available to the State Department. Develop mechanisms to promote greater interagency cooperation in planning security and stabilization programs. Analysts point to many problems inherent in programming by individual agencies. Because agencies usually do not consult or coordinate with others when planning programs, there is unnecessary duplication and overlap. And because agencies conduct programs targeted at the issues that fall under their purview, there are often serious gaps. Of particular concern are the "governance gaps," i.e., the formulation of security assistance programs to train and equip military forces without components to improve the ability of government institutions to manage those forces. The goal of greater interagency cooperation is to develop coherent security and stabilization programs that address all elements of a problem. Clarif y and rationaliz e security roles and missions. The appropriate division of labor between the State Department and DOD, especially for security assistance, is a matter of debate. Since military assistance first became a significant component of U.S. foreign policy after World War II, oversight of those programs has always been vested in a civilian, usually the Secretary of State. In 1961, Congress made the Secretary of State responsible, by law, for "the continuous supervision and general direction" of that assistance. Beginning in the 1980s, however, Congress has called on DOD to contribute its manpower and funding to an increasingly broad range of national security efforts under new DOD authorities. After the terrorist attacks on the United States of September 11, 2001 (9/11), DOD requested and Congress approved multiple new DOD authorities. Some fill gaps when civilian funding and personnel are not available. Others, DOD argues, provide a means to address critical needs in an effort to protect U.S. troops and minimize U.S. military operations. The goal is to reach agreement on an appropriate model for post -9/11 civil-military activities and missions, either by strengthening the State Department's ability to lead, by creating a new system of shared responsibility, or by strengthening the State Department's lead while also encouraging greater sharing of responsibility in order to enhance collaboration among all agencies involved in security sector assistance. Creat e a "unified" budget system for national security missions along functional rather than agency lines . For over a decade, analysts have urged the U.S. government to consolidate budgets for national security activities. In particular, they have recommended that the White House present Congress annually with either a unified national security budget or a series of unified budgets for a specific multi-agency national security activity, such as counterterrorism or security assistance. The goal is to rationalize government-wide resource allocation and promote due consideration of the tradeoffs involved in allocating those resources. Unified budgets are also recommended as a means to provide greater transparency and accountability in U.S. government spending, and facilitate congressional oversight of national security programs. The Obama Administration presented the GSCF as a means to identify potential difficulties when combining State Department and DOD funds and to test the possibilities for combining agency expertise and efforts to conduct security activities. If successful, the GSCF is seen as a possible precedent for a broader interagency funding and efforts. Assistance may be provided under the three-year GSCF authority for three purposes, as detailed below. Assistance "may include the provision of equipment, supplies, and training." (GSCF funds are available to either the Secretary of State or the Secretary of Defense for such assistance.) The first two of these purposes--security and counterterrorism training, and coalition support--are nearly identical to those of the Global Train and Equip authority provided by Section 1206 of the FY2006 NDAA, P.L. 109-163 , as amended, with one exception. For Section 1206 programs, the Secretary of Defense is in the lead. Section 1207 (b)(1)(A) authorizes the use of the GSCF "to enhance the capabilities of military forces and other security forces responsible for conducting border and maritime security, internal security, and counterterrorism operations, as well as the government agencies responsible for such forces." Recipient countries would be designated by the Secretary of State with the concurrence, i.e., approval, of the Secretary of Defense. Programs to provide this support would be jointly formulated by the Secretary of State and the Secretary of Defense, and approved by the Secretary of State, with the concurrence of the Secretary of Defense before implementation. Section 1207 (b)(1)(B) permits GSCF assistance to national military forces and other specified security forces to enable them to "participate in or support military, stability, or peace support operations consistent with United States foreign policy and national security interests." Just as with security and counterterrorism training assistance, recipient countries would be designated by the Secretary of State with the concurrence of the Secretary of Defense. These programs are also jointly formulated by the Secretary of State and the Secretary of Defense, and approved by the Secretary of State, with the concurrence of the Secretary of Defense, before implementation. Section 1207(b)(2) authorizes using the GSCF to assist the justice sector (including law enforcement and prisons), and to conduct rule of law programs and stabilization efforts "where the Secretary of State, in consultation with the Secretary of Defense, determines that conflict or instability in a region challenges the existing capability of civilian providers to deliver such assistance." The Secretary of State also designates recipients of this type of assistance and implements activities with the concurrence of the Secretary of Defense. However, unlike the preceding types of assistance where the Secretaries of State and Defense would jointly formulate programs, the Secretary of State formulates these programs in consultation with the Secretary of Defense. State and DOD staff will determine an appropriate consultation mechanism. In addition to the GSCF authority requested by the Administration, Section 1207(n) of the original legislation established three new transitional authorities that would permit the Secretary of Defense, with the concurrence of the Secretary of State, to assist counterterrorism and peacekeeping efforts in Africa during FY2012. A similar provision was added to the FY2013 NDAA ( P.L. 112-239 ); subsequently, Section 1207(n) was deleted by the FY2014 NDAA. The FY2012 NDAA established a GSCF account "on the books of the Treasury of the United States." As amended by the FY2014 NDAA, there is no overall spending limitation. There is a limit of $200 million on transfers from DOD to the GSCF, but no limit is set on State Department funding. (However, the appropriations legislation sets a limit on State Department transfers; see below.) A proportional limitation provides that the DOD contribution for any activity shall be no more than 80% of the cost of that activity, and the State Department contribution shall be not less than 20%. Despite the State Department's request for a $50 million appropriation, the FY2012 appropriations act provided no new money for the fund, but permitted DOD and the State Department to transfer up to the $250 million from other accounts, with a limit of $200 from DOD and $50 million from State. Under the FY2012 NDAA, monies may be transferred from the GSCF to the "agency or account determined to be the most appropriate to facilitate" assistance. (No official was specified as responsible for the determination.) GSCF authority expires on September 30, 2015, but amounts appropriated or transferred before that date for programs already in progress would remain available until the programs are completed. Complementing the P.L. 112-74 appropriations act authority for DOD to transfer funds to the GSCF, the P.L. 112-81 authorizing legislation provided DOD with a new transfer authority of up to $200 million per fiscal year, permitting DOD to transfer funds from its defense-wide operation and maintenance account to the GSCF. The appropriations act required the Secretary of Defense to notify the congressional defense committees in writing 30 days before making the transfer, providing the source of the funds and a detailed justification, execution plan, and timeline for each proposed project. Just as with DOD, the P.L. 112-74 appropriations act provided no new monies for the State Department contribution to the fund. Instead, this act permits the State Department to transfer up to $50 million from funds appropriated in three accounts (i.e., International Narcotics Control and Law Enforcement [INCLE], Foreign Military Financing [FMF], and Pakistan Counterinsurgency Capability Fund [PCCF]) or any other transfer authority available to the Secretary of State. No funding was provided in FY2013. The "omnibus" Consolidated Appropriations Act, 2014 ( P.L. 113-76 ), Section 8003 of Division K (Department of State, Foreign Operations, and Related Programs Appropriations Act, 2014), permits the State Department to transfer up to $25 million to the GSCF from INCLE, FMF, and PKO. Section 8068 of Division C (Department of Defense Appropriations, 2014) of that act states that DOD may transfer up to $200 million to the GSCF from the Operations and Maintenance, Defense-Wide account. For FY2015, the Obama Administration does not request a GSCF appropriation under the State Department budget. Relevant DOD budget documents available as of this date seem to indicate there is no DOD FY2015 appropriation request. Congress provided GSCF authority notwithstanding any other provision of law, with two exceptions. These are the Foreign Assistance Act of 1961, as amended (FAA) (P.L. 85-195) Section 620A prohibition on assistance to governments supporting international terrorism and the FAA Section 620J prohibition on assistance to foreign security forces for which the Secretary of State has determined there is credible evidence of gross violations of human rights (the "Leahy Amendment." The legislation makes clear that the three-year GSCF authorization is not intended to replace other legislation. GSCF programs are required to include elements to promote the observance of and respect for human rights and fundamental freedoms, as well as respect for legitimate civilian authority. Reporting requirements are extensive and detailed. There are five separate reporting requirements, one in the appropriations legislation (a notification before funds are transferred) and four in the authorization legislation (one a notification before programs are initiated, one when guidance is issued, one when guidance and processes are fully operational, and one an annual report). Section 8003(d) of the FY2014 omnibus appropriations legislation ( P.L. 113-76 ) requires the State Department to notify the appropriations committees 15 days prior to making any transfers from the INCLE, FMF, and PKO accounts to the GSCF in accordance with regular notification procedures, including a detailed justification, implementation plan, and timeline for each proposed project, but is not subject to prior consultation with the appropriations committees. Section 8068 requires DOD to notify the congressional defense committees in writing 30 days prior to making transfers from the Operations and Maintenance, Defense-Wide account to the GSCF with the source of funds and a detailed justification, execution plan, and timeline for each proposed project. The FY2014 NDAA amended NDAA reporting requirements slightly. The authorizing legislation requires the secretaries of State and Defense to notify specified congressional committees at four points. Specified committees are the House and Senate Appropriations Committees and Armed Services Committees, the House Committee on Foreign Affairs, and the Senate Committee on Foreign Relations. The Secretary of State and the Secretary of Defense must notify the specified committees not less than 30 days before initiating an activity. No funds may be transferred into the fund until 15 days after Congress is notified. The notification regarding the initiation of program activities is to include a detailed justification for the program, its budget, execution, plan and timeline, a list of other security-related assistance or justice sector and stabilization assistance being provided to that country that is related to or supported by that activity, and any other appropriate information. The secretaries of State and Defense shall jointly submit a report to the specified committees no later than 15 days after the date on which guidance and processes for implementation of programs have been issued, and shall jointly submit additional reports not later than 15 days after future changes to guidance and processes. A related notification requirement mandates that the Secretary of State, with the concurrence of the Secretary of Defense shall jointly notify Congress 15 days after the date on which all necessary guidance has been issued and the processes for implementing programs "are established and fully operational." The secretaries of State and Defense must jointly submit an annual report on programs, activities, and funding no later than October 30 of each year. For programs to be conducted under FY2012 funding, the Secretary of State designated seven countries as recipients of GSCF assistance: Nigeria, Philippines, Bangladesh, and Libya, as well as three Central European countries, Hungary, Romania, and Slovakia. In August and September, 2012, the State Department and DOD submitted requests to the Appropriations Committees to transfer $44.8 million from designated funds to the GSCF. These funds were transferred before the end of FY2012, according to the State Department. As of the date of this report, detailed programs are still being developed. (See Table A-1 in the Appendix for summaries of the programs and funding transferred.) No further information on the progress of the FY2012 programs or on plans for potential FY2014 programs has been made available to CRS. For some policy makers and analysts, the GSCF proposal is a positive, long-awaited first step toward the development of integrated, interagency funding streams for agencies that carry out related programs. For others, the GSCF proposal and specific provisions of the bill raise a number of issues, some of which are summarized below. Congress has expressed concern over the slow pace of FY2012 program planning and implementation. In May 2012, the House Armed Services Committee HASC), in its report on the National Defense Authorization Act for FY2013 ( H.R. 4310 ), expressed concern with the direction and speed of the process of developing GSCF programs. Attributing the problem to cumbersome bureaucratic processes, HASC stated its expectation that the departments "begin exercising the authority in a timely manner." Also contributing to delays have been the small size of the GSCF three-member team, the problems of setting up a new interagency office, and the difficulties of aligning two sets of planning and implementation processes, requiring decisions down to the level of resolving definitional differences, as well as to the extensive intra-agency consultation and coordination required, according to observers. Some observers have wondered whether identifying feasible projects has contributed to the delay. While to some observers these problems raise serious doubts about the feasibility of establishing an agile interagency mechanism, others believe the potential utility of such a mechanism argues for continued efforts to overcome them. The GSCF puts the State Department, in the person of the Secretary of State, in the lead. Some who have viewed Congress's approval of many new DOD security assistance authorities since 9/11 as a gradual erosion of the traditional State Department lead on security assistance, may see the GSCF as a welcome reversal of that trend. Nevertheless, some may wonder about the extent to which the Secretary of State may actually exercise control if DOD provided most GSCF funding. This is especially true as the Secretary of Defense will be providing funds through an authority that permits the transfer of funds from one activity to another but stipulates that the funds may only be transferred to a higher priority activity. Activities that may be high priority for State are not necessarily high priority for DOD. Advocates of greater State Department control would prefer that Congress dispense with the GSCF "pooled" fund and appropriate substantially more security assistance and related DOD funding (particularly "Section 1206" building partnership capacity funding ), directly to the international affairs budget, just as FMF, INCLE, and PCCF are currently appropriated. Some fear that the decision to pool DOD and State Department funds rather than to appropriate funds directly to the State Department budget will perpetuate the State Department's lack of capacity to resource security assistance rather than resolve it. On the other hand, others are concerned that including all GSCF funding in the international affairs budget would leave GSCF activities vulnerable to possible cuts by Congress or the State Department itself in the case of overall State Department budget reductions. Others may be concerned that the State Department lacks the capacity to plan and direct an increased number of security assistance and related governance and rule of laws programs without increasing the size of its staff. Some also view the State Department as lacking the institutional interest and will necessary to plan and oversee a large security assistance portfolio. But others may point to the State Department's creation of new programs under the Security Assistance peacekeeping account (PKO) as evidence of State's interest in this program area. For DOD, the GSCF may be perceived as entailing disadvantages as well. While some perceive the GSCF's ability to tap DOD funds for State Department programs of mutual interest as beneficial, others see this effort as a problematic and unwarranted diversion of DOD funds, particularly in this constrained budget environment. In addition, some perceive possible future disadvantages. Some analysts believe that DOD at times needs to ensure the integrity of its own missions by the use of security and stabilization assistance. Because GSCF purposes overlap those of DOD's "Section 1206" train and equip authority, where the Secretary of Defense is in the lead, some analysts view a successful GSCF effort as someday leading to the elimination of Section 1206 and similar authorities. For some analysts, such a move could mean sacrificing some of the control and flexibility over programs provided through a DOD authority. The GSCF proposals also raise the continuing concern about DOD's role in training security forces with law enforcement functions. The GSCF legislation provides DOD with authority to train and otherwise assist a wider range of foreign security forces than previously permitted. Since FY2006, in conjunction with DOD requests for an expansion of Section 1206 authority, Congress has repeatedly rejected providing DOD with authority to train and assist police and other non-military forces, except for foreign maritime security forces. (Congress has, however, specifically provided DOD with authority to train police in Afghanistan and Iraq.) The GSCF provides authority for assistance to "security forces responsible for conducting border and maritime security, internal security, and counterterrorism operations, as well as the government agencies responsible for such forces," without any limitation on the agency that could provide such assistance. Opponents of this extension have argued that training security forces that perform law enforcement functions is a civilian, not a DOD, function because military skills and culture are distinct from those of civilian law enforcement. Proponents see sufficient overlap, particularly for security forces that operate in lawless border areas and those that exercise counterterrorism functions, to validate this expansion. Some, although, point out that such police activities conducted within the GSCF framework would probably be subject to greater State Department oversight than those conducted under a DOD authority. Some analysts express concern that the Administration has requested a new security assistance funding mechanism without first establishing a strategic framework that would set priorities and clarify department and agency roles in security assistance, improving the prospects for effective interagency collaboration. Early on, the Obama Administration undertook a review of security assistance to establish such a framework, but that effort has not concluded. Some now look to the GSCF process as the crucible for competing concepts and new arrangements. Given the Administration's characterization of the GSCF as an experiment intended to identify issues in interagency collaboration, the GSCF may indeed contribute to the goals of the review. Even though the GSCF has been authorized for four years, through FY2015, Congress may monitor its use closely and consider in-course changes. Congressional expressions of concern about the Administration's slow progress in implementing FY2012 programs point to cumbersome bureaucratic processes as a source of the problem. GSCF officers have attributed difficulties to the melding of State and DOD procedures and the extensive intra-agency coordination required in the State Department. Coordination problems may be exacerbated by reliance on transfers from multiple State Department accounts, rather than on appropriations, may be another source of the problem. If the Administration cannot plan and implement FY2014-funded programs more expeditiously than the FY2012 programs, Congress may wish to study, perhaps through a Government Accountability Office (GAO) or other program evaluation, whether and how planning and implementation impediments can be overcome.

The FY2012 National Defense Authorization Act (P.L. 112-81), Section 1207, created a new Global Security Contingency Fund (GSCF) as a four-year pilot project to be jointly administered and funded by the Department of Defense (DOD) and the State Department. The purpose of the fund is to carry out security and counterterrorism training, and rule of law programs. (There also are three one-year transitional authorities for assistance to Africa and Yemen.) The GSCF is placed under the State Department budget. Although decisions are to be jointly made by the Secretaries of State and Defense, the mandated mechanism puts the Secretary of State in the lead. The GSCF was conceived of as an important step in improving U.S. efforts to enable foreign military and security forces to better combat terrorism and other threats. It incorporates features of previous legislation and reflects recommendations to address multiple deficiencies in current national security structures and practices. Many have hope that it will provide a model for interagency cooperation on security assistance that will overcome the disadvantages of the current system of agency-centric budgets and efforts. Extended start-up difficulties, however, have led to questions about the mechanism's utility. To date, Congress has provided funds for the GSCF through transfers from other accounts, not from appropriations. While the Administration requested GSCF appropriations in FY2012, FY2013, and FY2014, Congress has appropriated no funding. In the FY2012 omnibus appropriations act (P.L. 112-74), Congress permitted DOD and the State Department to transfer up to the $250 million from specified accounts, with a limit of $200 million from DOD and $50 million from State. For FY2013, Congress made no provision for funding. In the FY2014 omnibus appropriations act (P.L. 113-76), Congress provided authority for DOD to transfer to the GSCF up to $200 million and for the State Department to transfer up to $25 million from specified accounts. For FY2015, the Obama Administration does not request a GSCF appropriation under the State Department budget. Relevant DOD FY2015 budget documents available as of this date seem to indicate there is no DOD FY2015 appropriations request. The Administration has taken steps to program FY2012 funds. In mid-2012, it notified Congress that it would initiate programs for Yemen and East Africa under the "transitional" (Section 1207(n), P.L. 112-81) authority with authorized funding up to $75 million each. These are being implemented. Later in the year, the Administration transferred $44.8 million to the GSCF for programs under the core GSCF legislation, which provided for country selection by the Administration in the course of the fiscal year. The Secretary of State designated seven countries as eligible for this assistance: Nigeria, the Philippines, Bangladesh, Libya, Hungary, Romania, and Slovakia. The Administration must notify congressional committees with detailed program plans before the programs can begin. The GSCF office has provided no further information to CRS as of this date. Issues include whether the State Department has the ability and capacity to lead GSCF activities; possible drawbacks for DOD; the desirability of providing DOD with authority to train non-military security forces, including law enforcement; and the potential effectiveness of GSCF programs in the absence of a strategy for security assistance.

In September 2007, Congress reauthorized the Prescription Drug User Fee Act (PDUFA). This was the third five-year extension of the original 1992 law. Since 1993, the program has enabled the Food and Drug Administration (FDA) to collect and use fees from pharmaceutical manufacturers to review marketing applications concerning prescription drug and biological products. The law intends those fees to supplement direct appropriations not replace them. This most recent version of the user fee program, often referred to as PDUFA IV, retains the basic structure and elements of the original PDUFA. Like PDUFA II and PDUFA III, PDUFA IV addresses issues that had been either unnecessary or unrecognized in earlier versions of the law. The current authority expires October 1, 2012. This report reviews the history the four PDUFA authorizations as well as the issues concerning them. It first describes the situation that led to the introduction of prescription drug user fees. It then describes the initial PDUFA law and the incremental changes made in each of its reauthorizations. The report closes with a discussion of the intended and unintended effects of the prescription drug user fee program on FDA both within the human drug program and agency-wide. This report presumes some knowledge of the approval process for drugs and biologics. Readers unfamiliar with those activities might benefit by first reading CRS Report RL32797, Drug Safety and Effectiveness: Issues and Action Options After FDA Approval , by [author name scrubbed]. The 1992 passage of PDUFA had its origin in the dissatisfaction from industry, consumers, and FDA itself. All three felt it took far too long from the moment a manufacturer submitted a drug or biologics marketing application to the time FDA's reached its decision. In the late 1980s, that process took a median time of 29 months. Patients had to wait for access to the products. For some patients, a drug in review--and therefore not available for sale--could be the difference between life and death. Manufacturers, in turn, had to wait to begin to recoup the costs of research and development. At that time, FDA estimated that each one-month delay in a review's completion cost a manufacturer $10 million. FDA argued that it needed more scientists to review the drug applications that were coming in and the ones already backlogged in its files. It had not received sufficient appropriations to hire them. For decades FDA had asked Congress for permission to implement user fees; the pharmaceutical industry generally opposed them, believing the funds might go into the Treasury to reduce federal debt rather than help fund drug review. The 1992 law became possible when FDA and industry agreed on two steps: performance goals, setting target completion times for various review processes; and the promise that these fees would supplement--rather than replace--funding that Congress appropriated to FDA. Those steps helped persuade industry groups the fees would reduce review times--and gave FDA the revenue source it had sought for over 20 years. Congress first authorized FDA to collect fees from pharmaceutical companies in 1992 with the Prescription Drug User Fee Act (PDUFA, P.L. 102-571 ), which amended the Federal Food, Drug, and Cosmetic Act (FFDCA). Its goals were to speed up FDA's review of new drug applications for approval and to diminish its backlog of applications. PDUFA specified the activities on which FDA could spend the fees; most of the collections were to be used to hire additional reviewers. To keep funding predictable and stable, Congress required three kinds of prescription drug user fees, and specified that they each make up one-third of the total fees collected: application review fees: a drug's sponsor (usually the manufacturer) would pay a fee for the review of each new or supplemental drug-approval or biologic-license application it submitted; establishment fees: a manufacturer would pay an annual fee for each of its manufacturing establishments; and product fees: a manufacturer would pay an annual fee for each of its products that fit within PDUFA's definition. For FY1993, the standard application fee was approximately $100,000. The law provided exceptions--either exemptions or waivers--for applications from small businesses, or for drugs developed for unmet public health needs or orphan diseases. PDUFA I authorized fee revenue limits for each of FY1993 through FY1997, allowing also for adjustments based on inflation. The fees collected in each fiscal year were to be in an amount equal to the amount specified in appropriations acts for such fiscal year. In accordance with the agreement that brought about its passage, PDUFA I explicitly stated that the funds were to supplement, not supplant, congressional appropriations. The law included complex formulas, known as "triggers," to enforce that goal. FDA may collect and use fees only if the direct appropriations for the activities involved in the review of human drug applications and for FDA activities overall remain funded at a level at least equal to the pre-PDUFA budget, adjusted for inflation as specified in the statute. PDUFA's basic goal was, each year, to reduce the time from the sponsor's submission of an application to FDA's decision regarding approval. Rather than listing specific performance goals in statutory language, Congress stated in the bill's "Findings" (Section 101) that: (3) the fees authorized by this title will be dedicated toward expediting the review of human drug applications as set forth in the goals identified in the letters of September 14, 1992, and September 21, 1992, from the Commissioner of Food and Drugs to the Chairman of the Energy and Commerce Committee of the House of Representatives and the Chairman of the Labor and Human Resources Committee of the Senate, as set forth at 138 Cong. Rec. H9099-H9100 (daily ed. September 22, 1992). This direction was not codified in the FFDCA; instead, Congress, with that "finding," incorporated the performance goals listed in FDA Commissioner David Kessler's September 1992 letters to the committee chairs. The predominant goal was that, by 1997, FDA would review 90% of standard applications within 12 months and 90% of priority applications within six months of application submission. PDUFA restricted FDA's use of collected fees to activities related to the "process for the review of human drug applications." In its FY2004 report to Congress, FDA listed such activities. They include investigational new drug (IND), new drug application (NDA), biologics license application (BLA), product license application (PLA), and establishment license application (ELA) reviews; regulation and policy development activities related to the review of human drug applications; development of product standards; meetings between FDA and application sponsor; pre-approval review of labeling and pre-launch review of advertising; review-related facility inspections; assay development and validation; and monitoring review-related research. Congress reauthorized PDUFA in 1997 as Title I of the Food and Drug Administration Modernization Act (FDAMA, P.L. 105-115 ). The reauthorization, referred to as PDUFA II: stated that the fees were to be used to expedite the drug development and application review process as laid out in performance goals identified in letters sent by the Secretary of the Department of Health and Human Services (HHS) to the two authorizing committees; mandated tighter performance goals, more transparency in the drug review process, and better communication with drug makers and patient advocacy groups; and allowed FDA to use PDUFA revenue to consult with manufacturers before they submitted an application. Previously FDA could use the fees only to review a manufacturer's application. Now FDA could meet with a manufacturer from the moment it began testing a new drug in humans. (See Figure 3 .) Congress passed its second five-year reauthorization as Title V of the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 ( P.L. 107-188 ). PDUFA III: allowed FDA to adjust annual revenue targets based on changes in workload; required the agency to meet with interested public and private stakeholders when considering the reauthorization of this program before its expiration; allowed the collection, development, and review of postmarket safety information for up to three years on drugs approved after October 1, 2002, which allowed the agency to double the number of staff monitoring side effects of drugs already on the market; allowed biotechnology companies to request that FDA select an independent consultant (for which the manufacturer would pay) to participate in FDA's review of research activities; authorized two pilot programs for the continuous ("rolling") review of new drug applications for products designated for the fast track program because they would address serious or life-threatening conditions for which other treatments were not available; encouraged companies to include risk management plans in their pre-NDA/BLA meetings; allowed the use of fees to develop databases documenting drugs' use; allowed the use of fees for risk management oversight in the "peri-approval" period (i.e., two to three years post-approval); provided for "first cycle," preliminary reviews; required the HHS Secretary to note on FDA's website if a sponsor did not meet an agreed-upon deadline to complete a postmarket study, and to note if the Secretary considers the reasons given for study incompleteness to be unsatisfactory; required any sponsor who failed to complete timely studies to notify health practitioners both of this failure and of unanswered questions related to the clinical benefit and safety of the product; and added specificity to the availability and crediting of fees provision, stating that fees authorized be collected and available for obligation only to the extent and in the amount provided in advance in appropriations Acts; and that such fees are authorized to remain available until expended. PDUFA allowed FDA to use fee revenue for activities that were part of the "process for the review of human drug applications." Both PDUFA II and PDUFA III expanded the scope of that definition beyond the review of a submitted NDA/BLA to include both earlier phases (preclinical development, clinical development) and later phases (post-approval safety surveillance and risk management). The Prescription Drug User Fee Amendments of 2007 (PDUFA IV) formed Title I of the FDA Amendments Act of 2007 ( P.L. 110-85 ). This September 2007 reauthorization of PDUFA kept the basic approach to prescription drug user fees that Congress first enacted in 1992. The PDUFA provisions in FDAAA made some technical changes to the law's earlier versions and introduced some new elements. For example, PDUFA IV: added a "reverse trigger" to the law, turning around the concept of "triggers" that the earlier PDUFA laws included to safeguard the pre-PDUFA level of appropriations. If appropriations for both FDA as a whole and for the agency's review of human drug applications exceed the amounts appropriated for those activities for FY2008, then authorized user fee revenue will be decreased by an amount up to $65 million of the increase in appropriations; added fee revenues for drug safety totaling $225 million over the five-year reauthorization; removed the calendar and time limitations on postapproval activities. FDA may, therefore, use PDUFA funding for authorized activities throughout the life of a product, rather than the three-year postapproval period that PDUFA III had allowed; expanded the list of postmarket safety activities for which the fees could be used to include developing and using adverse-event data-collection systems, including information technology systems; developing and using improved analytical tools to assess potential safety problems, including access to external data bases; implementing and enforcing new FFDCA requirements relating to postapproval studies, clinical trials, labeling changes, and risk evaluation and mitigation strategies; and managing adverse event reports; authorized the assessment and collection of fees relating to advisory review of prescription-drug television advertising. Manufacturer requests for pre-dissemination review of advertisements would be voluntary, and FDA responses would be advisory. Only manufacturers that request such reviews would be assessed the new fees, which would include an advisory review fee and an operating reserve fee; codified in the FFDCA certain core elements, such as annual reporting requirements, of the prescription drug user fee program that, although included in PDUFA I, II, and III, were never placed into the FFDCA; and set forth new requirements intended to increase the Secretary's communication to the public regarding, for example, negotiations between the agency and industry. The PDUFA IV amendments took effect on October 1, 2007. Authority to assess, collect, and use drug fees will cease to be effective October 1, 2012. The reporting requirements will cease to be effective January 31, 2013. PDUFA has attracted both criticism and praise from industry, FDA staff, consumers, and Members of Congress. The issues they raised played out in the legislative debate leading up to PDUFA IV, as they had at each earlier reauthorization. Although specific to PDUFA, these issues persist because they reflect broader questions about budget choices under limited resources, the identification and amelioration of conflicts of interest, and the tension between making new drugs available to the public and ensuring that those drugs be safe and effective. The next section of this report uses data covering the period leading up to PDUFA IV to illustrate those key issues likely to resurface, particularly as Congress plans for PDUFA V, scheduled for 2012. Based on its stated goals, PDUFA has been generally viewed as a success. FDA has added review staff and now completes it reviews of NDA/BLA applications more quickly and runs less of a backlog. Median time from an NDA or BLA submission to FDA's approval decision was 29 months in 1987; for the first two years of PDUFA I, it fell to 17 months. In later years, FDA presented separate calculations for standard applications and priority applications. Table 1 shows median approval times for 1993 through 2006. In calendar year 2006, the median review times were 13.0 months for standard applications and 6.0 months for priority applications. FDA attributes shorter approval times to PDUFA-funded staff increases. PDUFA also funds FDA activities with sponsors before their official NDA or BLA submissions, resulting in increasingly more complete applications that require fewer extensive resubmissions. As a result of PDUFA, industry faces shorter and more predictable review times. It has treated the per-application fee--about $100,000 FY1993 and over $1 million FY2008 --as an acceptable cost relative to the estimated $10 million monthly cost of delay in the years immediately before PDUFA was enacted. Meanwhile, PDUFA has enabled consumers to have quicker access to new drugs. Such quicker access, however, has raised concerns. First, critics ask whether PDUFA's emphasis on speed results in inadequate review. Second, they ask whether the increase in industry funding might lead to undue industry influence. They are concerned that PDUFA, in the name of speed, might lead FDA to sacrifice safety and effectiveness. Many overlapping factors influence drug safety, most unrelated to the source of funding. Some safety problems cannot be identified before public marketing. In its consideration of PDUFA and in other plans for FDA, the Congress has discussed whether FDA has the authority and resources to identify and then act on problems during both the premarket and postmarket periods. It addressed these issues in FDAAA, both in the PDUFA title and a broader drug safety title. The key to the shortening of review times is the influx of funds that PDUFA allows. This section first describes the extent of the collected fees and then discusses that revenue in the context of the budget for both the human drug program and FDA overall. What began as a program to fund new drug review has budget, management, and policy implications beyond that. Figure 1 and Figure 2 illustrate the resource (funding and personnel) history of the FDA Human Drugs program from FY1989 through FY2007. ( Table A-1 and Table A-2 in the Appendix provide detailed actual and inflation-adjusted budget figures, along with full-time equivalent positions, by funding source for selected fiscal years.) Beginning in FY1994, user fees have made up an increasing proportion of FDA's budget for human drug activities. While total funding has increased over the period, this has been entirely due to the increase in user fees. Congressional appropriations have remained essentially flat in real (i.e., inflation-adjusted) terms. Indicating full-time equivalent (FTE) positions by funding source shows that the overall increase in personnel comes solely from the user fees first collected in FY1993 and that the overall increase in FTEs obscures a 19% decrease in FTEs funded by congressional appropriations from FY1992 to FY2007. The PDUFA triggers (described above), in particular, and the relative contributions of appropriations and user fees to FDA's budget for human drugs have implications for budget planning both within the human drugs activity area and in agency-level decisions across all activities. Balance between pre- and postapproval activities. Because PDUFA initially allowed FDA to use the fees on only pre-approval activities (the review of manufacturer applications to market drugs and biologics) and still directs a majority of fees to those tasks, it is widely asserted that PDUFA is responsible for what some observers view as an inappropriate budget imbalance between FDA's premarket drug review and its postmarket safety activities. They point out how PDUFA requirements--the trigger requirements that congressional appropriations for FDA's review activities be maintained at least at 1992 levels--and congressional budget trends--increasing FDA responsibilities at relatively flat funding levels--result in a squeezing out of non-PDUFA related programs. Faced with losing fee revenue if PDUFA-authorized activities decrease, FDA must prioritize its use of appropriated dollars to those activities. Critics say that non-PDUFA activities, such as the review of generic drug applications, therefore suffer. In part to address this concern, the Congress has, with each PDUFA reauthorization extended the scope of covered activities. The top and middle sections of Figure 3 illustrate the five stages of drug development, beginning with basic research and continuing through preclinical development (which could be research in the laboratory or with animals), clinical research (the Phase 1, Phase 2, and Phase 3 trials that involve people), and FDA review; and the related industry-FDA interactions. The bottom third displays the span of industry R&D activities over which the laws allowed PDUFA fees to cover FDA activities. The law authorized FDA to use PDUFA I fees to fund only those activities from NDA submission through the review decision; PDUFA II allowed FDA to use the funds for meetings with manufacturers during the clinical development stages, going, therefore, from the investigational new drug (IND) submission through review; and PDUFA III extended the time range at both ends, to include the pre-clinical development period and up to three years after marketing begins. PDUFA IV removes the three-year limit on postapproval activities. FDA may, therefore, use PDUFA funding for authorized activities throughout the life of a product. Industry influence. Some critics think that, through its provision of fees, the industry has too much influence over FDA actions. They believe that, by structuring industry participation into the setting of performance goals, the law creates conflicts of interest. This is compounded because, they say, the process of setting performance goals is not transparent. Until an amendment in PDUFA IV that requires consumer participation as well, the law directed FDA and manufacturers to meet, in preparation for each PDUFA reauthorization, to discuss workload and revenue needed. FDA then submitted a letter to the authorizing committees that presents performance goals for the following five years. The performance goals regarding review activities were structured to include a length of time (in months) and the percent of applications that would be completed in that time. The industry participation in goal negotiation and the focus on review time created what some see as actual or the appearance of industry influence on the management of FDA resources. At the least, those speculations could threaten confidence in FDA reviews. At the worst are the concerns of some that the fee system contributes to quick and suboptimal reviews. FDA staff reports of pressure to meet performance goal deadlines suggest to some that safety and effectiveness data are being inadequately evaluated. Interaction with congressional appropriations decisions. As previously noted, user fees are an increasing part of FDA's budget. In FY2008, user fees contribute 24.2% of FDA budget. Looking only at the agency's Human Drug Program (basically that is the Center for Drug Evaluation and Research and related activities of the Office of Regulatory Affairs), as in Figure 1 (and Tables A 1 and A- 2 in the Appendix ) for FY2008, user fees contribute 48.4% of the drug program's budget. Not shown on the figure: the FY2008 enacted budget for the human drug program shows user fees contributing 58% of the pre-market activities total and 25.3% of the postmarket activities total. FDA relies on fee revenue for maintaining its expert science base via staff retention. Critics say that FDA is becoming too dependent on industry fees to carry out its normal review activities. A related concern is that the large percentage of FDA's budget being covered by user fees may undercut congressional support for increases in direct appropriations to the agency. Leaving aside some critics' distrust of the pharmaceutical industry's motives, other political and health analysts believe that drug application review is a regulatory responsibility that the federal government should shoulder completely. They believe that rather than rely on user fees, Congress should appropriate the full amount necessary to support FDA in its mission to protect the public's health.

This report, last updated in June 2008, provides a history of the Prescription Drug User Fee Act through its third reauthorization--as PDUFA IV--in September 2007. As the 112th Congress turns to the law's next reauthorization--PDUFA V, CRS has prepared another report that describes current law and the PDUFA V proposal (legislative language and the performance goals Agreement between FDA and industry representatives). It also explores the impact of PDUFA on FDA application review time and the agency's Human Drugs Program budget, and issues that Congress is likely to discuss as it prepares for anticipated PDUFA V reauthorization. For activity in the 112th Congress, please see CRS Report R42366, Prescription Drug User Fee Act (PDUFA): Issues for Reauthorization (PDUFA V) in 2012, by [author name scrubbed]. In 1992, Congress passed the Prescription Drug User Fee Act (PDUFA I) to give the Food and Drug Administration (FDA) a revenue source--fees paid by the pharmaceutical manufacturers--to supplement, not replace, direct appropriations. The impetus behind the 1992 law stemmed from the length of time between a manufacturer's submission of an FDA New Drug Application (NDA) or Biologics License Application (BLA) and the agency's decision on approval or licensure. FDA had attributed the delay, which affected patients and manufacturers, to constraints on its ability to hire and support review staff. Congress reauthorized the user fee program in 1997 (PDUFA II), in 2002 (PDUFA III), and, most recently, in 2007 (PDUFA IV), as Title I of the Food and Drug Administration Amendments Act of 2007 (FDAAA, P.L. 110-85). Congress intended PDUFA to diminish the backlog of applications at FDA and increasingly shorten the time from submission to decision. PDUFA II expanded the program's scope to include activities related to the investigational phases of a new drug's development, and to increase FDA communications with industry and consumer groups. PDUFA III again expanded the scope of authorized activities to include both preclinical development and a three-year postapproval period. In keeping with the law, FDA has worked with the drug manufacturers to set PDUFA performance goals, which the Secretary of Health and Human Services (HHS) has submitted in letters to the chairs of the relevant congressional authorizing committees. The Secretary also submits annual performance and financial reports. In crafting PDUFA IV, the most recent reauthorization, the 110th Congress addressed workload and compensation adjustments; expanded the authorized range of safety activities to include development of data collection systems and analytic tools, and enforcement of postapproval study, labeling, and risk evaluation and mitigation strategy requirements; increased public communication requirements; and authorized a user fee for the advisory review of prescription drug television ads. The general view is that PDUFA has succeeded. FDA has added review staff and reduced its review times. At each reauthorization, however, discussion returns to certain issues in the context of PDUFA that also reflect broader FDA concerns. These include budget choices under limited resources, including the relationship between direct appropriations and user fees; the identification and amelioration of conflicts of interest when the regulated industry is a major source of industry funding; and the tension between making new drugs available to the public and ensuring that those drugs be safe and effective.

The United States has sought to develop and deploy ballistic missile defenses for more than 50 years. Since President Reagan's Strategic Defense Initiative (SDI) in FY1985, Congress has provided about $110 billion for ballistic missile defense programs and studies. National missile defense (NMD) has proven to be challenging and deployment of an effective NMD system remains uncertain. Until recent years, NMD was a divisive political and national security issue. Debate has focused on the nature and immediacy of foreign missile threats to the United States and its interests, the pace and adequacy of technological development, the foreign affairs and budgetary costs of pursuing missile defenses, and implications for deterrence and global stability. In the mid-1980s and into the early 1990s, Congress reacted to these concerns and questions by reducing requested missile defense budgets and providing legislative language to guide the development of missile defense programs and policy. During this time, many in Congress appeared more concerned than the Defense Department and the military about near-term threats to forward-deployed U.S. military forces posed by shorter range ballistic missiles. Congress demonstrated those concerns by supporting the development and deployment of theater missile defenses (TMD), oftentimes over the objections of the Defense Department. Since the end of the 1991 Persian Gulf War, and especially over the past several years, Congress generally has supported larger missile defense budgets. For FY2007, Congress appropriated $9.3 billion for missile defense programs, making it the largest Defense Department acquisition program. The primary technological concept for missile defense since the early 1980s has been 'hit-to-kill' interceptor missiles. The utility of hit-to-kill as a ballistic missile defense (BMD) concept over the past 25 years remains mixed. Alternatives to the hit-to-kill concept have also been pursued. One is the development of laser technology and the platforms on which lasers might be based. For most missile defense advocates the Airborne Laser (ABL) program represents the most promising near-term effort. Although the Air Force contends that the ABL is mature technology, some observers have questioned whether this technical assessment is accurate, pointing out that the various ABL components have yet to be fully integrated and tested. Considerable debate also continues over whether the ABL will be capable of dealing with likely future ballistic missile threats. The effort that led to the ABL dates to the early 1970s when the Air Force began development of an Airborne Laser Laboratory (ALL)--a modified KC-135A aircraft--to demonstrate that a high-powered laser mounted on an aircraft platform could destroy an attacking missile. After 10 years of research, development, and field testing (culminating in 1983) the ALL program announced that lasers had managed to "destroy or defeat" five Sidewinder air-to-air missiles and a simulated cruise missile at short range. The ALL aircraft was retired in 1984 because its research purpose was considered no longer necessary. Although the ALL test targets were not ballistic missiles, the Air Force and the Defense Department became increasingly interested in the possibility of using high-powered lasers aboard aircraft to destroy enemy ballistic missiles during their boost phase. Through the 1980s and mid-1990s, further research on various ground laser concepts and designs and tracking and beam compensation tests convinced Pentagon officials to proceed with the conditional development of the ABL in June 1998 (although low-level funding for the program began as early as FY1994). Currently, the ABL program is the primary focus of the Missile Defense Agency's (MDA) Boost Defense program. The ABL's lethality test demonstration, which is designed to test the various subsystems and target and destroy a ballistic missile, has been delayed many times. According to the Missile Defense Agency, that lethality test, which was initially scheduled for late FY2003, is now planned for August 2009. Congress has provided strong funding support ballistic missile defenses in the face of growing concerns about the proliferation of missiles around the world. Of all the current efforts, most missile defense advocates believe the ABL shows the best near-term promise for destroying enemy ballistic missiles during their boost-phase. While the missile is still in the earth's atmosphere, the airborne laser would seek to rupture or damage the target's booster skin to cause the missile to lose thrust or flight control and fall short of the intended target before decoys, warheads, or submunitions are deployed. The expectation is that this would occur near or even over the enemy's own territory. Second, although the United States has primarily pursued kinetic energy kill mechanisms for missile defense some 25 years, many defense analysts believe that if the United States chooses to pursue increasingly effective missile defenses for the longer term future, then alternative concepts such as high-powered lasers may be the answer. This report tracks the current program and budget status of the Airborne Laser program. In addition, this report examines several related issues that have been of interest to Congress. It will be updated occasionally as necessary. This report does not provide a technical overview or detailed assessment of the ABL or Air-Based Boost Program. It is envisioned that the ABL would use a high-power chemical laser mounted in the aft section of a modified Boeing 747 aircraft to destroy or disable all classes of ballistic missiles during the initial portion or first several minutes of their flight trajectory (from shortly after launch and before they leave the earth's atmosphere). Analysts indicate that during this period (up to several minutes) the missile is at its most vulnerable stage--it is slower relative to the rest of its flight, it is easier to track because the missile is burning its fuel and thus has a very strong thermal signature, and it is a much larger target because any warhead has not yet separated from the missile itself. Analysts also point out the advantages of destroying the missile before any warhead, decoys, or submunitions are deployed, and potentially over the enemy's own territory. The ABL program will integrate a weapons-class chemical laser aboard a modified Boeing 747-400 series freighter aircraft (747-400F). The chemical laser has been assembled in the System Integration Laboratory (SIL), a 747-200 fuselage, and tested. The Air Force acquired the 747-400F in January 2000 directly from the Boeing Commercial Aircraft assembly line and flew it to Wichita, Kansas, where Boeing workers made extensive modifications to the aircraft. Among other things, they grafted huge sheets of titanium to the plane's underbelly for protection against the heat of the laser exhaust system, and added a 12,000-pound bulbous turret on the plane's front to house the 1.5 meter telescope through which the laser beams would be fired. This plane made its maiden flight in July 2002; it logged 13 more flights in 2002 before relocating to Edwards Air Force Base in California. Since 2002, the focus of the ABL program has been on system integration, an effort that is considered challenging. Officials have reported completing ground integration and testing of the Beam Control Fire Control (BCFC) segment and most of that segment's integration into the ABL aircraft. Additionally, six laser modules in the SIL have been integrated and tested. Further integration and testing of the BCFC, laser modules in the SIL, and communications links took place in 2005. However, the primary goal to have achieved a lethality test by 2005 was not met. That test has now been moved further to August 2009. Program officials said the delay was due largely to program restructuring and budget changes. Others suggested that technical and integration problems continue to prove more challenging than anticipated. In 2006, Boeing announced successful surrogate low-power laser testing from the ABL aircraft. In October 2006, Boeing rolled out the ABL aircraft in Wichita, Kansas, announcing successful completion of major system integration milestones in preparation for some flight testing that will lead to the lethality test in August 2009. As of January 2007, ABL had completed over 50 flight tests. In March 2007, the ABL successfully completed the first in a series of in-flight tracking laser firings at an airborne target. Officials argue this is an important step toward demonstrating the aircraft's ability to engage an airborne target. Major ABL subsystems include the lethal laser, a tracking system, and an adaptive optics system. The kill mechanism or lethal laser system (as distinct from the other on-board acquisition and tracking lasers) is known as COIL (Chemical Oxygen Iodine Laser). COIL generates its energy through an onboard chemical reaction of oxygen and iodine molecules. Because this laser energy propagates in the infrared spectrum, its wavelength travels relatively easily through the atmosphere. The acquisition, tracking, and pointing system (also composed of lasers) helps the laser focus on the target with sufficient energy to destroy the missile. As the laser travels to its target, it encounters atmospheric effects that distort the beam and cause it to lose its focus. The adaptive optics system compensates for this distortion so that the lethal laser can hit and destroy its target with a focused energy beam. The current ABL program began in November 1996 when the Air Force awarded a $1.1 billion PDRR contract (Program Definition Risk Reduction phase) to several aerospace companies. The contractor team consists of Boeing, Lockheed Martin, and Northrop Grumman (formerly TRW). Boeing Integrated Defense Systems (Seattle, WA) has overall responsibility for program management and systems integration, development of the ABL battle management system, modification of the 747 aircraft, and the design and development of ground-support subsystems. Lockheed Martin Space Systems (Sunnyvale, CA) is responsible for the design, development, and production of ABL target acquisition, and beam control and fire control systems. Northrop Grumman Space Technology (Redondo Beach, CA) is responsible for the design, development, and production of the ABL high-energy laser. A number of subcontractors are also involved. It is envisioned that a fleet of some number of ABL aircraft would be positioned safely in theater then flown closer to enemy airspace as local air superiority is attained. Although the Defense Department once indicated that a fleet of five aircraft might support two 24-hour combat air patrols in a theater for some unspecified period of time in a crisis, there has been no public discussion in recent years as to how many aircraft might eventually be procured or deployed as part of a future BMD system. It is likely, however, that current plans are to acquire seven production aircraft. The current ABL development and acquisition strategy is described in terms of several 'blocks' or two-year periods of research, development, testing and evaluation activities. The program goals for ABL Block 2006 (2006-2007) are to continue integration and ground and flight test activities for the first ABL aircraft or weapon system test bed. Program officials further plan to improve domestic production capabilities for advanced optics and sensors for high-energy lasers. The program expects to study and establish baseline capabilities for a more advanced second ABL weapon system after a successful lethal demonstration. In March 2007 Boeing announced that it had successfully fired the ABL's tracking laser in-flight at an airborne target for the first time. A company representative stated that "The Airborne Laser team has successfully transitioned to the next major test phase, completing the first in a series of in-flight laser firings at an airborne target." The goals for ABL Block 2008 (2008-2009) are for further ground and flight testing of the first ABL weapon system and studies defining the second ABL weapon system. Additionally, integration of the ABL into the wider ballistic missile defense system is expected and the initiation of ground support activities for the ABL. The lethality test of the ABL is anticipated during this period. In Block 2010, programs officials plan to evaluate a broader spectrum of ballistic missile threats as part of the overall ballistic missile defense system in place at that time. During this period, the primary focus will be on the second ABL aircraft. More specifically, this includes completion of design activities and initial fabrication of weapon components. The total ABL program cost cannot be given or estimated because of the acquisition strategy adopted by MDA for missile defense. Nor has the final system architecture been identified, meaning that the total number of ABL aircraft to be procured has not been determined. Prior to adopting this new evolutionary acquisition or "spiral development" strategy, however, there were a couple points of reference as to what the Pentagon envisioned. In its FY1997 Annual Report to Congress, DOD's Office of Test and Evaluation envisioned seven ABL aircraft for a total program cost of $6.12 billion (then year dollars). The objective to acquire seven production aircraft likely remains. The most recent cost estimate, from the Clinton Administration, was $10.7 billion (life-cycle costs) for the same number of aircraft. No other system cost data are available. In March 2007, MDA Director Lt. Gen. Trey Obering testified that it is too early to tell how much the ABL will cost to operate because program managers do not know what technical achievements will be made in the coming years. Until recently, Congress has largely supported the ABL program by appropriating the Defense Department's requests, which have totaled about $4.3 billion. See table below, which shows the President's Budget (PB) request and the amount Congress appropriated. For FY2007, the Bush Administration requested about $632 million for the ABL program, which Congress approved. For FY2008, the Bush Administration requested $548.8 billion for the ABL program. In the House version of the defense authorization bill ( H.R. 1585 ) the request was decreased to $298 billion. The Senate decreased the ABL request by $200 million in its version of the defense authorization bill ( S. 1547 ). Several factors combine to affect the near future of the ABL program. First, the ABL continues to face technical challenges. Second, in January 2002, the MDA dropped the traditional requirements-setting process in favor of a "capabilities-based" approach, intended to more quickly field a system capable of responding to some, if not all of the current ballistic missile threat. Third, on June 13, 2002, the United States withdrew from the Anti Ballistic Missile (ABM) Treaty, thus removing numerous barriers to potential anti-missile platforms. Fourth, the MDA is exploring alternatives to the ABL for the Boost Phase Intercept (BPI) mission. Finally, recent changes in funding profiles for both the ABL and for the MDA's new kinetic kill vehicle reinforce the uncertainty related to the ABL program. Specific issues that may confront Congress include the severity and implications of the ABL programmatic and technological challenges, how the ABL might be employed if and when it is fielded, the potential for industrial base problems, the scheduled lethality test, and consideration of boost-phase alternatives to the ABL. As a new type of weapon system, the ABL has faced technological challenges throughout its history. The GAO has pointed out the challenges of developing and fielding a new type of weapon system, when it noted that "only one of the ABL's five critical subsystems, the aircraft itself, represents mature technology." In October 1997 the GAO issued a report (GAO/NSIAD-98-37) highlighting the program's technical challenges and calling them "significant." In 2001, DOD's Director of Operational Test and Evaluation called the ABL a "high technical risk" program and outlined a number of technical challenges to be overcome. There is some consensus on the ABL's current technical challenges. In congressional testimony, the GAO pointed out that the ABL program office agreed with its assessment of the technological maturity and technical challenges in most instances, only disagreeing about the adaptive optics' maturity and challenges. However, consensus appears to break down when evaluating how these challenges might affect budget and schedule. The GAO asserts that "problems with maturing technology have consistently been a source of cost and schedule growth throughout the life of the program." But the ABL program's new requirements setting process, and its focus on developing a less sophisticated system based on currently available technology, may result in less risk of cost and schedule growth in the future. The Missile Defense Agency asserts that program adjustments made in February 2004 have put the program on budget and schedule. GAO subsequently found that changes in the ABL program would result in a knowledge-based approach that was likely to result in a more cost-effective program. Two technical issues have long challenged the ABL program: beam control and adaptive optics and system integration. The essentials of these two challenges have not changed that much in recent years. The ABL system's weight has been another concern. The ABL was designed to carry 14 laser modules that were planned to weigh a total of 175,000 lbs. The six laser modules produced thus far already exceed this weight budget by at least 5,000 lbs. ABL proponents admit that the laser modules are currently heavier than anticipated. Nonetheless, they argue that they are within the requirement for the whole weapon system to fit within the 747's maximum takeoff weight--800,000 lbs. with the six laser modules on the aircraft. ABL critics remain skeptical that with fewer modules the same level of lethality can be achieved, thus raising questions as to whether the ABL will be required to fly closer toward its targets in hostile air space and whether weight trade-offs will result in reduced fuel capacity and increased need for aerial refueling to perform its mission. Recent military operations in Afghanistan and Iraq suggest that DOD's aerial refueling fleet is already overburdened. Another group of ABL questions that may confront Congress pertains to the aircraft's concept of operations, or CONOPs. As the program nears procurement and potential fielding, questions remain about the number of aircraft to be procured, where the aircraft might be deployed, and how they would be used. A number of questions are likely to be asked regarding this size of the ABL inventory. The ABL will be a highly visible asset. It is very large, and will be escorted by fighter aircraft. Its high altitude will also help to distinguish it from other wide-body aircraft. Long in-theater on-station time for the ABL is premised on forward basing. These forward bases would likely not have chemical replenishment capabilities, which would necessitate return flights to the United States if the laser is used. It appears plausible that an enemy could wait until an orbiting ABL is being refueled, or is absent before initiating a missile attack. Thus, a force of seven aircraft might only be expected to provide 24-hour theater ballistic missile (TBM) BPI coverage of one theater. DOD's decision in the Spring of 2006 to postpone the purchase of five ABL aircraft brings the issue of exactly what a small number of ABL aircraft--in this case two--could achieve operationally. Past doctrine and current real-world events suggest that U.S. interests could be threatened simultaneously in more than one theater and by more than one country with TBMs. Would seven aircraft be sufficient to adequately address potential threats? To address growing deployment requirements and to improve personnel retention, the Air Force has organized itself into 10 Air Expeditionary Forces (AEFs) that rotate on predictable schedules. How would a force of seven ABLs support the 10 AEFs? The Air Force, and other Services, frequently complain about the onerous and disproportionate O&S (Operations and Support) costs of "high demand, low density" (HD/LD) assets such as JSTARS and U2s. Would procurement of only seven aircraft create another HD/LD problem for the Air Force? On the other hand, buying more aircraft would require more people to fly and maintain them. It is currently unclear what impact the ABL might have on the Air Force's already strained aerial refueling fleet. While based at some yet-to-be determined U.S. base, ABLs will likely deploy to forward operating locations such as Guam, Diego Garcia, RAF Fairford England, and Elmendorf AFB Alaska during crises. Although these bases are likely closer to tomorrow's hot spots than the continental United States, they are still hours of flying time away from the Persian Gulf, the Korean Peninsula, and Central Asia. ABLs will require refueling to get to the crisis theater, refueling to maintain combat air patrols in-theater, and refueling to return to base. What effect will the ABL's current weight gain have on its fuel load? Might increased payload mean less fuel and therefore an even greater aerial refueling requirement? Some observers have questioned how the ABL would be employed to counter intercontinental ballistic missiles (ICBMs). The consensus is that Russia and China currently field ICBMs that could plausibly threaten the United States; there is no such consensus on the future ability of North Korea or other so-called "rogue states" to field such missiles. (Some believe that such capabilities will emerge in the distant future, if ever. Others see the proliferation of such missiles as inevitable, and that it could occur sooner rather than later.) Current estimates suggest that the ABL's 400 km range (about 250 miles) is too short to stand outside Russian or Chinese airspace and still engage those countries' ICBMs in boost phase. Would the ABL fly into these countries' airspace during crisis to address potential ICBM launches in boost phase? Or would the ABL's laser need to be more powerful? Or will some alternative be deployed to supplement or replace the ABL for these scenarios? Another set of questions pertains to using the ABL in or near commercial airspace. How will the aircraft be operated, and what rules will be established to eliminate or reduce the potential of accidently hitting a commercial aircraft? The ABL should fly above the altitude of most commercial aircraft, which should help mitigate this potential problem. However, the ABL's laser is designed to shoot over long distances, and the target ABL is attempting to engage may be within the same altitude as most commercial aircraft. It appears that ABL CONOPS questions are also affected by MDA's decision to abandon the traditional requirements process. MDA has adopted a "flexible" requirements process that is driven as much by technological maturity as it is by operator needs. Thus, it is difficult to assess how the ABL might be employed because it is not currently clear what the ABL's capabilities will be, once fielded. A final set of issues revolves around the ABL industrial base. Missile defense officials have cautioned that the ABL is pursuing very specialized technologies that are not routinely pursued in civilian or even defense industries. Turbulence in ABL funding or schedule, they maintain, jeopardizes the ABL industrial base because these specialized vendors will seek other business if ABL business appears threatened. The industrial base supporting advanced optical components of the ABL is most frequently cited as "fragile." The criticality of these vendors to the health and progress of the ABL program has not been clearly established. DOD may, or may not, for example, find expertise in the optical telecommunications industry that would be applicable to ABL needs. Once the health of the ABL-specific contractor and subcontractor base has been established Congress may be asked to help preserve some of the "critical path technologies" that enable the ABL. If this take place, a key calculation to make may be the break point at which keeping a number of specialized companies in business outweighs the potential value of fielding the ABL. It is also argued that cancelling the ABL could harm the laser industry writ large , rather than just those sub-industries associated with the ABL. This is because, ABL supporters assert, the ABL program is far and away the largest of its kind, and a "pathfinder" for other laser programs. Cancelling the ABL could slow down the entire U.S. laser development industry, they say. Others may disagree with this argument and argue that ABL survival or cancellation should be based on its own merits. The dearth of laser programs outside of the ABL, they could argue, indicates that the ABL's cancellation would have little affect on other programs, because there aren't many to affect. The lethality test now scheduled for August 2009 (some six years later than original plans) is seen as a critical next step in the ABL program's development. The objectives of this test include: to demonstrate an actual shoot-down of a missile over the Pacific Ocean, possibly a Scud missile; to test the IRST (the Infrared Search & Track System), to see if the ABL can find, hold and track the intended target; and to demonstrate that the adaptive optics systems is able to compensate for atmospheric distortion. The lethality test is considered important for a number of reasons, many of which have to do with the long advocated potential for this ABL test aircraft to provide a limited capability for emergency or contingency missions immediately after the lethality test. First, the test will demonstrate whether or how well the various ABL subsystems and component parts are working together. The fact that this test has been delayed several times and for several years now, suggests to some that continued systems integration problems are forcing this delay. Depending on the test results, additional system integration tests may be required. If significant technical problems arise or additional technical challenges are identified, the availability of this ABL platform for near-term emergency missions would likely be questioned. Second, depending on the nature and outcome of the lethality test itself, use of this ABL test aircraft may not be appropriate in an emergency or contingency mission. For instance, if the lethality test fails to hit or destroy a Scud or other ballistic missile, military planners may not want to rely on a test aircraft deployed during a crisis. Additionally, if the lethal test is not considered significant (for example, the test is conducted against a very short range missile at very close range), military planners similarly may not have confidence in actually using the ABL test platform during a crisis. Some in the ABL program have suggested that the platform could be made available only as a airborne sensor and for battle management purposes. Others have questioned whether meaningful testing protocols can be developed if the ABL system is not yet integrated. A third question pertains to how effective and extensive this flight test will be. Prior to the most recent test program restructuring, some 35-50 other missions were planned to validate design and other changes; additional air refueling missions were also considered. During the flight tests, ABL test aircraft were to operate with a relative large contingent of personnel, including 2 aircrew and up to 16 others. Test missions were expected to last 4-8 hours. A May 2004 GAO report (GAO-04-643R) notes that the lethality test contract has been restructured three times and that costs have tripled. Will MDA be able to execute a highly robust and investigative test considering these increased costs? Press accounts suggest that the latest lethality test contract contains flaws that may inhibit the test. These programmatic and technological challenges lead to another family of questions regarding the ABL's current and potential standing in missile defense vis-a-vis other missions and platforms. Might other platforms offer promise in the theater Boost Phase Intercept mission area? A Kinetic Energy Interceptor (KEI), unmanned aerial vehicles (UAVs), and ship-based, or space-based interceptors are potential options. ABL officials believe the program's technical challenges are being overcome. MDA is simultaneously pursuing, however, a Kinetic Energy Interceptor (KEI) that has come to be viewed as a potential alternative. This program was established in 2003, and early statements by MDA focused on the interceptor's commonality rather than its possible use as an ABL alternative. For instance, former MDA Director Air Force Lt. Gen. Kadish told reporters that the agency finds kinetic interceptor attractive because "given that we no longer have the constraints of the [1972 Anti-ballistic Missile] treaty and the way the services have put together operational requirements documents...I think it is now possible to think and actively pursue commonality that makes sense and a common interceptor with a common type of kill vehicle." Changes to budget and schedule, however, have brought the ABL and KEI into much more obvious competition. MDA's FY2004 R&D request for KEI (then called common boost- and mid-course interceptor) represented a six-fold increase in funding for this technology and was perhaps the first sign that MDA had some doubts about ABL's ultimate feasibility. Slippages to both programs' schedules have increased the apparent competition between ABL and KEI. MDA director Lt.Gen. Trey Obering has described these potential weapon systems as being in a "flyoff." The FY2007 budget request for KEI was $386 million. Future budgets for KEI climb so about $852 million (FY2009) to $1.65 billion (FY2011). At issue is whether the KEI represents a prudent hedge against potential slippages the ABL schedule, or a drain on funds and other resources that could be devoted to the ABL, or other MDA programs. This question was probed at length in a March 15, 2005 House Armed Services, Strategic Forces Subcommittee Hearing. Subcommittee members expressed concern about the appropriate balance between the two programs. During this hearing, MDA Director Lt.Gen. Trey Obering explained the decision to cut $800 million from the KEI's FY2006 budget request: "...to meet our top-line budget reductions, I decided to accept more risk in this area and restructure the kinetic energy intercept effort..." In their report H.R. 1815 (109-89), House Authorizors expressed their concern about pursuing both programs (p.232). Authorizors required MDA (Sec. 231) to provide a comparison of the two programs, including capabilities and costs. Other potential alternatives for the BPI mission might be explored. With their long endurance and increasing payloads, Unmanned Aerial Vehicles (UAVs) may one day offer alternatives to the ABL. UAVs have been studied as BPI platforms since the mid-1990s. At the time, a UAV-based Boost Phase Intercept approach was viewed as a back-up to ABL in case that program encountered difficulties. Congress provided $15 million in FY1996 for a joint U.S./Israeli advanced concept technology demonstration (ACTD) program to study the feasibility of using up to 20 UAVs with three to six lightweight missiles each to conduct BPI in an Iraq-like scenario. The Army Space and Strategic Defense Command estimated that the 20-UAV architecture could cost $1.5 billion over a 10-year life span, compared to a then-estimated $6 billion 10-year life cycle cost for the ABL and a $17 to $23 billion 10-year life cycle cost for a space-based laser. In addition to potentially lower cost, possible UAV advantages include the ability to operate closer to TBM launch points than the ABL, and the ability to conduct the BPI mission without endangering the lives of aircrews. Perceived UAV deficiencies include a lack of adequate payload carrying capability. Considering the rapid recent advances in UAVs and their operational success, however, some analysts believe it may be time to revisit the UAV-based approach and weigh its efficacy relative to the ABL program. In the mid 1990s, the Air Force also studied outfitting F-15s with special air-to-air missiles to destroy TBMs in boost phase. Some in Congress have expressed their preference for UAVs over manned aircraft in this role. In its report ( S.Rept. 104-112 / S. 1026 ), the Senate Armed Services Committee wrote that "to the extent that kinetic-energy BPI systems hold promise for TMD applications, the committee believes that reliance should be placed on unmanned aerial vehicles (UAVs)." Some constraints on ship-based missile defenses have been eliminated by the Bush Administration's decision to withdraw from the 1972 ABM treaty. Ship-based systems are attractive to missile defense planners because ships often can be maneuvered close to hostile areas. A number of BPI experiments are planned for FY2004 combining modified Standard anti-aircraft missiles with the Kinetic Kill Vehicle (KKV). In July 2004 the Congressional Budget Office published a report in which five BPI options were explored. Two of these five options were space-based. While space-based options had some advantages over terrestrial options, such as greater global coverage, they also were much more expensive; perhaps prohibitively. Although platforms other than the ABL might conduct TMD BPI, it is also possible that the ABL might be capable of performing additional or alternative missions. When in charge of the program, the Air Force studied alternative roles for the ABL including cruise missile defense, destroying or disabling enemy satellites, or intercepting high altitude surface-to-air missiles. In November 2002, the Air Force Scientific Advisory Board recommended that the Air Force also consider using the ABL to attack time critical targets on the ground. In May 2005, the Commander of the U.S. Strategic Command reportedly advocated that alternative uses for the ABL be studied. Potential alternate missions that have been discussed in 2006 include shooting down manned aircraft, cruise missiles, air-to-air missiles, and surface-to-air missiles. In addition to destroying these alternate threats, the ABL, some argue, could also contribute to a variety of command and control missions, such as airborne command and control, combat identification (CID), electronic support measures, and bomb damage assessment. Today, the only alternative--albeit similar--role that MDA is considering for the ABL is BPI of intercontinental ballistic missiles (as opposed to theater-range ballistic missiles). MDA officials state that they need to concentrate on developing the ABL's technology to conduct its primary mission of theater ballistic missile defense before ancillary roles can be considered. Others may question whether abandoning the assessment of alternative uses for the ABL is prudent. Congress has appropriated about $4.3 billion for the ABL thus far. Some are likely to maintain that more should be done to investigate potential returns on this investment. The ABL is DOD's most mature high power chemical laser program. If MDA determines that UAVs or ship-based KKVs offer more potential in TMD BPI, studying alternative uses for the ABL might be a way to exploit the advances made by the program.

The United States has pursued a variety of ballistic missile defense concepts and programs over the past fifty years. Since the 1970s, some attention has focused on directed energy weapons, such as high-powered lasers for missile defense. Today, the Airborne Laser (ABL) program is the furthest advanced of these directed energy weapons in relative terms and remains the subject of some technical and program debate. The Department of Defense (DOD) has remained a strong advocate for the ABL and its predecessor programs. The Defense Department and most missile defense advocates argue that the ABL, which is designed to shoot down attacking ballistic missiles within the first few minutes of their launch, is a necessary component of any broader U.S. ballistic missile defense system. Until recently, Congress has largely supported the Administration's ABL program. Funding for the ABL began in FY1994, but the technologies supporting the ABL effort has evolved over 25 years of research and development concerning laser power concepts, pointing and tracking, and adaptive optics. Delayed now for many years, the ABL program plans to conduct a lethality test now scheduled for August 2009. Assuming a successful test, the Defense Department has said that this test platform could then be made available on an emergency basis for a future crisis. To date, about $4.3 billion has been spent on the ABL program, including $632 million for FY2007. For FY2008, the Administration requested $548.8 billion, which was cut substantially in the House and Senate defense authorization bills. Total ABL program costs are not available because the system architecture has not been defined. Program skeptics continue to raise several issues. Their questions include the maturity of the technologies in use in the ABL program and whether current technical and integration challenges can be surmounted. If the ABL is proven successful, there have been questions about the number of platforms the United States should acquire. Seven aircraft have been mentioned previously, and apparently this number remains the program's objective, but is this number appropriate? What stresses might continued ABL program slippage or delays place on the supporting industrial base? How does the ABL compare to alternative concepts? To what degree should the United States invest in alternative missile defense technologies in the event that the ABL program may not prove successful? This report examines the ABL program and budget status. It also examines some of the issues raised above. This report does not provide a detailed technical assessment of the ABL program (see CRS Report RL30185, The Airborne Laser Anti-Missile Program, by [author name scrubbed] and [author name scrubbed] (pdf)). This report is updated periodically as necessary.

Citizens United, a nonprofit Internal Revenue Code Section 501(c)(4) tax-exempt corporation, produced a 90-minute documentary regarding a presidential candidate, then-Senator Hillary Clinton. The group released the film in theaters and on DVD, and planned to make it available through video-on-demand. In addition, Citizens United planned to fund three broadcast and cable television advertisements to promote the movie. Concerned that both the film and its ads would be prohibited under the Federal Election Campaign Act (FECA), which imposes civil and criminal penalties, Citizens United filed suit in U.S. district court. Specifically, the group sought a preliminary injunction to enjoin the Federal Election Commission (FEC) from enforcing Sections 203, 201, and 311 of the Bipartisan Campaign Reform Act of 2002 (BCRA). These provisions of law amended the Federal Election Campaign Act (FECA) in order to regulate "electioneering communications." BCRA defines "electioneering communication" as any broadcast, cable, or satellite transmission made within 30 days of a primary or 60 days of a general election (sometimes referred to as the "blackout periods") that refers to a candidate for federal office and is targeted to the relevant electorate. Section 311 of BCRA, known as the disclaimer provision, codified at 2 U.S.C. SS 441d, requires electioneering communications to include a statement identifying the funding source of the communication. Section 201, codified at 2 U.S.C. SS 434, requires any person who spends more than $10,000 on electioneering communications in a year to file disclosure statements with the FEC. Section 203, codified at 2 U.S.C. SS 441b, prohibits corporate and labor union treasury funds from being spent for electioneering communications. The group argued that Section 203 of BCRA violated the First Amendment on its face and as applied to its movie and advertisements. In addition, Citizens United maintained that Sections 201 and 311, requiring disclosure and identification of funding sources, were unconstitutional as applied to the television ads. In a 2003 decision, McConnell v. FEC, the Supreme Court upheld the constitutionality of Sections 203, 201, and 311 in a facial challenge. In a 2007 decision, FEC v. Wisconsin Right to Life, Inc. (WRTL II), the Supreme Court limited the applicability of Section 203 by ruling that the prohibition could not constitutionally apply to advertisements that may reasonably be interpreted as something other than an appeal to vote for or against a specific candidate, and that such ads are not the functional equivalent of express advocacy. The U.S. District Court for the District of Columbia denied the request by Citizens United for a preliminary injunction, finding that the BCRA provisions in question had previously been upheld by the Supreme Court as regulation that does not unconstitutionally burden First Amendment free speech rights. Likewise, the court found that the group's as-applied claim would also fail on the merits because the movie did not focus on legislative issues, but instead took a position on the candidate's character, qualifications, and fitness for office, thereby falling within the FEC's regulatory definition of an electioneering communication. The court concluded that Supreme Court precedent upholding Section 203 applied to Citizens United to the extent that it prohibited the group from funding electioneering communications that constituted the functional equivalent of express advocacy. The court also found that BCRA's disclosure requirements were constitutional. Citizens United appealed. BCRA provides that if an action is brought to challenge the constitutionality of any of its provisions, a final decision from the district court shall be reviewable only by direct appeal to the U.S. Supreme Court. The U.S. Supreme Court heard oral argument in Citizens United v. FEC on March 24, 2009, and re-argument on September 9. For the re-argument, the Court ordered the parties to file supplemental briefs addressing whether the Court should overrule its earlier holdings in Austin v. Michigan Chamber of Commerce, upholding the constitutionality of a state statute prohibiting corporate campaign expenditures, and the portion of its decision in McConnell v. FEC upholding the facial validity of Section 203 of BCRA. In a 5-to-4 ruling, the Supreme Court in Citizens United v. FEC invalidated two provisions of the Federal Election Campaign Act (FECA), codified at 2 U.S.C. SS 441b. It struck down the long-standing prohibition on corporations using their general treasury funds to make independent expenditures, and Section 203 of the Bipartisan Campaign Reform Act of 2002 (BCRA), which amended FECA, prohibiting corporations from using their general treasury funds for "electioneering communications." The Court determined that these prohibitions constitute a "ban on speech" in violation of the First Amendment. In so doing, the Court overruled its earlier holding in Austin v. Michigan Chamber of Commerce, finding that it provided no basis for allowing the government to limit corporate independent expenditures; and the portion of its decision in McConnell v. FEC upholding the facial validity of Section 203 of BCRA, finding that the McConnell Court relied on Austin. The Court, however, upheld the disclaimer and disclosure requirements in Sections 201 and 311 of BCRA as applied to the movie that Citizens United produced and the broadcast advertisements it planned to run promoting the movie. According to the Court, while they may burden the ability to speak, disclaimer and disclosure requirements "impose no ceiling on campaign-related activities." It does not appear that the Court's ruling in Citizens United affects the validity of Title I of BCRA, which generally bans the raising of soft, unregulated money by national parties and federal candidates or officials, and restricts soft money spending by state parties for "federal election activities." Writing for the Court, Justice Kennedy began consideration of the case by examining whether Citizens United's claim, that the corporate expenditure prohibition was unconstitutional as applied to its film, could be resolved on other, narrower grounds. Disputing Citizens United's contention that the prohibition, codified at 2 U.S.C. SS 441b, does not apply because its film does not qualify as an "electioneering communication," the Court found that the message of the film was the functional equivalent of express advocacy. As explained by the Court in FEC v. Wisconsin Right to Life (WRTL II) , a communication is the functional equivalent of express advocacy "only if [it] is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate." Applying that standard, the Supreme Court determined that there is no reasonable interpretation of the film other than an appeal to vote against then-Senator Clinton for President. The movie is a "feature-length negative advertisement that urges viewers to vote against Senator Clinton for President," and therefore, the Court concluded, triggers the applicability of SS 441b. Rejecting Citizens United's argument that video-on-demand has a lower risk of distorting the political process than television ads, the Court cautioned that the judiciary must decline to make determinations as to which modes of communication are preferred for particular types of messages and speakers. Such determinations, the Court cautioned, would require protracted litigation and risk chilling protected speech. In response to Citizens United's request for the Court to carve out an exception to SS 441b's expenditure prohibition for nonprofit corporate political speech funded primarily by individuals, the Court determined that such a holding would result in courts making "intricate case-by-case determinations," an interpretation it also declined to adopt. Accordingly, the Court concluded that it could not resolve the case on a narrower ground without chilling political speech that is "central to the meaning and purpose of the First Amendment." The First Amendment to the U.S. Constitution provides that "Congress shall make no law ... abridging the freedom of speech." Citing several of its precedents that have invalidated restrictions on First Amendment free speech--such as laws requiring permits and impounding royalties--the Court contrasted those restrictions with the "outright ban" on speech imposed by SS 441b, which also imposes criminal penalties. Furthermore, the Court determined that even though FECA permits a corporation to establish a political action committee (PAC) in order to make expenditures, SS 441b nonetheless constitutes a complete ban on the speech of a corporation . "A PAC is a separate association from the corporation," the Court observed, and allowing a PAC to speak does not "somehow" translate into allowing a corporation to speak. Enumerating the "onerous" and "expensive" reporting requirements associated with PAC administration, the Court announced that even if a PAC could permit a corporation to speak, "the option to form a PAC does not alleviate the First Amendment problems associated with SS 441b." In addition, in view of the fact that a PAC must comply with such burdensome restrictions "just to speak," the Court found that a corporation may not have sufficient time to establish a PAC in order to communicate its views in a given campaign. As a law that bans free speech, the Court explained that it is subject to a "strict scrutiny" analysis, requiring the government to demonstrate that the restriction "furthers a compelling interest and is narrowly tailored to achieve that interest." Employing that analytical framework, the Court first observed that in its jurisprudence, it has previously determined "that First Amendment protection extends to corporations." Furthermore, the Court noted, this protection has been extended in its holdings to political speech. Quoting from its 1978 decision in First National Bank of Boston v. Bellotti, the Court announced, "[u]nder the rationale of these precedents, political speech does not lose First Amendment protection 'simply because its source is a corporation.'" "The Court has thus rejected the argument that political speech of corporations or other associations should be treated differently under the First Amendment simply because such associations are not 'natural persons.'" Examining whether the prohibition furthers a compelling governmental interest, the Court noted that in its landmark 1976 decision, Buckley v. Valeo , it found that while large campaign contributions create a risk of quid pro quo candidate corruption, large independent expenditures do not. In Buckley, the Court noted, it "emphasized that 'the independent expenditure ceiling ... fails to serve any substantial governmental interest in stemming the reality or appearance of corruption in the electoral process.'" Indeed, the Court remarked, if the ban on corporate and labor union independent expenditures had been challenged in the wake of Buckley, "it could not have been squared with the reasoning and analysis of that precedent." Less than two years after its decision in Buckley , the Court decided a case that "reaffirmed the First Amendment principle that the Government cannot restrict political speech based on the speaker's corporate identity." In Bellotti, the Court struck down as unconstitutional a state law prohibiting corporate independent expenditures related to referenda. It is important to note that Bellotti did not consider the constitutionality of a ban on corporate independent expenditures to support candidates , but if it had, the Court announced, such a restriction would have also been unconstitutional in order to be consistent with the main tenet of the Bellotti decision, "that the First Amendment does not allow political speech restrictions based on a speaker's corporate identity." According to the Court, it was not until its 1990 decision, Austin v. Michigan Chamber of Commerce , that it squarely evaluated the constitutionality of a direct restriction on independent expenditures for political speech in a candidate election. In Austin , the Court upheld a Michigan state law prohibiting and imposing criminal penalties on corporate independent expenditures that supported or opposed any candidate for state office. "To bypass Buckley and Bellotti , the Austin Court identified a new governmental interest in limiting political speech: an antidistortion interest." In Austin, the Court identified a compelling governmental interest in preventing "the corrosive and distorting effects of immense aggregations of wealth ... accumulated with the help of the corporate form," with "little or no correlation to the public's support for the corporation's political ideas." As a result, the Court in Citizens United faced "conflicting lines of precedent." One did not allow for restrictions on political speech that were based on the corporate identity of the speaker, while the other did. Rejecting the antidistortion rationale that it had relied upon in Austin, the Court announced that it could not support the ban on corporate independent expenditures. According to the Court, the antidistortion rationale would have the "dangerous" and "unacceptable" result of permitting Congress to ban the political speech of media corporations. Although media corporations are currently exempt from the federal ban on corporate expenditures, the Court announced that upholding the antidistortion rationale would allow their speech to be restricted, which First Amendment precedent does not support. In addition, the Court determined that the Austin precedent "interferes with the 'open marketplace' of ideas protected by the First Amendment," permitting the speech of millions of associations of citizens--many of them small corporations without large aggregations of wealth--to be banned. Accordingly, the Supreme Court overruled its holding in Austin v. Michigan Chamber of Commerce and the portion of its decision in McConnell v. FEC upholding the facial validity of Section 203 of BCRA, finding that the McConnell Court relied on Austin . In so doing, the Court invalidated not only Section 203 of BCRA, but also SS 441b's prohibition on the use of corporate treasury funds for communications expressly advocating election or defeat of a federal candidate. The Court upheld the disclaimer and disclosure requirements in Sections 201 and 311 of BCRA as applied to the movie that Citizens United produced and the broadcast advertisements it planned to run promoting the movie. According to the Court, while they may burden the ability to speak, disclaimer and disclosure requirements "impose no ceiling on campaign-related activities," and "do not prevent anyone from speaking." Citizens United argued that the disclosure requirements could deter donations to the organization because donors may fear retaliation. In response, the Court, relying on its holding in McConnell v. FEC , reiterated that such requirements would be unconstitutional as applied to an organization if there were a reasonable probability that its donors would be subject to threats, harassment or reprisals. In this case, however, the Court found that Citizens United offered no evidence of such threats. In a strongly worded dissent, Justice Stevens criticized the Court's opinion, arguing that its decision to overrule Austin v. Michigan Chamber of Commerce and to find Section 203 of BCRA facially unconstitutional was made "only after mischaracterizing both the reach and rationale of those authorities, and after bypassing or ignoring the rules of judicial restraint." The dissent disagreed with the Court's conclusion that the avoidance of corruption and its appearance does not justify the regulation of corporate expenditures in candidate elections. Rather, the dissenting justices would have upheld the regulation because "the longstanding consensus on the need to limit corporate campaign spending should outweigh the wooden application of judge-made rules." In brief, before the Court's ruling, corporations and labor unions were prohibited from using their general treasury funds to make expenditures for communications expressly advocating election or defeat of a clearly identified federal candidate. In addition, 30 days before a primary and 60 days before a general election, corporations and unions were prohibited from using general treasury funds to finance electioneering communications. However, corporations and labor unions were permitted to use political action committees (PACs), financed with regulated contributions from employees or members, to make independent expenditures for express advocacy communications and to fund electioneering communications within the restricted time periods. As a result of the Court's ruling, it appears that federal campaign finance law does not restrict corporate and, most likely, labor union use of their general treasury funds to make independent expenditures for any communication expressly advocating election or defeat of a candidate, including broadcast and cablecast communications made immediately prior to an election. Corporations and unions may still establish PACs, but are only required to use PAC funds in order to make contributions to candidates, parties, and other political committees.

In a 5-to-4 ruling, the Supreme Court in Citizens United v. FEC invalidated two provisions of the Federal Election Campaign Act (FECA), codified at 2 U.S.C. SS 441b. It struck down the long-standing prohibition on corporations using their general treasury funds to make independent expenditures, and Section 203 of the Bipartisan Campaign Reform Act of 2002 (BCRA), which amended FECA, prohibiting corporations and labor unions from using general treasury funds for "electioneering communications." The Court determined that these restrictions constitute a "ban on speech" in violation of the First Amendment. In so doing, the Court overruled its earlier holdings in Austin v. Michigan Chamber of Commerce, finding that it provided no basis for allowing the government to limit corporate independent expenditures. The Court also overruled the portion of its decision in McConnell v. FEC upholding the facial validity of Section 203, finding that the McConnell Court relied on Austin. The Court, however, upheld the disclaimer and disclosure requirements in Sections 201 and 311 of BCRA as applied to the movie that Citizens United produced and the advertisements it planned to run promoting the movie. According to the Court, while they may burden the ability to speak, disclaimer and disclosure requirements "impose no ceiling on campaign-related activities." As a result of the Court's ruling, it appears that federal campaign finance law does not limit corporate and, most likely, labor union use of their general treasury funds to make independent expenditures for any communication expressly advocating election or defeat of a candidate, including broadcast and cablecast communications made immediately prior to an election. Corporations and unions may still establish PACs, but are only required to use PAC funds in order to make contributions to candidates, parties, and other political committees.

RS21324 -- Iraq: A Compilation of Legislation Enacted and Resolutions Adopted by Congress, 1990-2003 Updated March 27, 2003 House H.J.Res. 658 Supported the actions taken by the President with respect to Iraqi aggression against Kuwait and confirmed United States resolve. Passed in the House: October 1, 1990 H.Con.Res. 382 Expressed the sense of the Congress that the crisis created by Iraq's invasion and occupation of Kuwait must be addressed and resolved on its own terms separately from otherconflicts in the region. Passed in the House: October 23, 1990 Senate S.Res. 318 Commended the President for his actions taken against Iraq and called for the withdrawal of Iraqi forces from Kuwait, the freezing of Iraqi assets, the cessation of all armsshipments to Iraq, and the imposition of sanctions against Iraq. Passed in the Senate: August 2, 1990 Public Laws P.L. 101-509 ( H.R. 5241 ). Treasury, Postal Service, and General Government Appropriations Act FY1991 (Section 630). Urged the President to ensure that coalition allies were sharing theburden of collective defense and contributing financially to the war effort. Became public law: November 5, 1990 P.L. 101-510 ( H.R. 4739 ). Defense Authorization Act FY1991 (Section 1458). Empowered the President to prohibit any and all products of a foreign nation which has violated the economicsanctions against Iraq. Became public law: November 5, 1990 P.L. 101-513 ( H.R. 5114 ). The Iraq Sanctions Act of 1990 (Section 586). Imposed a trade embargo on Iraq and called for the imposition and enforcement of multilateral sanctions inaccordance with United Nations Security Council Resolutions. Became public law: November 5, 1990 P.L. 101-515 ( H.R. 5021 ). Department of Commerce, Justice, and State Appropriations Act FY1991 (Section 608 a & b). Restricted the use of funds to approve the licensing for export of anysupercomputer to any country whose government is assisting Iraq develop its ballistic missile program, or chemical,biological, and nuclear weapons capability. Became public law: November 5, 1990 Public Laws P.L. 102-1 ( H.J.Res. 77 ). Authorization for Use of Military Force Against Iraq Resolution . Gave congressional authorization to expel Iraq from Kuwait in accordance with United NationsSecurity Council Resolution 678, which called for the implementation of eleven previous Security CouncilResolutions. Became public law: January 12, 1991 P.L. 102-138 ( H.R. 1415 ). The Foreign Relations Authorization Act for FY1992 (Section 301). Stated that the President should propose to the Security Council that members of the Iraqiregime be put on trial for war crimes. Became public law: October 28, 1991 P.L. 102-190 ( H.R. 2100 ). Defense Authorization Act for FY1992 (Section 1095). Supported the use of "all necessary means to achieve the goals of United Nations Security CouncilResolution 687 as being consistent with the Authorization for Use of Military Force Against Iraq Resolution ( P.L.102-1 )." Became public law: December 5, 1991 Public Laws P.L. 103-160 ( H.R. 2401 ). Defense Authorization Act FY1994 (Section 1164). Denied defectors of the Iraqi military entry into the United States unless those persons had assisted U.S. orcoalition forces and had not committed any war crimes. Became public law: November 30, 1993 P.L. 103-236 ( H.R. 2333 ). Foreign Relations Authorization Act FY1994, 1995 (Section 507). Expressed the sense of Congress that the United States should continue to advocate themaintenance of Iraq's territorial integrity and the transition to a unified, democratic Iraq. Became public law: April 30, 1994 House H.Res. 120 Urged the President to take "all appropriate action" to secure the release and safe exit from Iraq of American citizens William Barloon and David Daliberti, who had mistakenlycrossed Iraq's border and were detained. Passed in the House: April 3, 1995 Senate S.Res. 288 Commended the military action taken by the United States following U.S. air strikes in northern Iraq against Iraqi radar and air defense installations. This action was taken duringthe brief Kurdish civil war in 1996. Passed in the Senate: September 5, 1996 House H.Res. 322 Supported the pursuit of peaceful and diplomatic efforts in seeking Iraqi compliance with United Nations Security Council Resolutions regarding the destruction of Iraq'scapability to deliver and produce weapons of mass destruction. However, if such efforts fail, "multilateral militaryaction or unilateral military action should be taken." Passed in the House: November 13,1997 H.Con.Res.137 Expressed concern for the urgent need of a criminal tribunal to try members of the Iraqi regime for war crimes. Passed in the House: January 27, 1998 H.Res. 612 Reaffirmed that it should be the policy of the United States to support efforts to remove the regime of Saddam Hussein in Iraq and to promote the emergence of a democraticgovernment to replace that regime. Passed in the House: December 17, 1998 Senate S.Con.Res. 78 Called for the indictment of Saddam Hussein for war crimes. Passed in the Senate: March 13, 1998 Public Laws P.L. 105-174 ( H.R. 3579 ). 1998 Supplemental Appropriations and Rescissions Act (Section 17). Expressed the sense of Congress that none of the funds appropriated or otherwise madeavailable by this act be used for the conduct of offensive operations by the United States Armed Forces against Iraqfor the purpose of enforcing compliance with United Nations Security CouncilResolutions, unless such operations are specifically authorized by a law enacted after the date of the enactment ofthis act. Became public law: May 1, 1998 P.L. 105-235 ( S.J.Res. 54 ). Iraqi Breach of International Obligations . Declared that by evicting weapons inspectors, Iraq was in "material breach" of its cease-fire agreement. Urged thePresident to take "appropriate action in accordance with the Constitution and relevant laws of the United States, tobring Iraq into compliance with its international obligations." Became public law:August 14, 1998 P.L. 105-338 ( H.R. 4655 ). Iraq Liberation Act of 1988 (Section 586). Declared that it should be the policy of the United States to "support efforts" to remove Saddam Hussein from power inIraq and replace him with a democratic government. Authorized the President to provide the Iraqi democraticopposition with assistance for radio and television broadcasting, defense articles and militarytraining, and humanitarian assistance. Became public law: October 31, 1998 House H.J.Res. 75 Stated that Iraq's refusal to allow weapons inspectors was a material breach of its international obligations and constituted "a mounting threat to the United States, its friends andallies, and international peace and security." Passed in the House: December 20, 2001 Public Laws P.L. 107-243 ( H.J.Res. 114 ). To Authorize the Use of United States Armed Forces against Iraq . Authorized the President to use armed force to defend the national security of the United Statesagainst the threat posed by Iraq and to enforce all relevant U.N. resolutions regarding Iraq. Became public law:October 16, 2002 House H.Con.Res. 104 Expresses the unequivocal support and appreciation of the nation (1) to the President as Commander-in-Chief for his firm leadership and decisive action in the conduct ofmilitary operations in Iraq as part of the on-going Global War on Terrorism; (2) to the members of the U.S. armedforces serving in Operation Iraqi Freedom, who are carrying out their missions withexcellence, patriotism, and bravery; and (3) to the families of the U.S. military personnel serving in Operation IraqiFreedom, who are providing support and prayers for their loved ones currently engagedin military operations in Iraq. Passed in the House: March 21, 2003. Senate S.Res. 95 Commends and supports the efforts and leadership of the President, as Commander in Chief, in the conflict against Iraq. Commends, and expresses the gratitude of the nation to allmembers of the U.S. armed forces (whether on active duty, in the National Guard, or in the Reserves) and thecivilian employees who support their efforts, as well as the men and women of civiliannational security agencies who are participating in the military operations in the Persian Gulf region, for theirprofessional excellence, dedicated patriotism, and exemplary bravery. Expresses the deepcondolences of the Senate to the families of brave Americans who have lost their lives in this noble undertaking,over many years, against Iraq. Expresses sincere gratitude to British Prime Minister TonyBlair and his government for their courageous and steadfast support, as well as gratitude to other allied nations fortheir military support, logistical support, and other assistance in the campaign againstSaddam Hussein's regime. Passed in the Senate: March 20, 2003. For a complete list of 108th legislation related to Iraq that has been proposed in either the House or the Senate, please see Iraq - U.S. Confrontation: Legislation in the 108th Congress (3) available online at http://www.crs.gov/products/browse/iraqleg.shtml .

This report is a compilation of legislation on Iraq from 1990 to the present. The list is composed of resolutions and public laws relating to military action ordiplomatic pressure to be taken against Iraq. (1) Thelist does not include foreign aid appropriations bills passed since FY1994 that deny U.S. funds to any nation inviolation of the United Nations sanctionsregime against Iraq. (2) Also, measures that were not passed only in either the House or the Senate are not included (with the exceptionof the proposals in the 108th Congress and several relevant concurrentand joint resolutions from previous Congresses ). For a more in-depth analysis of U.S. action against Iraq, see CRS Issue Brief IB92117, Iraq, Compliance, Sanctions and U.S. Policy. This report will beupdated periodically.

The United States has gradually shifted its formal drug policy from a punishment-focused model toward a more comprehensive approach--it is now one that focuses on prevention, treatment, and enforcement. The Obama Administration stated that it coordinated "an unprecedented government-wide public health and public safety approach to reduce drug use and its consequences." In its FY2018 budget request, the Trump Administration requested funds for both public health and public safety efforts to combat the opioid epidemic. The proliferation of drug courts in American criminal justice fits this new comprehensive model. Broadly, these specialized court programs are designed to divert some individuals away from traditional criminal justice sanctions such as incarceration. Many drug courts offer a treatment and social service alternative for those who otherwise may have faced traditional criminal sanctions for their offenses. In some drug courts, individuals that have been arrested are diverted from local courts into special judge-involved programs; these courts are often viewed as "second chance" courts. Other drug court programs offer reentry assistance after an offender has served his or her sentence. According to some research, these courts help save on overall criminal justice costs, provide treatment for defendants/offenders with substance abuse issues, and help offenders avoid rearrest. This report will explain (1) the concept of a "drug court," (2) how the term and programs have expanded to include wider meanings and serve additional subgroups, (3) how the federal government supports drug courts, and (4) research on the impact of drug courts on offenders and court systems. In addition, it briefly discusses how drug courts might provide an avenue for addressing the opioid epidemic and other emerging drug issues that Congress may consider. The term "drug courts" refers to specialized court programs that present an alternative to the traditional court process for certain criminal defendants and offenders. Traditionally, these individuals are first-time, nonviolent offenders who are known to abuse drugs and/or alcohol. While there are additional specialized goals for different types of drug courts (e.g., veterans drug courts, tribal drug courts, and family drug courts), the overall goals of adult and juvenile drug courts are to reduce recidivism and substance abuse. Drug court programs may exist at various points in the justice system, but they are often employed postarrest as an alternative to traditional criminal justice processing. Figure 1 illustrates a deferred prosecution, pretrial drug court model where defendants are diverted into drug court prior to pleading to a criminal charge. In many drug court programs, participants have the option to participate in the program. Figure 2 illustrates a postadjudication model where defendants must plead guilty to charges (as part of a plea deal) in order to participate in the drug court program. Upon completion of this type of program, their sentences may be amended or waived, and in some jurisdictions, their offenses may be expunged. These diagrams illustrate two common models of drug courts, but other models (or variations on the above) have been developed around the country. For example, some drug court referrals may come as a condition of probation. Many drug courts, including some federal drug court programs, are actually reentry programs that assist a drug-addicted prisoner with reentering the community while receiving treatment for substance abuse. While drug courts vary in composition and target population, they generally have a comprehensive model involving offender screening and assessment of risks and needs, judicial interaction, monitoring (e.g., drug and alcohol testing) and supervision, graduated sanctions and incentives, and treatment and rehabilitation services. Drug courts are usually managed by a team of individuals from (1) criminal justice, (2) social work, and (3) treatment service. Drug courts typically utilize a multiphase treatment approach including a stabilization phase, an intensive treatment phase, and a transition phase. The stabilization phase may include a period of detoxification, initial treatment assessment, and education, as well as additional screening for other needs. The intensive treatment phase typically involves counseling and other therapy. Finally, the transition phase could emphasize a variety of reintegration components including social integration, employment, education, and housing. A group of criminal justice professionals established the first drug court in Florida in 1989; they are credited with sparking a national movement of problem-solving courts that address specific needs and concerns of certain types of offenders. There are around 3,000 drug courts (of various types) operating in the United States. Drug courts have diversified to serve specialized groups including veterans, juveniles, and college students. Many drug courts are hybrid courts and address issues beyond drug abuse including mental health and alcohol-impaired driving. In some ways, the term "drug courts" appears to be a catch-all phrase for specialized programs for addicted defendants and offenders at various points in the criminal justice process. While the Judicial Conference of the United States has long opposed the creation of specialized federal courts, there has been growing support within the federal court system and the Department of Justice (DOJ) for reentry programs that incorporate some features of drug courts. While some federal district courts have created special programs for drug-involved offenders--these programs are sometimes referred to as "drug courts"--they are largely reentry programs that manage an inmate's reintegration to the community. A few federal drug court programs, however, manage offenders with "front end" diversion options. There have been questions about the effectiveness of drug court programs at the federal level due to the nature of federal crimes and the individuals who are arrested for allegedly committing them. Federal district courts fund these specialized programs from decentralized allotments given to the districts for general treatment and supervision of offenders. As federal districts have budget autonomy, they may elect to establish these specialized court programs. Of note, in 2017 the President's Commission on Combating Drug Addiction and the Opioid Crisis recommended that DOJ establish a federal drug court in every federal judicial district. Enacted in 2016, Section 14003 of the 21 st Century Cures Act (the Cures Act; P.L. 114-255 ) required DOJ to establish a pilot program to determine the effectiveness of federal drug and mental health courts. Within one year of enactment, DOJ, with assistance from the Administrative Office of the United States Courts and the United States Probation Offices, must establish a pilot program in at least one U.S. judicial district that will divert certain offenders with mental illness or intellectual disabilities from federal prosecution, probation, or prison and place the offenders in these specialized courts. As of January 2018, this pilot program is still in the planning stages. Postdeployment, many veterans face unique challenges in readjusting to civilian life, and these challenges may contribute to involvement with the criminal justice system. According to the Bureau of Justice Statistics' (BJS's) National Inmate Survey from 2011 to 2012, approximately 8% (181,500) of the total incarcerated population in the United States are veterans. For approximately 14% (25,300) of these incarcerated veterans, the most serious offense that led to their incarceration was a drug offense, and for approximately 4% (7,100), their most serious offense was driving while intoxicated or impaired. Older BJS survey data indicate that 43% of veteran state prisoners and 46% of veteran federal prisoners met the criteria for drug dependence or abuse in 2004, as opposed to 55% of nonveteran state prisoners and 45% of nonveteran federal prisoners. While veterans in state prison reported lower levels of past drug use than nonveterans, a larger percentage of veterans (30%) than nonveterans (24%) reported a "recent history of mental health services." In 2008, the first veterans court was created in Buffalo, NY, in response to the combined mental health and substance abuse treatment needs of justice system-involved veterans. These court programs are a hybrid model of drug treatment and mental health treatment courts. As of June 2015, there were approximately 306 veterans treatment courts and 6 federal veterans courts. The federal government has demonstrated growing support for the drug court model primarily through financial support of drug court programs, research, and various drug court initiatives. The Department of Justice (DOJ) supports research on drug courts, training and technical assistance for drug courts, and grants for their development and enhancement. The primary federal grant program that supports them is the Drug Court Discretionary Grant Program (Drug Courts Program). DOJ's Office of Justice Programs (OJP), Bureau of Justice Assistance (BJA) jointly administers this competitive grant program along with the Substance Abuse and Mental Health Administration (SAMHSA) within the Department of Health and Human Services (HHS). Grants are distributed to state, local, and tribal governments as well as state and local courts themselves to establish and enhance drug courts for nonviolent offenders with substance abuse issues. See Table 1 for a five-year history of DOJ appropriations for the Drug Courts Program. Drug courts funded through this program may not use federal funding and matched funding to serve violent offenders. Offenders may be characterized as "violent" according to current or past convictions as well as current charges. Of note, an exception to the violent offender restriction is made for veterans treatment courts that are funded through the Drug Courts Program. Since FY2013, BJA has funded the Veterans Treatment Court Program through the Drug Courts Program using funds specifically appropriated for this purpose (see amounts in Table 1 ). As mentioned, these amounts are not subject to the violent offender exclusion according to BJA. The purpose of the Veterans Treatment Court Program is "to serve veterans struggling with addiction, serious mental illness, and/or co-occurring disorders." Grants are awarded to state, local, and tribal governments to fund the establishment and development of veterans treatment courts. While veterans treatment court grants have been part of OJP's Drug Courts Program for several years, the Comprehensive Addiction and Recovery Act of 2016 (CARA; P.L. 114-198 ), authorized DOJ to award grants to state, local, and tribal governments to establish or expand programs for qualified veterans, including veterans treatment courts, peer-to-peer services, and treatment, rehabilitation, legal, or transitional services for incarcerated veterans. Based on a review of program activity at the Department of Veterans Affairs (VA), the VA does not offer funding for veterans treatment courts; however, the VA operates a Veterans Justice Outreach (VJO) program, which provides outreach and linkage to VA services for justice system-involved veterans, including those involved with veterans courts or drug courts. Other DOJ grants, including the Edward Byrne Memorial Justice Assistance Grants (JAG) and Juvenile Accountability Block Grants (JABG), may be used to fund drug courts. One of the broader purpose areas of the JAG program is to improve prosecution and courts programs as well as drug treatment programs. The JABG program includes a purpose area to establish juvenile drug courts. Of note, the last time JABG received an appropriation was in FY2013, and it has been unauthorized since it expired in FY2009. The Office of National Drug Control Policy (ONDCP), under its Other Federal Drug Control Programs account, offers drug court training and technical assistance grants, as well as support for other initiatives. As mentioned, SAMHSA jointly administers the Drug Courts Program with BJA. In addition, SAMHSA administers other grants that support drug courts. Grants go toward the creation, expansion, and enhancement of adult and family drug courts and treatment drug courts. For FY2016, SAMHSA funded 122 drug court continuations, 60 new drug court grants, and four contracts. In FY2017, SAMHSA planned to fund 103 drug court continuations, 71 new drug court grants, and two contracts. Jurisdictions have sought to utilize drug courts to treat individuals' drug addictions, lower recidivism rates for drug-involved offenders, and lower costs associated with processing these defendants and offenders. Since the inception of drug courts, a great deal of research has been done to evaluate their effectiveness and their impact on offenders, the criminal justice system, and the community. Much of the research yields positive outcomes. Over the last decade, the National Institute of Justice, through its CrimeSolutions.gov evaluation program, has evaluated 21 drug court programs and found that 19 of them had either "effective" or "promising" ratings while two had ratings of "no effects." Most reported positive results for recidivism outcomes. For cost evaluations, only some programs had these data and these evaluations showed mixed results. Some programs showed significant cost savings while others had insignificant findings for cost impacts. Several studies have demonstrated that drug courts may lower recidivism rates and/or lower costs for processing defendants and offenders compared to traditional criminal justice processing. For example, one group of researchers examined the impact of a drug court over 10 years and concluded that treatment and other costs associated with the drug court (investment costs) per offender were $1,392 less than investment costs of traditional criminal justice processing. In addition, savings due to reduced recidivism (outcome costs) for drug court participants were more than $79 million over the 10-year period. A collaboration of researchers conducted a five-year longitudinal study of 23 drug courts from several regions of the United States and reported that drug court participants were significantly less likely than nonparticipants to relapse into drug use and participants committed fewer criminal acts than nonparticipants after completing the drug court program. Still, some are skeptical of the impact of drug courts. The Drug Policy Alliance has claimed that drug courts help only offenders who are expected to do well and do not truly reduce costs. This organization also has criticized drug courts for punishing addiction because drug courts dismiss those who are not able to abstain from substance use. Congress has long been concerned over illicit drug use and abuse in the United States. Recently, Congress has given attention to opioid abuse, and especially overdose deaths involving prescription and illicit opioids. In 2015, there were 52,404 drug overdose deaths in the United States, including 33,091 (63.1%) that involved an opioid. Also, in 2016 SAMHSA estimated that 329,000 Americans age 12 and older were current users of heroin and approximately 3.8 million Americans were current "misusers" of prescription pain relievers. Policymakers may debate whether drug courts are an effective tool in the package of federal efforts to address the opioid epidemic. Policy options include, but are not limited to, increasing federal funding for drug courts, expanding federal drug court programs, and amending the Drug Courts Program to possibly include a broader group of offenders, among other potential changes. As discussed, grant recipients of the federal Drug Courts Program, with the exception of veterans treatment courts, must exclude violent offenders; however, some argue that drug courts should include violent offenders. One group of researchers compared the outcomes for violent and nonviolent offenders and concluded that courts should consider the current charge rather than the offender's history of violence, and the type and seriousness of the offender's substance abuse problem when selecting individuals for drug court programs. They found that while it appeared that individuals with a history of violence (defined as at least one violent charge before entering drug court) were more likely to fail the program than those who never had been charged with a violent crime, the relationship between history of violence and drug court success disappeared when controlling for total criminal history. More serious offenders are less likely than low-level or first-time offenders to abstain from crime, and some argue that drug courts may be the best option for these individuals. Substance abuse and crime have long been linked, and diversion and treatment may assist some individuals in avoiding criminal behavior. Congress may wish to maintain the exclusion of violent offenders from the Drug Courts Program, or it may consider broadening the pool of eligible offenders that may participate in BJA-funded drug court programs to include certain violent offenders.

The United States has gradually shifted its formal drug policy from a punishment-focused model toward a more comprehensive approach--one that focuses on prevention, treatment, and enforcement. The proliferation of drug courts in American criminal justice fits this more comprehensive model. These specialized court programs are designed to divert certain defendants and offenders away from traditional criminal justice sanctions such as incarceration while reducing overall costs and helping these defendants and offenders with substance abuse issues. Drug courts present an alternative to the traditional court process for some criminal defendants and offenders--namely those who are considered nonviolent and are known to abuse drugs and/or alcohol. While there are additional specialized goals for certain types of drug courts, the overall goals of adult and juvenile drug courts are to reduce recidivism and substance abuse among nonviolent offenders. Drug court programs may exist at various points in the justice system, but they are most often employed postarrest as an alternative to traditional criminal justice processing. The federal government has demonstrated growing support for the drug court model primarily through financial support of drug court programs, federal drug courts, research, and various drug court initiatives. For example, each year, the Bureau of Justice Assistance (BJA) and Substance Abuse and Mental Health Administration (SAMHSA) distribute grants to states and localities to support the creation and enhancement of drug courts. In FY2017, over $100 million in federal funding was appropriated for drug courts. As the opioid epidemic continues, policymakers may debate whether drug courts could be an effective tool in efforts to address opioid abuse. Policy options include, but are not limited to, increasing federal funding for drug courts and reauthorizing (with or without amendments) the Drug Court Discretionary Grant Program (Drug Courts Program). Further, Congress may wish to maintain the exclusion of violent offenders from the Drug Courts Program, or, conversely, broaden the pool of eligible offenders that may participate in BJA-funded drug court programs to include some violent offenders.

The question of whether a political advertisement is issue advocacy (including lobbying) or campaign activity is an important one under the tax laws, particularly for tax-exempt 501(c) organizations. This is because the Internal Revenue Code (IRC) imposes limitations on the ability of 501(c) groups to engage in campaign activity. Any activity that is truly issue advocacy would not be subject to these limitations. Some 501(c) groups--primarily 501(c)(3) charitable organizations, including houses of worship, charities, and educational institutions--are prohibited under the IRC from engaging in any campaign intervention. They are, however, allowed to take positions on policy issues and conduct an insubstantial amount of lobbying. Others types of 501(c)s--primarily 501(c)(4) social welfare organizations, 501(c)(5) labor unions, and 501(c)(6) trade associations --may engage in campaign intervention. However, because these groups' primary purpose must be their tax-exempt purpose (e.g., promoting social welfare), campaign activity, along with any other non-exempt purpose activity, cannot be their primary activity. Recently, this standard has received significant attention because 501(c) organizations have reportedly spent millions of dollars on campaign activity and allegations have been made that some should have their tax-exempt status revoked. Any activity that is truly issue advocacy would not be counted as campaign intervention when determining whether a group has violated the primary purpose test. Relatedly, even though some types of 501(c) organizations may engage in campaign activity under the IRC, they are subject to tax if they make an expenditure for "influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any Federal, State, or local public office or office in a political organization, or the election of Presidential or Vice-Presidential electors." The tax is imposed at the highest corporate rate on the lesser of the organization's net investment income or the total amount of these expenditures. True issue advocacy would fall outside the reach of the tax. In order to understand what issue advocacy is under the tax code, it is helpful to begin by looking at its opposite--campaign intervention. The IRC and regulations offer little insight into what constitutes campaign intervention. The IRC does not define the term other than to say it "includ[es] the publishing or distributing of statements" on behalf of or in opposition to a candidate. A Treasury regulation defines candidate as "an individual who offers himself, or is proposed by others, as a contestant for an elective public office, whether such office be national, State, or local." As to what types of activities are campaign intervention, the regulation adds little besides specifying they include "the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate." Clearly, any advertisement that expressly endorses or opposes a candidate is campaign activity. It is also clear that there is no rule that campaign intervention occurs only when an organization expressly advocates for or against a candidate. What is less clear is what happens when an ad merely refers to a candidate. Guidance released by the IRS shows that in any situation that falls short of express advocacy, this issue does not lend itself to bright-line rules. The focus is essentially on whether the activity exhibits a preference for or against a candidate. Preference can be subtle, and the IRS takes the position that it is not necessary for the organization to expressly mention a candidate by name--rather, referring to party affiliation or "distinctive features of a candidate's platform or biography" may be sufficient to identify a candidate. As a result, the line between issue advocacy and campaign activity can be difficult to discern. The IRS has released two revenue rulings that discuss when an issue advocacy communication has crossed the line into campaign activity. Both contain a non-exhaustive list of factors to be considered, as well as some examples. Consistent with the above discussion, there are no bright-line rules. Rather, the determination is made by looking at the facts and circumstances of each case, focusing on whether the ad or statement includes anything that indicates a candidacy should be supported or opposed based on the issue. A point to keep in mind is that these rulings indicate the IRS' position on this issue, but they have not been challenged in court and therefore no court has given its approval to the analysis contained in them. Some might argue that this point may be particularly relevant in a context like this one, where the classification of an activity as campaign activity subjects it to regulation and therefore may have First Amendment implications. Commentators have raised constitutional concerns about the campaign intervention standard, arguing, among other things, that it may be unconstitutionally vague in at least some circumstances. No court has addressed this issue. One of the rulings deals with the definition of campaign intervention in the context of the 501(c)(3) prohibition. It appears likely the same analysis would be used for the 501(c) primary purpose test. According to the IRS, key factors to be examined in determining whether an issue advocacy communication crosses the line into campaign intervention include the following: whether it identifies a candidate for a given public office by name or other means, such as party affiliation or distinctive features of a candidate's platform or biography; whether it expresses approval or disapproval for any candidate's positions or actions; whether it is delivered close in time to an election; whether it refers to voting or an election; whether the issue it addresses has been raised as one distinguishing the candidates; whether it is part of an ongoing series by the group on the same issue and the series is not timed to an election; and whether its timing and the identification of the candidate are related to a non-electoral event (e.g., a scheduled vote on legislation by an officeholder who is also a candidate). The other ruling addresses whether an expenditure for an issue advocacy expenditure is subject to the 527(f) tax. It is generally similar to the above, but there are some differences. According to that ruling, factors that tend to show that an expenditure for an issue advocacy communication is taxable include the following: the communication identifies a candidate for public office; the communication identifies the candidate's position on the subject of the communication; the candidate's position has been raised (either by the communication or in other public communications) to distinguish him or her from other candidates; the communication is timed to coincide with an electoral campaign; the communication is targeted at voters in a particular election; and the communication is not part of an ongoing series of substantially similar advocacy communications by the organization on the same issue. Factors that tend to show the expenditure is not taxable include the following: the absence of one or more of the above factors; the communication identifies specific legislation or an event outside the organization's control that the organization hopes to influence; the communication's timing coincides with a specific event outside the organization's control that it hopes to influence; the candidate is identified solely as a government official who is in a position to act on the issue in connection with a specific event (e.g., will vote on the legislation); and the candidate is identified solely in a list of the legislation's key sponsors. It is not clear that the differences between the two rulings have much practical import for purposes of the general discussion contained in this report. This is illustrated by the fact that, as discussed below, both include examples and the same conclusion would be reached for each example under either ruling. The determination of whether an advertisement is actually campaign activity is entirely dependent on the facts and circumstances of each case. This requires actually looking at the ad in question. Additionally, it requires being familiar with the organization's other activities--e.g., is the group running a series of ads on the issue, and one just happens to coincide with an election? It also requires knowing information about the election--e.g., has the issue been raised to distinguish the candidates? Illustrating the importance of the overall context in which the ad is run, and not just the text of the ad itself, is the fact that it is not necessary for the ad to expressly mention a candidate by name. Rather, the IRS takes the position that simply referring to such things as party affiliation or "distinctive features of a candidate's platform or biography" may be sufficient in some cases to count as identifying a candidate. According to the IRS, a statement or ad is "particularly at risk" of being classified as campaign intervention when it refers to candidates or to voting in an upcoming election. However, even in those situations, "the communication must still be considered in context before arriving at any conclusions," thus emphasizing that any determination is highly fact specific. The following example shows how these points come together. Shortly before an election, a group whose mission is to educate the public about community development issues releases an ad that discusses some general issues and mass transit in particular. It ends with the following: For those of you who care about quality of life in District X and the growing traffic congestion, there is a very important choice coming up next month. We need new mass transit. More highway funding will not make a difference. You have the power to relieve the congestion and improve your quality of life in District. Use that power when you go to the polls and cast your vote in the election for your state Senator. While the ad references the upcoming election, no candidate is identified by name at any point during it. The group's position on mass transit is clearly stated, but the ad is silent on how any candidate running in the election feels about the issue. Is this campaign intervention? Making the determination would require knowing additional facts not discussed in the ad. The most important would likely be whether mass transit and/or highway funding had been raised during the election to distinguish the candidates, looking at such things as whether it was a prominent issue in the campaign; whether either candidate had made it a part of his/her platform; and whether other public communications discussed the candidates' position on it. If the answer is yes, then the IRS would likely find the ad to be campaign intervention, particularly in light of the ad including the group's position on the issue. The two rulings contain several examples that are useful because they address the treatment of a very common type of ad where people are urged to contact an elected official, who is also a candidate, to support or oppose an issue or legislation. The examples illustrate how the factors are applied in order to determine whether anything in the ad indicates support or opposition to the official's candidacy. The first example involves a situation with pending legislation. A group runs an ad that states pending Senate legislation would provide educational opportunities for state residents and identifies one of the state's Senators as someone who had previously opposed similar bills. The ad ends by urging people to contact the Senator and tell him/her to vote for the bill. The ad was published in newspapers throughout the state shortly before a Senate vote on the bill, which was also right before a primary election in which the Senator was running. Educational issues had not been raised to distinguish the Senator from other candidates. The IRS ruled the ad was not campaign intervention. While the ad was run shortly before an election and identified the Senator's position as contrary to that of the group, it did not mention the election or Senator's candidacy; education issues had not been raised as distinguishing the Senator from other candidates; the ad's timing and identification of the Senator were directly related to the bill and an upcoming Senate vote; and the Senator was in the position to vote on the bill. Two other examples illustrate how a few changes in the fact pattern can result in a different outcome. An anti-death penalty group runs television ads that included information about countries that have abolished the death penalty and alleged inequities in its application. In one example, the ads were run regularly before scheduled executions and end by noting the governor's support of the death penalty and encouraging people to contact him/her to stop the upcoming execution. One of these ads is run before a scheduled execution, which coincides with an election in which the governor is running. In the other example, the ad was not part of an ongoing series timed to run before scheduled executions, and it ended by noting that the governor's support for the death penalty and encouraging people to contact him/her to demand a moratorium. That ad was run shortly before the election, when no executions were scheduled in the near future. The IRS ruled that the first example was not campaign activity because the ad was part of an ongoing series of substantially similar advocacy communications; identified an event outside the group's control that it hoped to influence; its timing coincided with the event; and the candidate was a public official in a position to take action in connection with the event. On the other hand, the second example was determined to be campaign activity because it identified the governor shortly before an election in which he/she was a candidate; identified the governor's position as opposite to that of the group; was not part of an ongoing series; and was not timed to coincide with a non-electoral event. As the second death penalty example illustrates, when there is no pending legislative vote or other non-electoral activity, the IRS rulings suggest it can be difficult for an ad to avoid being classified as campaign activity. Another example of this principle involves an education reform group that released an ad supporting an increase in state funding for public education. The ad encourages people to "Tell the Governor what you think about our under-funded schools," without indicating the governor's position on public education funding. The ad, which was not part of an ongoing series, was run several times, the first of which was before an election in which the governor was running for reelection. At that time, no legislative vote or other non-electoral activity was scheduled. The governor's opponent had made public education funding an issuing in the campaign by highlighting, in public appearances and campaign literature, the governor's veto of a tax increase to fund education. The IRS ruled this was campaign intervention because it identified a candidate; was run shortly before the election; was not part of an ongoing series; was not timed to coincide with a nonelectoral event; and even though the ad did not state the governor's position on the issue, the issue has been raised by the other candidate as a way to distinguish them. The same result was reached on a similar fact pattern except that the issue had not been raised to distinguish the candidate/officeholder from any opponents, but the ad did identify his/her position as agreeing with that of the group. An ad released shortly before an election without a link to a pending non-electoral action may not always be campaign activity. One IRS example dealt with a union that advocated for better law enforcement personnel conditions. The union ran a series of ads that called for more federal money for law enforcement. The series ran in large newspapers throughout the state regularly throughout the year, and one time an ad was published right before an election in which one of the state's Senators was up for reelection. The ad urged people to contact both of the state's Senators to support increased federal funding, without indicating either one's position on the issue. At the time it ran, no legislative vote or other Senate activity on the issue was scheduled. Law enforcement issues had not been raised as an issue to distinguish the Senator from any opponent. The IRS ruled this was not campaign activity because it was part of an ongoing series of substantially similar advocacy communications by the group; it identified both Senators as public officials who would vote on this issue; did not identify the position of the Senator who was running for reelection; and law enforcement issues had not been raised in the election to distinguish the Senator from any opponent. When it comes to regulating the political activities of tax-exempt organizations, both the IRC and the Federal Election Campaign Act (FECA) have a role to play. One recurring issue is that similar or identical terms in tax and campaign finance law and policy do not always have the same meanings. Thus, it should not be assumed that the characterization or treatment of an activity for campaign finance purposes necessarily results in the same characterization or treatment for tax purposes, and vice versa. When thinking about activities that the tax world might consider to be "issue advocacy" or "campaign intervention," the campaign finance world might be concerned about whether the relevant activities are "independent expenditures" or "electioneering communications." It seems clear that any "independent expenditure," which by definition involves expressly advocating for or against a candidate, is per se campaign intervention for purposes of the IRC. "Electioneering communications" present a trickier situation. FECA defines them as broadcast, cable, or satellite communications that refer to a federal candidate and are made within 60 days of a general election or 30 days of a primary. As discussed above, there is no analogous bright-line standard in the IRC for determining whether communications that merely refer to a candidate are campaign intervention. Rather, making this type of determination for tax law purposes requires looking at the facts and circumstances of each case to assess whether the communication indicates a preference for or against the candidate. The communication's timing is only one factor to consider. Because of this mismatched intersection between tax and campaign finance law, it is possible that an issue advocacy communication might, depending on its timing and content, be an electioneering communication under FECA, but not be treated as campaign intervention under the IRC. Thus, it appears that just because a group reports an ad as an electioneering communication to the Federal Election Commission (FEC), this does not necessarily mean the ad would be treated as campaign intervention for purposes of the IRC. The opposite is true as well--not all campaign activity under the IRC will necessarily be reported to the FEC. What this means in practice is that, for example, when trying to figure out whether a 501(c) group has violated the primary purpose test by engaging in "too much" campaign activity, the amount reported to the FEC might not accurately reflect the amount of campaign activity actually engaged in for tax purposes.

Television and radio airwaves are inundated with political ads right now, and their numbers will only increase as the November 2012 elections get closer. Some ads expressly tell viewers or listeners which candidate to vote for or against. Others take a different approach. These ads typically urge people to contact an elected official, who also happens to be a candidate in the upcoming election, and tell him/her to support an issue or piece of legislation. Sometimes they do not even mention any candidate/officeholder by name, yet some still feel political in nature. The question of whether an advertisement has crossed the line into campaign activity is an important one under the tax laws, particularly for tax-exempt 501(c) organizations. There are two main reasons. First, 501(c)(3) charitable organizations (including churches and other houses of worship) are prohibited under the Internal Revenue Code (IRC) from engaging in campaign activity. They are, however, permitted to take policy positions and engage in an insubstantial amount of lobbying. Second, other types of 501(c)s--primarily 501(c)(4) social welfare organizations, 501(c)(5) labor unions, and 501(c)(6) trade associations--may engage in campaign activity. However, it (along with any other non-exempt purpose activity) cannot be their primary activity. This standard has been the focus of congressional and public scrutiny, as 501(c) groups have reportedly spent millions of dollars on campaign activity in the post-Citizens United era, and allegations have been made that some should have their status revoked for engaging in too much campaign activity. Whether an advertisement is campaign activity is key in this context because a "true" issue ad, as defined for tax purposes, would not be counted as campaign activity when determining whether revocation of 501(c) status is appropriate. The standard for determining whether something is campaign activity under the IRC is whether it exhibits a preference for or against a candidate. Clearly, ads that tell people who to vote for or against are campaign intervention. However, in situations involving something short of express advocacy, this standard does not lend itself to bright-line rules. Preference can be subtle, and the IRS takes the position that it is not always necessary to expressly mention a candidate by name. As a result, the line between issue advocacy and campaign activity can be difficult to discern. The IRS has released two rulings that provide a non-exhaustive list of factors the agency considers when determining whether an issue advocacy communication is electioneering. The most important point to keep in mind is that the determination of whether an ad is actually campaign activity is entirely dependent on the facts and circumstances of each case. This requires looking at the ad in question, as well as being familiar with some of the organization's other activities (e.g., has the group run a series of similar ads?) and the election (e.g., has the issue been raised to distinguish among the candidates?). Finally, the term "issue advocacy" is also used when people talk about campaign finance law and policy. The terminology used in tax and campaign finance law and policy do not always match. Thus, it should not be assumed that the characterization or treatment of an activity for campaign finance purposes necessarily results in the same characterization or treatment for tax purposes, and vice versa.

The Temporary Assistance for Needy Families (TANF) block grant provides states, territories, and Indian tribes with federal grants for benefits and services intended to ameliorate the effects, and address the root causes, of child poverty. TANF funds can be used in any manner a state can reasonably calculate helps it achieve the goals of (1) providing assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; (2) ending the dependence of needy parents on government benefits through work, job preparation, and marriage; (3) preventing and reducing the incidence of out-of-wedlock births; and (4) encouraging the formation and maintenance of two-parent families. Thus, TANF truly is a broad-based block grant with broad discretion for the states to spend funds to meet federal goals. TANF was created in the 1996 welfare reform law and is typically thought of as the federal program that helps states fund their cash assistance programs for needy families with children. Moreover, TANF is also most associated with the 1996 welfare reform policies imposing work requirements and time limits on families receiving assistance. Most of TANF's federal rules and requirements relate to families receiving assistance. TANF's performance is measured on state welfare-to-work efforts, with states assessed based on numerical work participation standards. However, basic assistance--what many call "cash welfare"--accounted for only 27.6% of all TANF funding in FY2013. Additionally, many of the families that received TANF cash assistance in FY2013 represented family types that were not the focus of debate in 1996, and are not subject to TANF work requirements and time limits. These are families with children cared for by adults who are not themselves recipients of TANF: disabled parents receiving Supplemental Security Income (SSI); immigrant parents who are ineligible for TANF assistance but have citizen children who are eligible; and nonparent relative caregivers, such as grandparents, aunts, and uncles. In FY2013, 38.1% of families receiving TANF were composed of children in families cared for by adults who themselves were not recipients of TANF or did not come under TANF work rules. This report examines the TANF cash assistance caseload, focusing on how the composition and characteristics of families receiving assistance have changed over time. It first provides a brief history of cash assistance for needy families with children, discussing how policy became focused on moving the predominately single parents who headed these families from welfare to work. It then traces the changes in the caseload composition since the 1996 welfare reform law, from a caseload dominated by unemployed single parents to a diverse caseload that had different routes to the benefit rolls as well as different circumstances on the rolls. It provides detail on caseload characteristics in FY2013, using data that states are required to report to the federal government. The report is intended to complement tabulations of these data already released by the Department of Health and Human Services (HHS). This report does not describe TANF rules or provide current statistics on the TANF caseload or expenditures. For an overview of TANF, see CRS In Focus IF10036, The Temporary Assistance for Needy Families (TANF) Block Grant , by [author name scrubbed]. It also does not describe individuals and families who receive TANF benefits and services other than cash assistance. Federal law does not require states to report on their numbers or characteristics. The modern form of assistance for needy families with children has its origins in the early-1900s "mothers' pension programs," established by state and local governments. These programs provided economic aid to needy families headed by a mother so that children could be cared for in homes rather than in institutions. Federal involvement in funding these programs dates back to the Great Depression, and the creation of the Aid to Dependent Children (ADC) program as part of the Social Security Act of 1935. ADC provided grants to states to help them aid families with "dependent children," who were deprived of the economic support of one parent because of his death, absence, or incapacitation. The legislative history of the 1935 act explicitly stated that the purpose of ADC payments was to permit mothers to stay at home, rather than work: The very phrases "mothers' aid" and "mothers' pensions" place an emphasis equivalent to misconstruction of the intention of these laws. These are not primarily aids to mothers but defense measures for children. They are designed to release from the wage-earning role the person whose natural function is to give her children the physical and affectionate guardianship necessary not alone to keep them from falling into social misfortune, but more affirmatively to rear them into citizens capable of contributing to society. Over time, a combination of changes in social policy and changes in economic and social circumstances made cash assistance to needy families (often called "welfare") among the most controversial of federal programs. The Social Security Act was amended to provide social insurance protection for families headed by widows (survivors' benefits, added in 1939) and those with disabled members (disability benefits, added in 1956). This left families headed by a single mother with the father alive, but absent, as the primary group aided by ADC, later renamed Aid to Families with Dependent Children (AFDC). The cash assistance caseload also became increasingly nonwhite. States were first given the option to aid two-parent families beginning in 1961, but were not required to extend such aid until the enactment of the Family Support Act in 1988. Even with the extension of aid to two-parent families, this group never became a large part of the caseload, and most adult TANF cash assistance recipients continue to be single mothers. The issue of whether lone mothers should work was also much debated. The intent of ADC to allow single mothers to stay home and raise their children was often met with resistance at the state and local level. It was also contrary to the reality that low-income women, particularly women of color, were sometimes expected to, and often did, work. Further, the increase in women's labor force participation in the second half of the 20 th century--particularly among married white women--eroded support for payments that permitted mothers to remain at home and out of the workforce. Beginning in 1967, federal policy changes were made to encourage, and then require, work among AFDC mothers. In 1974, children surpassed the elderly as the age group with the highest poverty rate. Poverty rates for children in families headed by a single mother were particularly high--and over time an increasing share of children were being raised in such families. In the 1980s, there was increasing attention to "welfare dependency." Research at that time showed that while many mothers were on cash assistance for a short period of time, a substantial minority of mothers remained on the rolls for long periods of time. Additionally, experimentation on "welfare-to-work" initiatives found that requiring participation in work or job preparation activities could effectively move single mothers off the benefit rolls and into jobs. "Welfare reform," aiming to replace AFDC with new programs and policies for needy families with children, was debated over a period of four decades (the 1960s through the 1990s). These debates culminated in a number of changes in providing aid to low-income families with children in the mid-1990s, creating a system of expanded aid to working families (e.g., increases in the Earned Income Tax Credit and funding for child care subsidies) and the creation of TANF, which established time limits and revamped work requirements for the cash assistance programs for needy families with children. Most TANF policy today reflects the history of cash aid to needy families with children headed by a single mother and the policy debates of the 1980s and early- to-mid 1990s. Some things remain the same from that period--children remain the age group most likely to be poor, and children living with single mothers have very high poverty rates. However, some things are very different from the period when TANF was created, including the size and composition of the cash assistance caseload. Figure 1 shows the trend in the average monthly number of families receiving cash assistance from TANF and its predecessor program (AFDC, ADC) from 1959 through 2013. The figure shows two distinct periods of rapid caseload growth. The first occurred from the mid-1960s to the mid-1970s. The second followed a period of relative stability in the caseload (around 3.5 million families) and occurred from 1989 to 1994. Following 1994, the caseload declined. It declined rapidly in the late 1990s, with continuing declines, albeit at a slower rate, from 2001 to 2008. The caseload increased again from 2008 through 2010 coincident with the economic slump associated with the 2007-2009 recession. That latest period of caseload increase was far less rapid and much smaller than the two earlier periods of caseload growth. The increases in the cash assistance caseload from 1989 to 1994, and its decline thereafter, were also associated with changes in the character of the caseload. Table 1 provides an overview of the characteristics of the family cash assistance caseload for selected years: FY1988, FY1994, FY2001, FY2006, and FY2013. The most dramatic change in caseload characteristics is the growth in the share of families with no adult recipients. In FY2013, 38.1% of TANF assistance families had no adult recipient; in contrast, in FY1988 only 9.8% of all cash assistance families had no adult recipient. These are families with ineligible adults (sometimes parents, sometimes other relatives) but whose children are eligible and receive benefits. Some other notable characteristics of the caseload include the following: Most families receiving assistance are small . The average number of recipients in a family stood at 2.5 recipients per family in FY2013. In that year, just over half (51.0%) of all families had only one child. The vast majority of adult recipients are women . In FY2013, 85.7% of adult recipients were women. As discussed, family cash assistance has historically been provided to families with children headed by a single mother. The FY2013 percentage is lower than in previous years examined in the table. Men slowly increased as a share of the caseload over time, but still remain a relatively small share of the total adult caseload. The families tend to have young children. In FY2013, 56.6% of all families had a child under the age of six, with 12.0% of all families having an infant. The majority of the caseload is racial or ethnic minorities. This was the case for all years shown in the table. Examining the racial/ethnic makeup of children, Hispanic children became the largest group of recipient children by FY2013. In FY2013, the share of child recipients who were Hispanic was 36.3%, compared with 29.9% who were African American, and 25.8% who were non-Hispanic white. The share of the child caseload that is Hispanic has grown over time. This reflects their growth as a share of all children in the general population and of all poor children. The incidence of TANF cash assistance receipt among Hispanic children and poor Hispanic children--like that of children in other racial and ethnic groups--has actually declined over time (see Table A-3 ). The increase in the share of TANF families with no adult recipient over the FY1988 to FY2013 period represents a major change in the character of the caseload. This section focuses on that change, classifying TANF families by the circumstances of the adults in the household. The classification in this report divides the TANF assistance caseload into six categories. There are two main categories of families where there is an adult recipient or an adult who is considered "work-eligible" and hence represent the traditional concerns of cash assistance policies: Families with TANF adult(s), not employed. This group dominated the cash assistance caseload in FY1988, but by FY2013 represented less than half of all cash assistance families. Families with TANF adult(s), employed. These are families with adult recipients or work-eligible parents, and at least one of these adults is employed. However, their employment is at low enough wages, or has been of short enough duration, that their family remains eligible for TANF cash assistance. The remaining four categories shown in the figure are considered "child-only" families. In these families, the adults caring for the children are not considered TANF cash assistance recipients themselves, but they receive benefits on behalf of the children. There are three main categories of "child-only" families: Parent is a Supplemental Security Income ( SSI ) recipient . These families are usually headed by a parent or couple who receives Supplemental Security Income. In general, they receive SSI on the basis of disability, meeting the federal law's criterion of being "unable to perform substantial gainful activity in the economy." SSI is paid only to individuals and couples and there is no federal funding for extra benefits if they have children. Therefore, states use TANF funds to provide benefits for children of SSI parents. Parent is an ineligible noncitizen . Federal law makes certain noncitizens ineligible for federally funded benefits. States have the option to use state funds to aid federally ineligible noncitizens who are lawfully present in the United States. Unauthorized immigrants are not eligible for either federally or state-funded TANF aid. However, there is a class of families known as "mixed status" families, with parents who are immigrants and children who are citizens because they were born in the United States. In these families, the children may be eligible for TANF regardless of the immigration status of their parents. Child (or child ren) in the care of a nonparent, caretaker relative . The first statutory goal of TANF is to provide assistance to needy families so that children can be cared for in their own homes or in the homes of relatives. If a nonparent relative cares for a child for whom they are not legally responsible financially, they can receive financial assistance from the state on behalf of the child. Some of these children are living with nonparent relatives because they have been removed from the home of their parents due to abuse or neglect. However, some are in these homes for other reasons. The additional "child-only" category comprises families where the parent is in the home but for reasons other than those listed above is not a recipient or work-eligible adult or the family lives in a state that fails to provide information on non-recipient adults in the household. Figure 2 shows the change in both the size and composition of the cash assistance caseload. As noted previously, from FY1988 to FY1994 the number of families receiving assistance increased from 3.7 million to 5.0 million per month, a 35% increase. In terms of numbers, the majority of that caseload growth was attributable to families with an adult recipient. However, also important in this period was the emergence of the "child-only" categories. In FY1988, the "child-only" categories represented about 10% of the overall caseload, a share that grew to 17% in FY1994. From FY1994 to FY2001, the cash welfare caseload declined rapidly, from 5.0 million families to 2.2 million families per month, a 56% decline. Over this period of time, the TANF caseload's character changed dramatically. The number of families with an adult recipient and no employment fell from a monthly average of close to 3.8 million to less than 1 million (992,000). This represented a 74% decline in this population, substantially greater than the overall caseload decline. It was this group that was most closely identified with welfare dependency during the welfare reform debates of the 1980s and 1990s. In contrast, the total number of families in the child-only category declined by a comparatively small amount, from 869,000 per month in FY1994 to 789,000 in FY2001, a decline of 9%. Thus, "child-only" families--a population not discussed much during the welfare reform debates of the 1980s and 1990s--became a greater share of the overall caseload. The FY2001 to FY2013 period also saw some declines in the overall caseload and continued changes in its composition, but the changes were far less dramatic than in the late 1990s. In FY2013, the TANF cash assistance caseload was very diverse. Families with an adult recipient or work-eligible individual who was unemployed--the group that welfare-to-work policies have traditionally focused on--represented less than half of the caseload (44.7%). Another 17.3% of the caseload reflected families with employed adult recipients or work-eligible parents. The figure shows the three main groups of "child-only" families. (The groups of "child-only" families are shaded in blue.) The largest of the "child-only" categories represents children with nonparent relative caretakers (13.4%). The other two major categories of "child-only" families are where the parent is an ineligible noncitizen (11.2% of the total caseload) and child-only families where the parent is an SSI recipient (8.9% of the total caseload). The composition of the TANF cash assistance caseload by family categories varies substantially by state. The variation reflects differences among states in both their demographic characteristics and policies. For TANF families by category and state in FY2013, see Table A-2 . The different categories of TANF families reflect different circumstances that either led or contributed to their remaining on the assistance rolls. Additionally, differences in the typical characteristics across the family categories highlight the diversity of the cash assistance caseload. This section will focus on the five major categories of TANF families: (1) families with an adult recipient who is not employed; (2) families with an adult recipient, employed; (3) "child-only" families with an SSI parent; (4) "child-only" families with a nonparent, relative caretaker; and (5) "child-only families" with an ineligible immigrant parent. The data for the "child-only/other" category are missing important information for identifying these families' characteristics, and thus are not included in this section's analysis. TANF families tend to be small, with the most typical family having only one child. However, there are some differences in family size among the different categories of families. Table 2 shows TANF families by number of children and family size. Families with an employed adult tend to be slightly larger than those with adult(s) who are not employed. This is because TANF cash assistance eligibility thresholds and benefit amounts are higher for larger families; thus, larger families with earnings are more likely than smaller families with earnings to retain eligibility for TANF assistance. TANF families with ineligible noncitizen parents are also somewhat larger than the average TANF family. In FY2013, 20.7% of families with an ineligible noncitizen parent reported earnings. (This percentage is not shown on the table.) Though the noncitizen parent is not in the assistance unit receiving benefits, the parent's earnings are typically deemed available to the family and count in determining both eligibility and benefits. Like other families with earnings, larger families with earnings are more likely to retain eligibility for benefits than are smaller families. Two-thirds of TANF child-only families with caretaker relatives were reported as single child cases in FY2013. The majority of TANF families have young children. However, the age of the youngest child in the family also varies by family category. Table 3 shows TANF families by family category and age of the youngest child. Families with an adult who is not employed are the focus of TANF welfare-to-work policies. These families often have pre-school children. In FY2013, two-thirds of TANF families with an adult who was not employed had a pre-school child (under the age of 6). Some of these families can be exempted from TANF work requirements. For example, TANF law allows single parents with a child under the age of 1 to be exempted from work and disregarded from the TANF work participation standards. In FY2013, close to one-fifth (18.2%) of TANF families with an adult who was not employed had an infant (under the age of 1). In contrast, "child-only" families headed by an SSI parent or a nonparent relative tended to have older children. In FY2013, 30.5% of TANF child-only families headed by an SSI parent had a teenager as their youngest child. In FY2013, 28.9% of families with children cared for by a nonparent relative had a teen as their youngest child. The majority of the TANF cash assistance caseload is composed of racial and ethnic minorities. Among child recipients, the largest group is Hispanic children--36.3% of all child recipients in FY2013. There are differences in the racial/ethnic make-up of child recipients by family category. Table 4 shows children receiving TANF cash assistance, by the category of their family and their race/ethnicity. African American children represent the largest group of children in two family categories that include TANF adults, as well as in child-only families with SSI parents. Hispanic children make up most of children with ineligible noncitizen parents. The table also shows that the largest group of children in child-only families cared for by nonparent relatives is non-Hispanic white. Historically, children in families receiving cash assistance that are cared for by nonparent relatives have been more likely to be African American than other racial/ethnic groups. As late as FY2001, African American children accounted for a majority (52.6%) of all children in TANF child-only families cared for by a nonparent relative. However, throughout the 2000s, the share of TANF children in such families who were African American declined. This reflected a decline in the number of African American children who were cared for by nonparent relatives in the overall population. TANF was created in the 1996 welfare reform law ( P.L. 104-193 ), the culmination of decades of debate over the roles of low-income, single mothers in the home and in the workforce. The policies created within TANF reflect a primary outcome of that debate: that is, the expectation that single mothers should work to support their families, with TANF being at most temporary assistance rather than a long-term support they would depend on for themselves and their children. In 2016, the TANF law turns 20 years old, with most policies the same as when the block grant was created. However, much has changed since 1996. States have used TANF as a broad-based block grant to fund a wide range of benefits and services addressing conditions and causes of economic and social disadvantage of children, in addition to providing cash assistance or traditional "welfare." Additionally, both the size and the composition of the TANF cash assistance caseload have changed markedly since welfare reform legislation was debated in the mid-1990s. The caseload is much smaller--1.7 million families in FY2013 versus 5.0 million families in FY1994. The type of family receiving assistance that was the focus of the welfare reform debates--families with an unemployed adult recipient, which accounted for three out of four families pre-reform--now accounts for less than half of all families on the rolls. Therefore, the majority of the caseload today represents families with characteristics that are different from those who are the focus of current TANF welfare-to-work policies. TANF cash assistance families with an adult reported as working represented 17.3% of the cash assistance caseload in FY2013--more than double the 7.5% share in FY1994. These often are families either in transition from welfare to work or are families with very low earnings. They also sometimes represent families in "earnings supplement" programs, which provide a TANF benefit (sometimes a small TANF benefit) to working parents who left traditional TANF cash assistance when they worked and/or received food assistance from the Supplemental Nutrition Assistance Program (SNAP). There was some attention to transitional benefits during the welfare reform debates. A series of welfare reform experiments showed that, without earnings supplements through continued assistance for working families, welfare-to-work initiatives tended to increase work and decrease receipt of welfare, but not increase family income. The experiments that showed increased family income were those that provided continued welfare assistance to families with earnings. TANF's work participation standards give states credit for providing cash assistance to families with earnings, so that states have the incentive to provide at least some earnings supplements to families who find work while on the rolls. The welfare reform experiments discussed above were conducted in the late 1980s and early 1990s. Since then, there have been expansions of earnings supplements and aid to working families through refundable tax credits (the Earned Income Tax Credit and the Additional Child Tax Credit), subsidized child care, and expanded health insurance coverage. However, little attention has been paid to how cash assistance to working families fits together with other earnings supplements, such as the EITC, to achieve TANF goals. Many of the "child-only" TANF assistance families are affected not only by TANF policy, but other social policies as well. The child welfare system (child protective services, foster care, guardianship) could be involved with some of the children who are in the care of nonparent relatives because of, or risk of, abuse or neglect. Families with ineligible noncitizen parents are affected by immigration policies. Families with disabled parents who receive Supplemental Security Income (SSI) are affected by disability determination and redetermination policies. Congress has focused on relative caregiving through child welfare legislation, specifically creating a program to help states reimburse kin who take legal guardianship of children who would otherwise be eligible for federal foster care assistance under Title IV-E of the Social Security Act. Congress has shown interest in promoting coordination between TANF and other federal and state programs serving TANF families, including the "non-traditional" families. This has especially been true in terms of coordinating information between TANF and child welfare programs. P.L. 112-96 requires the Department of Health and Human Services (HHS) to develop standards of data reporting to facilitate the sharing of information between TANF and other programs. Earlier legislation ( P.L. 112-34 ) added similar language to facilitate data sharing between child welfare and other programs. In addition, a May 2013 Government Accountability Office (GAO) report said Congress could opt to require states to include in TANF state plans how they will coordinate services between TANF and child welfare programs. Questions remain about whether and what policies within TANF should apply to "child-only" families. A 2012 report on "child-only" families from Chapin Hall at the University of Chicago, funded by HHS, raised concerns about each major group: whether TANF assistance to relative caregivers might be an inadequate replacement for foster care, and whether low rates of TANF receipt among potentially eligible families headed by SSI parents or ineligible immigrant parents might not be assuring a minimal standard of living for children in these families. The report did recommend that "explicit attention" be given to each component of the TANF caseload, including separate attention to each of the three major groups of "child-only" families. The May 2013 GAO report said a potential option to better understand TANF's role in helping its "child-only" families would be to require states to provide additional information to the federal government about the status and needs of "child-only" families. This information could be provided, for example, in TANF state plans. Congress could also establish--or require states to establish--goals and performance measures related to the well-being of children in "child-only" families. Congress could also require that annual reporting by states to HHS include a statement about how the goals related to "child-only" families are being met, and report on such performance measures that relate to these goals.

The Temporary Assistance for Needy Families (TANF) block grant provides states, territories, and Indian tribes with federal grants for benefits and services intended to ameliorate the effects, and address the root causes, of child poverty. It was created in the 1996 welfare reform law, and is most associated with policies such as time limits and work requirements that sought to address concerns about "welfare dependency" of single mothers who received cash assistance. This report examines the characteristics of the TANF cash assistance caseload in FY2013, and compares it with selected post-welfare reform years (FY2001 and FY2006) and pre-welfare reform years (FY1988 and FY1994). The size of the caseload first increased, from 3.7 million families per month in FY1988 to 5.0 million families per month in FY1994, and then declined to 2.2 million families in FY2001 and 1.7 million families in FY2013. Over this period, some of the characteristics of the TANF cash assistance caseload have remained fairly stable, and other characteristics have changed. Most cash assistance families are small; 51.0% of all TANF cash assistance families in FY2013 had one child. Cash assistance families also frequently have young children; 56.6% in FY2013 had a pre-school-aged child. The majority of the cash assistance caseload has also been composed of racial and ethnic minorities. By FY2013, the largest racial/ethnic group of TANF cash assistance children was Hispanic. In that year, of all TANF assistance child recipients, 36.3% were Hispanic, 29.9% were African American, and 25.8% were non-Hispanic white. The growth in Hispanic children as a percent of all TANF assistance children is due entirely to their population growth--not an increase in the rate at which Hispanic children receive TANF. Additionally, the majority of adult recipients today, as in the past, are women--specifically, single mothers. However, the share of the caseload comprised of families with an adult recipient has declined substantially in the post-welfare reform period. In FY2013, 38.1% of all families receiving TANF cash assistance represented "child-only" families, in which benefits are paid on behalf of the child in the family but the adult caretaker is ineligible for TANF. The three main components of the "child-only" caseload are (1) families with a disabled parent receiving federal Supplemental Security Income (SSI); (2) families with an ineligible, immigrant parent but with eligible citizen children; and (3) families with children being cared for by a nonparent relative, such as a grandparent, aunt, or uncle. Each of the three categories of families differs in their characteristics from TANF cash assistance families with an adult recipient; there are also differences in characteristics among families in the three major "child-only" categories. TANF policies generally date back to the 1996 welfare law and the welfare reform debates of the 1980s and 1990s, and do not necessarily address the current composition of the cash assistance caseload. The major performance measure used to evaluate TANF is the work participation rate, a measure not relevant to TANF "child-only" families. Many of TANF's child-only families are affected by social policies other than TANF (i.e., federal disability, immigration, and child protection policies). However, these families are also affected by TANF, and there are currently no federal rules for assessing how TANF funds are used to improve their well-being. Options that have been raised include requiring states to provide more information to the federal government and public on benefits and services afforded to "child-only" families. Congress could also either establish performance goals and measures, or, alternatively, require states to establish such goals and measures for "child-only" families.

RS21664 -- The WTO Cancun Ministerial November 6, 2003 The new round of trade negotiations, the Doha Development Agenda (DDA), was launched at the 4th WTO Ministerial at Doha, Qatar in November 2001. It isknown as the Doha Development Agenda because of its emphasis on integrating developing countries into theworld trading system. Many developingcountries believed they have received little or no benefit from those trade negotiations over the years. The workprogram for DDA folded in continuing talks(the built-in agenda) on agriculture and services. Other negotiations were launched on the reduction or eliminationof non-agricultural (industrial) tariffs,clarification and improvement of disciplines for existing WTO agreements on antidumping and subsidies, and topicsrelating to special and differential (S&D)treatment for developing countries and assistance to developing countries with the implementation of existing WTOcommitments. Trade ministers at Dohaagreed to continue discussions on whether to launch negotiations "by explicit consensus" on the "Singapore issues"at the 5th Ministerial at Cancun. The DohaMinisterial declaration also directed negotiators to resolve a dispute related to the ability of least developed countriesto access generic medicines for HIV/AIDSand other epidemics. Trade ministers at Doha directed that the negotiations conclude not later than January 1, 2005with a mid-term review at the 5thMinisterial. Negotiations proceeded at a slow pace. Several deadlines for agreement on negotiating modalities (i.e., methodologies by which negotiations are conducted)were missed in the agriculture and industrial market access talks. Without agreement, negotiators looked towardthe Cancun Ministerial to resolve themodalities. In the weeks before Cancun, negotiating documents to achieve this resolution were criticizedby all sides, and expectations of the Ministerial werereduced to achieving an agreement on the framework for the modalities to be used in future negotiations. Access to Medicines. Negotiators did resolve the access to medicines dispute just prior to the beginning ofthe Ministerial. On August 30, 2003, the Trade Related Aspects of Intellectual Property Rights (TRIPS) Councilagreed on a mechanism to allow poordeveloping countries to issue a compulsory license to a third-country producer to manufacture generic drugs tocombat HIV/AIDS, malaria, tuberculosis, andother epidemics. While the agreement contained several restrictions to protect the patent rights of pharmaceuticalmanufacturers, the agreement was designedin part to reaffirm the importance of developing country issues to the WTO in time for Cancun. (1) At the Cancun Ministerial, negotiators became embroiled in disputes over agriculture and the Singapore issues. The negotiations were characterized by theemergence of the G-20+, an informal group of developing countries (2) which demanded substantial concessions from developed countries in the agriculturenegotiations. Some developing countries also refused to countenance the beginning of negotiations over theSingapore issues, which had been championed bythe European Union (EU). In the end, the Singapore issues broke up the talks before agriculture issues were evenformally discussed. Reaction. Subsequent to the collapse of the talks, U.S. and EU negotiators criticized both the substance andtactics of the G-20+ group. A U.S. negotiator claimed that developing country rhetoric was more suited to the UnitedNations, while others claimed that theG-20+ lacked a negotiating strategy other than making demands on developed countries. However, one G-20+ trademinister has suggested that the position ofthe G-20+ merely represented the paramount interest of its members in breaking down the agricultural barriers andsubsidies in the United States and the EU. U.S. reaction to the collapse of the talks has been to give increased emphasis to the negotiation of bilateral and regional free trade agreements (FTA). U.S. TradeRepresentative Robert Zoellick said that the United States would negotiate with what he called "can-do" countriesrather than "won't-do" countries. (3) Therewere also calls by some Members of Congress to oppose bilateral or regional negotiations with countries of theG-20+, leading some G-20+ participantsnegotiating FTAs with the United States, including Guatemala, Costa Rica, Peru, Colombia, and Thailand, todissociate themselves from their G-20+activities. (4) The European Union has undertaken a review of its policy towards the WTO and multilateral trade negotiations. One issue that may be discussed in this reviewis the future emphasis that the EU places on the Singapore issues. While EU negotiators agreed to drop demandsthat negotiations proceed on all but the tradefacilitation issue at Cancun, the lack of agreement on that agenda may result in renewed EU insistence onthe full Singapore agenda. The EU may also decide toplay the regional card by placing renewed emphasis on ongoing negotiations with Mercosur or with former coloniesin the African, Caribbean and PacificGroup. EU officials have also made public statements on the need to reform various aspects of the WTO'sdecision-making process. (5) Some participants from G-20+ countries returned from Cancun claiming the outcome was a victory for developing countries. To them, the lack of agreementwas evidence that they had successfully defended their national interests in demanding changes in the agriculturalpolicies of developed countries. However,many of these countries have subsequently expressed an interest in returning to WTO negotiations. Some G-20+members, possibly under pressure from theUnited States, have announced that they will no longer attend G-20+ meetings. These defections have called intoquestion the future of this group as anegotiating entity, as well as underlying differences between the trade policies of some of its members, most notablyBrazil and India. The Derbez Draft. During the course of the Cancun Ministerial, a draft declaration (6) was written by theMinisterial Chairman, Luis Ernesto Derbez, the Mexican Foreign Minister. Crafted as a framework for futurenegotiations to which all parties could agree, itwas criticized by most parties and was not adopted at the Ministerial. The Derbez text principally modified theagricultural language of a draft negotiating textcirculated, and widely criticized, prior to the negotiations. It did call for the start of negotiations on two of theSingapore issues, trade facilitation andgovernment procurement, while relegating the issues of investment and competition policy to further "clarification." In the aftermath of the Conference,however, the Derbez text has reemerged as a possible negotiation vehicle to restart the negotiations. It has beenendorsed by leaders of the Asia-PacificEconomic Cooperation (APEC) nations, including the United States, Canada and Japan. Brazil has also indicatedthat it could work from the text, although itdisagrees with certain language in the draft. The European Union has not taken a formal position on the Derbezdraft, although EU Trade Representative PascalLamy wondered in a recent speech in London, "what magic dust has been shaken over a text so roundly rejected inSeptember, to find it so roundly endorsed inNovember." (7) Only India has rejected the textoutright as a basis for negotiation. (8) While the Derbez draft provides the advantage of a ready-made template to restart the negotiations, this approach also has potential shortcomings. As acompromise text that essentially revised a previous compromise text, the language is highly general, and in manyrespects represents a lowest commondenominator of agreement. Many of the previous disagreements could reemerge if negotiations commence basedon this text. The Derbez text also reflects thejoint negotiating positions worked out between the United States and the EU in agriculture and industrial marketaccess. Post-Cancun, some U.S. commentatorshave suggested that these positions do not serve U.S. interests, and that the United States would be better servedby reverting to its previous, more ambitious,negotiating proposals. Agriculture. (9) Agriculture negotiations are part of the ongoing negotiations, a built-in agenda of talks thatwere incorporated into the launch of the Doha round. The negotiations involve the "three pillars" of agriculturesupport: market access (tariffs), exportsubsidies, and production subsidies. The emphasis of the U.S. negotiating position has been market access. Theinitial U.S. agriculture proposal includedsignificant tariff reduction based on a non-linear formula that would cap individual tariff lines at 25%. The proposalalso called for a complete elimination ofexport subsidies and a harmonization of trade-distorting domestic support to 5% of a country's total agriculturalproduct. The initial European Union proposal adopted a linear formula approach to tariff reductions and subsidies used in the Uruguay Round. The linear approachwould reduce tariffs and subsidies by a fixed percentage cut, thus leaving the relative subsidy and tariff ratesunchanged between trading partners. The EU alsosought to trade concessions on export subsidies, which it heavily utilizes, for concessions on export credit and foodaid programs, which are utilized by theUnited States. In June 2003, the EU announced a series of reforms to its Common Agricultural Policy (CAP)including the partial decoupling of mostproduction from subsidies by 2007. However, the EU did not revise its agriculture offer based on these reforms. In August 2003, the United States and the EU adopted a joint negotiating framework to spur negotiations in the lead-up to the Cancun Ministerial. Thecompromise text blended various aspects of the U.S. and EU proposals. It provides for a combination of harmonizedand linear tariff reduction formulas. Trade-distorting domestic support would be reduced by a percentage formula, and production-limited support wouldbe allowed up to 5% of the value of the country's total agricultural production. Export subsidies would be phased out for products of interest to developingcountries, and WTO disciplines would bedeveloped for state trading enterprises, export credits, and food aid programs. special and differential treatment(S&D) was recognized for developingcountries, but not necessarily for developing countries that are net food exporters. Some observers have criticizedthe United States for moving away from itsinitial trade liberalizing stance to compromise with the EU, claiming that the initial U.S. position had been morecompatible with certain developing countryproposals. (10) However, others contend that acoherent U.S.-EU position would help facilitate negotiations. In response to the U.S. - EU proposal, the G-20+ group advocated a proposal to cut U.S. and EU domestic subsidies more drastically than the U.S.-EU proposal,to eliminate export subsidies, and to provide S&D treatment for all developing countries in terms of tariffreduction and other market access. In addition, agroup of four African nations, Benin, Burkina Faso, Chad, and Mali proposed the elimination of trade-distortingdomestic support and export subsidies forcotton coupled with a transitional compensation mechanism for cotton exporters affected by the subsidies. Inresponse, the United States proposed a WTOsectoral initiative to examine trade distortions for cotton, man-made fibers, and textile and apparel with multilateralassistance to help these countries diversifytheir economies away from cotton. African countries refused to negotiate on this basis. The Derbez draft tried to reconcile these different positions by advocating deeper cuts in trade-distorting domestic subsidies, bringing under reviewnon-trade-distorting subsidies, and by negotiating a date for the elimination of export subsidies, positions that reflectprevious developing country negotiatingpositions. It followed the U.S.-EU tariff formula, which blended harmonized and linear tariffs, but alloweddeveloping countries to identify items for minimaltariff cuts. It also largely adopted the U.S. position paper on the cotton issue. Singapore Issues. The Singapore issues refer to four issues (investment, competition policy, tradefacilitation, and government procurement) that were offered for the negotiating agenda of the WTO by theEuropean Union at the 1st Ministerial, held inSingapore in 1996. The 2001 Doha Ministerial declaration called for a decision on negotiating the issues "by explicitconsensus" at the 5th Ministerial. The 5thMinisterial at Cancun did not provide explicit consensus to negotiate these items. According to reports, itwas an impasse over these issues that finally causedthe talks to collapse. The European Union, along with Japan, South Korea, and Taiwan, have been the principal proponents of the Singapore issues. Tactically, it is generallyaccepted that for them, negotiation of the Singapore issues would be a quid pro quo for substantive negotiation ontheir agriculture policies. The United Stateshas been ambivalent about the Singapore issues, recently supporting the inclusion of government procurement andtrade facilitation primarily to move thenegotiations along. Generally, the developing countries have been opposed to the negotiation of the Singapore issuesfor two reasons. First, they foresee theimplementation of multilateral rules on these issues as an infringement of their sovereignty. Second, manydeveloping countries claim not to have theinstitutional capacity or resources to undertake the negotiation of additional issues, whatever the merits. TheDerbez text proposed the inclusion of tradefacilitation and government procurement. In the final outcome, the EU was willing to drop all the issues save tradefacilitation, the consideration of which wasthen vetoed by Botswana backed by several other African states. Before the talks broke, however, South Koreaindicated that it would accept nothing less thannegotiations on all four issues. Industrial Market Access. The United States has favored an aggressive tariff-cutting negotiating strategy inthe industrial market access talks. In December 2002, the United States proposed the complete elimination of tariffsby 2015. This proposal would haveeliminated "nuisance" tariffs (tariffs below 5%) and certain industrial sector tariffs by 2010, and would haveremoved remaining tariffs in 5 equal increments by2015. The initial EU tariff reduction proposal relied on a "compression formula," one in which all tariffs arecompressed in four bands with the highest bandbeing 15%. Like the U.S. position, this proposal applied to all countries and did not contain S&D language. The United States generally has been opposed toweakening the concept of tariff reciprocity, maintaining that it is in the developing countries' own interest to lowertariffs, not least to promote trade betweendeveloping countries. A paper jointly proposed by the United States, Canada, and the European Union proposeda harmonization (i.e. non-linear) formula fortariff reduction. This joint paper did contain S&D language for developing countries in the form of creditsawarded for further liberalization activity. (11) Industrial market access did not receive the attention paid to agriculture or Singapore issues. Because there was no agreement on modalities prior to theMinisterial, the Derbez text only reaffirmed the use of an unspecified non-linear formula applied line-by-line thatprovides flexibilities for developingcountries. The text also supported the concept of sectoral tariff elimination as a complementary modality for tariffreduction on goods of particular exportinterest to developing countries, but it advanced no concrete proposal. Next Steps. Following the collapse of the Cancun talks, all negotiating group meetings were cancelled. TheWTO General Council chairman Perez del Castillo has entered into discussion with national trade ministers andtheir Geneva representatives to try to establisha consensus on the way forward in the negotiations. To date, the United States and the EU have declined to takea leadership role in these discussions. TheGeneral Council, the WTO's highest decision-making body, is scheduled to meet on December 15, 2003, to assessany progress resulting from these discussionand recommend further steps.

The Cancun Ministerial Conference of the World Trade Organization(WTO)broke up without reaching agreementon the course of future multilateral trade negotiations. Negotiations on the Doha Development Agenda haveproceeded at a slow pace since the launch of thenew round in November 2001. The immediate cause of the collapse of talks was disagreement over launchingnegotiations on the Singapore issues, butagriculture and industrial market access issues were also sources of contention. Reaction from the United States hasbeen to focus on regional and bilateraltalks, while the European Union has undertaken a policy review of its position towards the WTO. The talks werecharacterized by the emergence of the G-20+group of developing nations that sought deep cuts in developed country agricultural subsidies. This report will notbe updated.

Since the terrorist attacks on September 11, 2001, the Islamic schools known as madrasa s have been of increasing interest to analysts and to officials involved in formulating U.S. foreign policy toward the Middle East, Central Asia, and Southeast Asia. Madrasas drew added attention when it became known that several Taliban leaders and Al Qaeda members had developed radical political views at madrasas in Pakistan, some of which allegedly were built and partially financed by donors in the Persian Gulf states. These revelations have led to accusations that madrasas promote Islamic extremism and militancy, and are a recruiting ground for terrorism. Others maintain that most of these religious schools have been blamed unfairly for fostering anti-U.S. sentiments and argue that madrasas play an important role in countries where millions of Muslims live in poverty and state educational infrastructure is in decay. The Arabic word madrasa (plural: madaris ) generally has two meanings: (1) in its more common literal and colloquial usage, it simply means "school"; (2) in its secondary meaning, a madrasa is an educational institution offering instruction in Islamic subjects including, but not limited to, the Quran, the sayings ( hadith ) of the Prophet Muhammad, jurisprudence ( fiqh ), and law. Historically, madrasas were distinguished as institutions of higher studies and existed in contrast to more rudimentary schools called kuttab that taught only the Quran. Recently, "madrasa" has been used as a catchall by many Western observers to denote any school--primary, secondary, or advanced--that promotes an Islamic-based curriculum. In many countries, including Egypt and Lebanon, madrasa refers to any educational institution (state-sponsored, private, secular, or religious). In Pakistan and Bangladesh, madrasa commonly refers to Islamic religious schools. This can be a significant semantic marker, because an analysis of "madrasa reform" could have different implications within various cultural, political, and geographic contexts. Unless otherwise noted in this paper, the term madrasa refers to Islamic religious schools at the primary and secondary levels. As an institution of learning, the madrasa is centuries old. One of the first established madrasas, called the Nizamiyah , was built in Baghdad during the eleventh century A.D. Offering food, lodging, and a free education, madrasas spread rapidly throughout the Muslim world, and although their curricula varied from place to place, it was always religious in character because these schools ultimately were intended to prepare future Islamic religious scholars ( ulama ) for their work. In emphasizing classical traditions in Arabic linguistics, teachers lectured and students learned through rote memorization. During the nineteenth and early twentieth centuries, in the era of Western colonial rule, secular institutions came to supersede religious schools in importance throughout the Islamic world. However, madrasas were revitalized in the 1970s with the rising interest in religious studies and Islamist politics in countries such as Iran and Pakistan. In the 1980s, madrasas in Afghanistan and Pakistan were allegedly boosted by an increase in financial support from the United States, European governments, Saudi Arabia, and other Persian Gulf states all of whom reportedly viewed these schools as recruiting grounds for anti-Soviet mujahedin fighters. In the early 1990s, the Taliban movement was formed by Afghan Islamic clerics and students ( talib means "student" in Arabic), many of whom were former mujahedin who had studied and trained in madrasas and who advocated a strict form of Islam similar to the Wahhabism practiced in Saudi Arabia and other Gulf countries. Madrasas, in most Muslim countries today, exist as part of a broader educational infrastructure. The private educational sector provides what is considered to be a quality Western-style education for those students who can afford high tuition costs. Because of their relatively lower costs, many people turn to state schools, where they exist. However, in recent years and in more impoverished nations, the rising costs and shortages of public educational institutions have encouraged parents to send their children to madrasas. Supporters of a state educational system have argued that the improvement of existing schools or the building of new ones could offer a viable alternative to religious-based madrasas. Others maintain that reforms should be institutionalized primarily within Islamic madrasas in order to ensure a well-rounded curriculum at these popular institutions. The U.S. Agency for International Development's (USAID) 2003 strategy paper Strengthening Education in the Muslim World advocates both of these viewpoints. Although some madrasas teach secular subjects, in general madrasas offer a religious-based curriculum, focusing on the Quran and Islamic texts. Beyond instruction in basic religious tenets, some argue that a small group of radicalized madrasas, specifically located near the Afghanistan-Pakistan border, promote a militant form of Islam and teach their Muslim students to fight nonbelievers and stand against what they see as the moral depravity of the West. Other observers suggest that these schools are wholly unconcerned with religious scholarship and focused solely on teaching violence. The 2003 USAID strategy paper described links between madrasas and extremist Islamic groups as "rare but worrisome," but also added that "access to quality education alone cannot dissuade all vulnerable youth from joining terrorist groups." Other concerns surround more moderate ("quietist") schools, in which students may be instructed to reject "immoral" and "materialistic" Western culture. The static curricula and dated pedagogical techniques, such as rote memorization, used in many quietist schools may also produce individuals who are neither skilled nor prepared for the modern workforce. Defenders of the madrasa system view its traditional pedagogical approach as a way to preserve an authentic Islamic heritage. Because most madrasa graduates have access only to a limited type of education, they commonly are employed in the religious sector as prayer leaders and Islamic scholars. Authorities in various countries are considering proposals for introducing improved science and math content into madrasas' curricula, while preserving the religious character of madrasa education. Madrasas offer a free education, room, and board to their students, and thus they appeal to impoverished families and individuals. On the whole, these religious schools are supported by private donations from Muslim believers through a process of alms-giving known in Arabic as zakat . The practice of zakat--one of the five pillars of the Islamic faith--prescribes that a fixed proportion of one's income be given to specified charitable causes, and traditionally a portion of zakat has endowed religious education. Almost all madrasas are intended for educating boys, although there are a small number of madrasas for girls. In recent years, worldwide attention has focused on the dissemination of donations to Islamic charities and the export of conservative religious educational curricula by governments and citizens in the Persian Gulf. Concern has been expressed over the spread of radical Islam through schools, universities, and mosques that have received donations and curricular material from Persian Gulf governments, organizations, and citizens. These institutions exist around the world, including South, Central, and Southeast Asia, the Middle East and North Africa, sub-Saharan Africa, western Europe, and the United States. Some view the teaching of religious curricula informed by Islamic traditions common in the Gulf as threatening the existence of more moderate beliefs and practices in other parts of the Muslim world. However, some argue that a differentiation should be made between funding to support charitable projects, such as madrasa-building, and funding that has been channeled, overtly or implicitly, to support extremist teachings in these madrasas. Critics of Gulf states' policies have alleged that Persian Gulf governments long permitted or encouraged fund raising by charitable Islamic groups and foundations linked to Al Qaeda. Several Gulf states have strengthened controls on the activities of charities engaged in overseas activities, including madrasa building and administration. Several Islamic charitable organizations based in Gulf states continue to provide assistance to educational projects across the Muslim world, and channels of responsibility between donors and recipients for curricular development and educational control are often unresolved or unclear. Hosting over 12,000 madrasas, Pakistan's religious and public educational infrastructure are of ongoing concern in the United States. In an economy that is marked by extreme poverty and underdevelopment, costs associated with Pakistan's cash-strapped public education system have led some Pakistanis to turn to madrasas for free education, room, and board. Others favor religious education for some of their children, whose siblings may be encouraged to pursue other professions. Links between Pakistani madrasas and the ousted Afghan Taliban regime, as well as alleged connections between some madrasas and Al Qaeda, have led some observers to consider the reform of Pakistan's madrasa system as an important counterterrorism tool and a means of helping to stabilize the Afghan government. In recommending increased U.S. attention to "actual or potential terrorist sanctuaries," the 9/11 Commission's final report singled out "poor education" in Pakistan as "a particular concern," citing reports that some madrasas "have been used as incubators for violent extremism." In September 2006, Afghan president Hamid Karzai called on Pakistan to do more to prevent the use of madrasas by extremists and terrorists. These reports received new and more urgent attention following reports that one of the four suicide bombers that carried out the July 2005 terrorist attacks on the London transportation system had spent time at a Pakistani madrasa with alleged links to extremists. In response, Pakistani authorities renewed plans to require all madrasas to register with the government and provide an account of their financing sources. The government had previously offered incentives to madrasas that agreed to comply with registration procedures, including better training, salaries, and supplies. Madrasa leaders reportedly agreed to the registration and financial accounting requirements in September 2005, but succeeded in preserving an anonymity provision for their donors. As of January 2007, over 12,000 of Pakistan's estimated 13,000 madrasas had registered with authorities. In a more controversial step, the Pakistani government also demanded that madrasas expel all of their foreign students by December 31, 2005. Of an estimated 1,700 foreign madrasa students, 1,000 had reportedly left Pakistan by January 1, 2006. In August 2006, Pakistani authorities announced their intent to deport some of the remaining 700 foreign students if they did not obtain permission to remain in Pakistan from their home governments: the visas of those with permission reportedly were extended. Some nationalist and Islamist groups have resisted the government's enforcement efforts, and authorities have made statements indicating that they do not plan to use force or shut down noncompliant madrasas in order to enforce the directives. An air-strike on a madrasa near the border with Afghanistan in the Bajaur tribal region killed 80 reported militants on October 30, 2006, and sparked massive protests across Pakistan. In July 2007, Pakistani security forces raided a girls madrasa related to the conservative Red Mosque after individuals affiliated with the facilities refused government orders to stop vigilante enforcement of religious social codes. Over 100 people were reportedly killed in related clashes. In September 2007, the U.S. Department of State reported in its annual religious freedom report that "in recent years many [Pakistani] madrasas have taught extremist doctrine in support of terrorism." The report identified "unregistered and Deobandi-controlled madrasas in the Federally Administered Tribal Areas (FATA) and northern Balochistan" and "Dawa schools run by Jamat-ud-Dawa" as being involved with teaching extremism or supporting terrorist organizations. Currently, the popularity of madrasas is rising in parts of Southeast Asia. For example in Indonesia, home to the largest number of Muslims in the world, almost 20%-25% of primary and secondary school children attend pesantren s (Islamic religious schools). Indonesian pesantrens have been noted for teaching a moderate form of Islam, one that encompasses Islamic mysticism or Sufism. Authorities in Bangladesh have expressed concern about the use of madrasas by a network of Islamist activists being investigated in connection with a number of attempted and successful bombing attacks across the country. A number of madrasa students were detained in connection with the investigations. Executive agencies and Congress have shown increasing interest in improving U.S. outreach and addressing educational challenges in the Muslim world in the aftermath of the September 11 terrorist attacks. The Final Report of the National Commission on Terrorist Attacks upon the United States (the "9/11 Commission") addressed education issues in the Islamic world in the context of its recommendations to identify and prioritize actual or possible terrorist sanctuaries and prevent the continued growth of Islamist terrorism. Relevant sections of the Intelligence Reform and Terrorism Prevention Act ( P.L. 108 - 458 , December 17, 2004) address many of the concerns reflected in the 9/11 Commission's final report regarding the improvement of educational opportunity in the Islamic world. Section 7114 of the act authorizes the President to establish an International Youth Opportunity Fund to improve public education in the Middle East. Examples of action taken to effect educational changes in Islamic countries include USAID's September 2002 commitment of $100 million over five years for general education reform in Pakistan. The Administration requested $259.664 million in FY2008 foreign operations funding to support ongoing education assistance programs in a number of Middle Eastern countries, including Egypt, Yemen, Jordan, Iraq, Lebanon, and Morocco. The Administration requested $118.670 million for similar programs in South and Central Asia, including programs in Afghanistan, Pakistan, and Bangladesh. In the 110 th Congress, Title XX of P.L. 110 - 53 , the Implementing the 9/11 Commission Recommendations Act of 2007 (signed August 3, 2007), amends and re-authorizes appropriations for an International Muslim Youth Opportunity Fund originally authorized by Section 7114 of P.L. 108 - 458 . The law also requires the Administration to submit an annual report to Congress on the efforts of Arab and predominantly Muslim countries to increase the availability of modern basic education and to close educational institutions that promote religious extremism and terrorism. A separate report is required on U.S. education assistance and the status of efforts to create the authorized Fund.

Since the terrorist attacks on September 11, 2001, the Islamic religious schools known as madrasas (or madrassahs) in the Middle East, Central, and Southeast Asia have been of increasing interest to U.S. policy makers. Some allege ties between madrasas and terrorist organizations, such as Al Qaeda, and assert that these religious schools promote Islamic extremism and militancy. Others maintain that most madrasas have been blamed unfairly for fostering anti-Americanism and for producing terrorists. This report provides an overview of madrasas, their role in the Muslim world, and issues related to their alleged links to terrorism. The report also addresses the findings of the National Commission on Terrorist Attacks Upon the United States (the "9/11 Commission") and issues relevant to the second session of the 110th Congress. Related products include CRS Report RS22009, Education Reform in Pakistan, by [author name scrubbed], CRS Report RL33533, Saudi Arabia: Background and U.S. Relations, by [author name scrubbed], CRS Report RL32499, Saudi Arabia: Terrorist Financing Issues, by [author name scrubbed], CRS Report RS21695, The Islamic Traditions of Wahhabism and Salafiyya, by [author name scrubbed], CRS Report RS21457, The Middle East Partnership Initiative: An Overview, by [author name scrubbed], and CRS Report RL32259, Terrorism in South Asia, by [author name scrubbed] and [author name scrubbed]. This report will be updated periodically.

Head Start, a federal program that has provided comprehensive early childhood development services to low-income children since 1965, was last reauthorized in 1998 for fiscal years 1999-2003. The program has remained alive in subsequent years through the annual appropriations process. After unsuccessful efforts by the 108 th and 109 th Congresses to complete the reauthorization process, the 110 th Congress has undertaken the task. The House and Senate have each passed its own version of a reauthorization bill, the Senate version adopting the House bill's number ( H.R. 1429 ) and representing only a slightly modified version of the bill reported by the Senate Health, Education, Labor, and Pensions Committee ( S. 556 ). On November 9, 2007, House and Senate conferees filed a conference report ( H.Rept. 110-439 ). This report does not yet reflect the provisions contained in that agreement. The Improving Head Start Act of 2007 ( H.R. 1429 ) was introduced by Representative Kildee on March 9, 2007. The following week, the House Committee on Education and Labor debated, amended, and approved the bill (42-1), and the committee's written report accompanying the legislation ( H.Rept. 110-67 ) was filed on March 23, 2007. That bill was taken to the House floor on May 2, and was approved (with nine amendments) by a vote of 365-48. Twelve amendments in total were offered on the floor, in addition to a motion to recommit (which was rejected). The Head Start for School Readiness Act ( S. 556 ) was introduced by Senator Kennedy on February 12, 2007, and approved via voice vote by the Senate Committee on Health, Education, Labor, and Pensions (HELP) on February 14. The Chairman's amended version of the bill was subsequently reported on March 29, 2007; a written report ( S.Rept. 110-49 ) was filed April 10, 2007. On June 19, the Senate passed (by voice vote under a unanimous consent agreement) its bill, adopting the bill number of the reauthorization bill that passed the House ( H.R. 1429 ), but substituting its own committee-reported bill language of S. 556 (with a few technical changes). Both reauthorization bills propose to amend Head Start with the purpose of improving the program's ability to promote low-income children's school readiness by supporting their cognitive, social, emotional, and physical development. The means for doing so encompass a wide range of provisions, covering issues of program funding, administration, eligibility, accountability, quality, governance, and coordination. Below is an overview of broad areas addressed in the proposed legislation, followed by Table 1 , a detailed side-by-side comparison of each bill's provisions with current law (and, where relevant, current regulations). The areas listed below are not intended to encompass every provision included in each of the respective bills, but rather major areas addressed. The table does not reflect the provisions agreed to in conference. Despite the expiration of authorizing language, the Head Start program has continued to receive its funding through the annual appropriations process, most recently (FY2007) at a level of almost $6.9 billion. From FY1995-FY2003, the Head Start Act authorized funding Head Start at an unspecified dollar amount--"such sums as may be necessary." The reauthorization bills propose to increase funding for Head Start, with both bills designating a dollar amount ($7.350 billion) for FY2008. After FY2008, the House version of H.R. 1429 would authorize "such sums as may be necessary" for each of the remaining four years covered by the legislation, whereas the Senate version includes specific increases for FY2009 and FY2010, before once again mirroring the House bill with unspecified amounts for FY2011 and FY2012. Both bills propose changes with respect to the allocation of appropriated funds. Within the 13% currently reserved from the total appropriation for a variety of purposes, both bills introduce a greater level of specificity, assigning designated percentages (of the total appropriation) for allotments to Indian and Migrant Head Start programs. In the case of both bills, the percentages proposed reflect increases above the portion currently received (and not set in statute). The allocation formula for determining state allotments is changed in both bills to update the "hold harmless," or base amounts assured for the states. Appropriated funds available to states after allotting the hold harmless amounts would be distributed differently by the two bills. The House bill would continue to allot remaining funds based on states' relative shares of poor children under age 5, while the Senate bill introduces a new provision in which a portion of the remaining funds would be allocated based on the percentage of eligible children served by grantees within the state. Program quality is also addressed by the funding allocation provisions. The proposed legislation would maintain current law's practice of reserving a designated percentage of the aforementioned remainder funds for "quality improvement," with both bills proposing greater percentages for this purpose than under current law. Both bills elaborate on the uses of quality improvement funds. Both bills would increase the percentage of the total appropriation reserved for funding Early Head Start programs, with a caveat that these percentages may only be reached provided appropriation levels suffice. To compare the specifics of these and other funding-related provisions, see the portions of Table 1 that refer to Sections 639 and 640 of current law. Provisions designed to address issues of accountability take several forms. Both bills target accountability with respect to fiscal and program management, as well as accountability with respect to Head Start children's outcomes. Under both the House bill and Senate bill, agencies would be designated as a grantee for no more than five years at a time, after which recompetition may be required. (Under current law, grantees do not have to recompete for funds.) Only the House version would establish an application review system to be used during this process; however, both bills establish means for determining what constitutes a "high-performing" grantee, and those agencies not meeting the standard would be faced with recompetition. In order to be considered a high performing grantee under either bill, Head Start agencies would need to demonstrate competent financial management, as well as the ability to deliver a program high in quality, developmentally appropriate, and based on scientifically-based research and measures. Both bills add new language to current law, requiring programs' governing bodies to include individuals with expertise in fiscal matters. Both bills would introduce detailed definitions of "deficiency" into statute, along with provisions to help ensure that funding for any grantees or delegates unable or unwilling to correct deficiencies be suspended or terminated as necessary. As reflected in Table 1 , particularly within Sec. 641A, the two proposals often expand on current regulations with respect to corrective actions. Both bills emphasize the use of scientifically-based early childhood research as a basis for formulating educational measures for children and developing appropriate curricula that will lead to positive outcomes. Likewise, both would suspend use of the National Reporting System (NRS) in its current form, pending further review and recommendations from a National Academy of Sciences panel. The importance of effective and reliable screening and assessments in the Head Start program is stressed by both bills, accompanied by an emphasis on the value of ensuring that the tools used for screening and assessment be scientifically sound, based on the most up-to-date research in the field. Current law emphasizes shared governance and parent involvement within Head Start programs in general terms, leaving the details to regulation. Both versions of H.R. 1429 would introduce into statute more detailed provisions regarding program governance, clearly outlining the composition and responsibilities of both the governing bodies and the policy councils. The reports accompanying the legislation emphasize the committees' intent that a commitment be made to maintaining the structure of shared governance (between governing bodies and policy councils), with clear language that the governing bodies hold legal and fiscal accountability. The responsibilities of policy councils are stated in both bills, but using different language; both bills are more specific than current regulations. As in current regulations, both bills make reference to the need for an impasse policy or means for dealing with internal disputes, in the event that a governing body disagrees with recommendations from the policy council. As noted in Table 1 , within the two bills, the provisions related to program governance do not amend the same section of current law. Section 8 of the House version of H.R. 1429 includes the provisions stating the required composition, role and responsibilities of the governing bodies and councils as part of amendments to Sec. 642, whereas the Senate bill includes its program governance requirements (including composition, roles, and responsibilities) in Section 7, the portion of the bill that amends Sec. 641 of current law. Provisions that aim to improve the quality of Head Start programs (through a variety of means) permeate both reauthorization bills. Some of these provisions, already alluded to, relate to allocation of funds for quality and technical assistance and training, designating agencies, and developing standards and measures. In addition, both proposed bills would amend Sec. 648A of current law to increase staff qualifications for Head Start teachers (but with different requirements). Accompanying report language makes clear both committees' view that teacher quality is essential to early childhood program quality. Professional development is promoted in both bills, as are efforts to enhance services for children with limited English proficiency. Included in the Senate bill is a newly proposed section (641B) to the Head Start Act, which would provide for the establishment of a program under which the Secretary of Health and Human Services (HHS) would designate up to 200 exemplary Head Start agencies as "Centers of Excellence in Early Childhood." These agencies would receive (pending appropriation of funds) bonus grants of at least $200,000 per year. Like regularly designated grantees, the Centers of Excellence bonus grants would be designated for up to five years at a time. In addition to provisions aimed at improving the quality and accountability of Head Start programs, both bills would amend current law to foster even greater program coordination between Head Start and other early childhood programs, including state prekindergartens. Program coordination includes providing for alignment of Head Start goals and expectations with those schools into which Head Start children will later enroll. Coordination is also to be enhanced by bolstering state and local relationships with Head Start. The House version of H.R. 1429 proposes a new section, 642B, specifically outlining the partnerships that Head Start agencies are to enter into with local education agencies, including a description of the memorandum of understanding that each Head Start agency would negotiate with the local entities. Under both bills, collaboration grants are described in greater detail, and the state's role in collaboration is bolstered through involvement of an Early Learning Council (under the House bill) or a State Advisory Council (under the Senate bill). Under current law, all children from families with income under 100% of the poverty line are eligible for Head Start. Regulations state that at least 90% of children enrolled in each program must fit this criterion, allowing for 10% to be over-income. Both bills would allow for expansion of eligibility up to 130% of the poverty line, with the House version of H.R. 1429 specifying that no more than 20% of children served by a Head Start program be above the poverty line. In the case of both bills, the intent is that programs seek to serve children under 100% of poverty before serving those from families with higher incomes. Homeless children would also be deemed categorically eligible under both bills. Both bills address the issue of how to confront situations of under-enrollment in Head Start programs, recognizing that the cause of these situations may differ from program to program, sometimes reflecting a program weakness while in other cases demographic changes in the community. Another provision reflecting both committees' desire for greater flexibility with respect to participation and serving the needs of communities is one that allows for regular funds to be used for serving Early Head Start infants and toddlers. Doing so requires approval of a written application under both bills, but the possibility for this expansion of services would be written into law. Table 1 provides a detailed comparison of the House- and Senate-passed versions of H.R. 1429 , and current law. Where applicable, current regulations are included to show whether changes proposed in the reauthorization bills would reflect practical changes to the program. As stated earlier, the table does not include provisions agreed to in the conference report ( H.Rept. 110-439 ) filed on November 9, 2007. The table is structured in the order of current law's sections. In cases where bills address the same or similar provisions by amending different sections of current law, that has been noted in the table. The table also notes if a provision was added as an amendment during House floor debate.

Head Start, a federal program that has provided comprehensive early childhood development services to low-income children since 1965, was last reauthorized in 1998 for fiscal years 1999-2003. The program has remained funded in subsequent years through the annual appropriations process. After unsuccessful efforts by the past two Congresses to complete the reauthorization process, efforts to do so are underway in the 110th Congress. The House and Senate have each passed their own version of a reauthorization bill (H.R. 1429), and on November 9, 2007, conferees filed a conference report (H.Rept. 110-439). This report does not yet reflect the provisions included in the conference agreement. The Improving Head Start Act of 2007 (H.R. 1429) was introduced by Representative Kildee on March 9, 2007. The following week, the House Committee on Education and Labor debated, amended, and approved the bill (42-1), and the committee's written report accompanying the legislation (H.Rept. 110-67) was filed on March 23, 2007. That bill was taken to the House floor on May 2, and was approved (with nine amendments) by a vote of 365-48. The Head Start for School Readiness Act (S. 556) was introduced by Senator Kennedy on February 12, 2007, and approved via voice vote by the Senate Committee on Health, Education, Labor, and Pensions (HELP) on February 14. The Chairman's amended version of the bill was subsequently reported on March 29, 2007, with a written report (S.Rept. 110-49) filed April 10, 2007. On June 19, under unanimous consent, the full Senate passed the committee's bill, with a few technical changes, under the House bill number (H.R. 1429). Both reauthorization bills amend Head Start with the goal of improving the program's ability to promote low-income children's school readiness by supporting their cognitive, social, emotional, and physical development. The means for doing so encompass a wide range of provisions, covering issues of program funding, administration, eligibility, accountability, quality, governance, and coordination. Authorization levels for funding would be increased above current funding amounts by both bills, and eligibility would be expanded to allow for serving children up to 130% of the poverty line. Both bills include provisions that would increase competition for Head Start grants, by limiting the period for which a grantee may receive grant funds to five years, before recompetition may be required. Other similarities include increasing the percentage of the appropriation to be reserved for Early Head Start; emphasizing coordination and collaboration with other state and local early childhood programs; increasing staff qualifications; specifying requirements of shared governance principles in statute; and suspending use of the National Reporting System. Although the overall areas addressed by the two reauthorization bills are similar, a side-by-side comparison of provisions, alongside current law, reveals notable differences in detail. The table does not reflect the provisions agreed to in conference.

T he 115 th Congress has passed legislation that substantially changes the U.S. federal tax system ( H.R. 1 ). This legislation builds on the September 27, 2017, "Unified Framework for Fixing our Broken Tax Code." This framework was intended to guide the tax writing committees' development of tax legislation. The issue of tax reform is not new in the 115 th Congress. The tax code has long been criticized for being overly complicated, unfair, and inefficient. Early in 2005, for example, President George W. Bush announced the establishment of a bipartisan panel to provide options to make the tax code "simpler, fairer, and more pro-growth." Tax reform was also considered in the context of deficit reduction in 2010. President Barack Obama created the National Commission on Fiscal Responsibility and Reform in 2010 to address the deficit and national debt. In December 2010, the Fiscal Commission released its final report, "A Moment of Truth," which included base-broadening, rate-reducing, revenue-raising tax reform as part of a broader fiscal reform package. During the 112 th and 113 th Congress, then-Chairman of the Ways and Means Committee, Dave Camp, released a series of tax reform discussion drafts, which ultimately became the Tax Reform Act of 2014. This proposal, which was intended to "fix America's broken tax code by lowering tax rates and making the code simpler and fairer for families and job creators" in a revenue-neutral manner was later introduced as H.R. 1 . No further legislative action was taken. The purpose of this report is to provide an overview of the federal tax system, including the individual income tax, corporate income tax, payroll taxes, estate and gift taxes, and federal excise taxes, as in effect through 2017. The federal income tax system has several components. The largest component, in terms of revenue generated, is the individual income tax. In fiscal year (FY) 2016, $1.5 trillion, or 47% of the federal government's revenue, came from the individual income tax. The corporate income tax generated another $300 billion in revenue in FY2016, or 9% of total revenue. Social insurance or payroll taxes generated $1.1 trillion, or 34% of revenue in FY2016. The remainder of federal revenue was collected through excise taxes (3%) or other sources (6%). The individual income tax is the largest source of revenue in the federal income tax system. Most of the income reported on individual income tax returns is wages and salaries (68% in 2014). However, a large portion of business income in the United States is also taxed in the individual income tax system. Pass-through businesses, including sole proprietorships, partnerships, S corporations, and limited liability companies, generally pass business income through to the business's owners, where that income is then taxed under the individual income tax system. To levy an income tax, income must first be defined. As a benchmark, economists often turn to the Haig-Simons comprehensive income definitions which can differ from the measure of income used in computing a taxpayer's taxes. Under the Haig-Simons definition, taxable resources are defined as changes in a taxpayer's ability to consume during the tax year. Using this definition of income, an employer's contributions toward employee health insurance would be counted toward the employee's income. This income, however, is not included in the employee's taxable income under current tax law. In practice, the individual income tax is based on gross income individuals accrue from a variety of sources. Included in the individual income tax base are wages, salaries, tips, taxable interest and dividend income, business and farm income, realized net capital gains, income from rents, royalties, trusts, estates, partnerships, taxable pension and annuity income, and alimony received. Gross income, for tax purposes, excludes certain items which may deviate from the Haig-Simmons definition of income. For example, employer-provided health insurance, pension contributions, and certain other employee benefits are excluded from income subject to tax. Employer contributions to Social Security are also excluded from wages. Amounts received under life insurance contracts are excluded from income. Another exclusion from income is the interest received on certain state and local bonds. There are special rules for income earned as capital gains or dividends. Capital gains (or losses) are realized when assets are sold. The tax base excludes unrealized capital gains. There are reduced tax rates for certain capital gains and dividends (discussed below in the " Tax Rates " section). As with ordinary income, there may be exclusions. For example, certain capital gains on sales of primary residences are excluded from income. Income from operating a business through a proprietorship, partnership, or small business corporation that elects to be treated similarly to a partnership (Subchapter S corporation), or through rental property is also subject to the individual income tax. This income is the net of gross receipts reduced by such deductible costs as payments to labor, depreciation, costs of goods acquired for resale and other inputs, interest, and taxes. A taxpayer's adjusted gross income (AGI), the basic measure of income under the federal income tax, is determined by subtracting "above the line" deductions from gross income. Above-the-line deductions are available to taxpayers regardless of whether they itemize deductions, or claim the standard deduction. Above-the-line deductions may include contributions to qualified retirement plans by self-employed individuals, contributions to individual retirement accounts (IRAs), moving expenses, interest paid on student loans and higher education expenses, contributions to health savings accounts, and alimony payments. Tax liability depends on the filing status of the taxpayer. There are four main filing categories: married filing jointly, married filing separately, head of household, and single individual. The computation of taxpayers' tax liability depends on their filing status, as discussed further below. The amounts of the personal exemption and standard deduction also depend on filing status. Taxpayers have a choice between claiming the standard deduction or claiming the sum of their itemized deductions. The standard deduction amount depends on filing status. The 2017 standard deduction for single filers is $6,350, while the standard deduction for married taxpayers filing jointly is twice that amount, or $12,700 (see Table 1 ). There is an additional standard deduction for the elderly (taxpayers age 65 and older) and the blind. The standard deduction amount is indexed for inflation. After AGI is computed, personal exemptions and deductions are subtracted, further reducing the tax base. Exemptions are allowed for the taxpayer, the taxpayer's spouse, and each of the taxpayer's dependents. In 2017, the exemption amount per person is $4,050 ( Table 1 ). The exemption amount is indexed for inflation. The personal exemption is phased out for higher-income taxpayers. In 2017, the personal exemption phaseout (PEP) begins when a taxpayer's AGI exceeds $261,500 (for those filing as singles), $287,650 (for those filing as head of household), or $313,800 (for married individuals filing jointly). These threshold amounts are adjusted for inflation. The personal exemption phaseout reduces a taxpayer's personal exemption by 2% for each $2,500 in AGI above the phaseout threshold for married filers filing jointly ($1,250 for single filers). Taxpayers also have the option of itemizing deductions. Deductions that can be itemized include deductions for state and local taxes (income taxes, sales taxes, and personal property taxes, sometimes referred to as SALT), the mortgage interest deduction, the deduction for charitable contributions, and the deduction for real property taxes. Some deductions can only be itemized and claimed in excess of a floor. For example, medical expenses can be deducted to the extent they exceed 10% of AGI. Casualty and theft losses can also be deducted in excess of 10% of AGI. Other miscellaneous expenses can be deducted in excess of 2% of AGI. Itemized deductions are subject to limitation above certain income thresholds (this limitation is known as the Pease limitation). This limitation reduces the amount of itemized deductions that can be claimed by 3% of the amount of certain thresholds. In 2017 these thresholds are AGI above $261,500 for single filers, $287,650 for head of household filers, $313,800 for married taxpayers filing jointly, and $156,900 for married taxpayers filing separately. These threshold amounts are adjusted for inflation. The total reduction in itemized deductions cannot be greater than 80% of total deductions (the taxpayer may also elect to claim the standard deduction). Certain deductions are not subject to the Pease limitation, including the deductions for medical expenses and casualty and theft losses. The income tax system is designed to be progressive, with marginal tax rates increasing as income increases. At a particular marginal tax rate, all individuals subject to the regular income tax, regardless of their overall level of earnings, pay the same tax rate on taxable income within the bracket. Once taxpayers' incomes surpass a threshold level, placing them in a higher marginal tax bracket, the higher marginal tax rate is only applied on income that exceeds that threshold value. Currently, the individual income tax system has seven marginal income tax rates: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. These marginal income tax rates are applied to taxable income to arrive at a taxpayer's gross income tax liability. Threshold levels associated with the rate brackets depend on filing status. Tax rates for 2017 are summarized in Table 2 . As was noted above, income earned from long-term capital gains and qualified dividends is taxed at lower rates. The maximum rate on long-term capital gains and qualified dividends is 20%. This 20% rate applies to taxpayers in the 39.6% bracket. Taxpayers in the 25%, 28%, 33%, and 35% tax brackets face a 15% tax rate on long-term capital gains and qualified dividends. The tax rate on capital gains and qualified dividends is 0% for taxpayers in the 10% and 15% tax brackets. Higher-income individuals with a high ratio of exemptions and deductions to income may be subject to the alternative minimum tax (AMT). There are two marginal tax rates under the AMT, 26% and 28%, that are applied to an expanded base. The AMT is discussed in further detail below. Few taxpayers file returns that are taxed at the top statutory tax rate (see Figure 3 and the related discussion). However, while less than 1% of returns filed are in the 39.6% tax bracket, nearly 16% of AGI was reported on returns that fell in the 39.6% bracket. Certain higher-income individuals may be subject to an additional 3.8% tax on net investment income. Specifically, the tax applies to the lesser of (1) net investment income, or (2) the amount by which modified AGI exceeds fixed threshold amounts. The fixed threshold amounts are $250,000 for taxpayers filing jointly and $200,000 for other filers. The net investment income tax increases the maximum tax rate on capital gains and dividends to 23.8% for affected taxpayers. The maximum rate on other investment income, including interest, annuities, royalties, and rent is 43.4% for taxpayers with modified AGI above the threshold. After a taxpayer's tax liability has been calculated, tax credits are subtracted from gross tax liability to arrive at a final tax liability (see Figure 4 ). Tax credits offset tax liability on a dollar-for-dollar basis. There are two different types of tax credits: refundable and nonrefundable. If a tax credit is refundable, and the credit amount exceeds tax liability, a taxpayer receives the credit (or a portion of the credit) as a refund. If credits are not refundable, then the credit is limited to the amount of tax liability. In some cases, unused credits can be carried forward to offset tax liability in future tax years. Some credits are phased out as income rises to limit or eliminate benefits for higher-income taxpayers. Tax credits that are refundable or have a refundable portion include the earned income tax credit (EITC) and the child tax credit (CTC). A nonrefundable tax credit can be claimed for child and dependent care expenses. There are also tax credits for other purposes, such as education and health care. The American Opportunity Tax Credit (AOTC), for example, provides a partially refundable tax credit for tuition and other related expenses. Given the complexities of the tax code, effective marginal tax rates differ from statutory marginal tax rates for many taxpayers. For example, the earned income tax credit (EITC) phases in as income increases, reducing a taxpayer's marginal tax rate. At higher income levels, as the credit phases out, the taxpayer faces a higher marginal tax rate during that phaseout range. Thus, effective marginal tax rates can be less than or greater than statutory rates. Individuals may also pay tax under the alternative minimum tax (AMT). The AMT applies lower tax rates to a broader income base. The policy goal is to prevent certain higher-income taxpayers from using tax preferences to avoid paying anything in taxes. Under current law, to calculate the AMT, an individual first adds back various tax items, including personal exemptions and certain itemized deductions, to regular taxable income. This grossed up amount becomes the income base for the AMT. The AMT exemption is subtracted from the AMT's income base. For 2017, the AMT exemption is $54,300 for single returns, and $84,500 for married taxpayers filing a joint return. These exemption amounts are indexed for inflation. The AMT exemption is reduced by 25% of the amount by which a taxpayer's AMT taxable income exceeds certain threshold amounts. In 2017, the AMT exemption amount begins to phase out at $120,700 for single filers, or $160,900 for married couples filing jointly. A two-tiered rate structure of 26% and 28% is assessed against AMT taxable income. The taxpayer compares his AMT tax liability to his regular tax liability and pays the greater of the two. Most nonrefundable personal tax credits are allowed against the AMT. Under current law, less than 4% of all tax filers pay the AMT. Higher-income taxpayers are more likely to be subject to the AMT (for 2017, the Tax Policy Center estimates that 63% of tax units with income between $500,000 and $1 million will pay the AMT, and 20% of taxpayers with income of more than $1 million pay the AMT). Taxpayers with more children, and married taxpayers, are also more likely to pay the AMT. The corporate income tax generally only applies to C corporations (also known as regular corporations). These corporations--named for Subchapter C of the Internal Revenue Code (IRC), which details their tax treatment--are generally treated as taxable entities separate from their shareholders. That is, corporate income is taxed once at the corporate level according to the corporate income tax system. When corporate dividend payments are made or capital gains are realized income is taxed again at the individual-shareholder level according to the individual tax system (discussed above). In contrast, non-corporate businesses, including S corporations and partnerships, pass their income through to owners who pay taxes. Collectively, these non-corporate business entities are referred to as pass-throughs. For these types of entities, business income is taxed only once, at individual income tax rates. The corporate income tax is designed as a tax on corporate profits (also known as net income). Broadly defined, corporate profit is total income minus the cost associated with generating that income. Business expenses that may be deducted from income include employee compensation; the decline in value of machines, equipment, and structures (i.e., deprecation); general supplies and materials; advertising; and interest payments. The corporate income tax also allows for a number of other special deductions, credits, and tax preferences that reduce taxes paid by corporations. Oftentimes, these provisions are intended to promote particular policy goals. A corporation's tax liability can be calculated as: Taxes = [(Total Income - Expenses)(1 - p ) x t ] - Tax Credits, where t is the statutory tax rate and p is the Section 199 production activities deduction. The Section 199 deduction effectively lowers the corporate tax rate for those corporations engaged in domestic manufacturing activities. For income not eligible for the Section 199 deduction, p is zero. Some corporations experience net operating losses (NOLs), which occur when total income less expenses is negative. A NOL can be "carried back" of "carried forward." If the firm had taxable income in the prior years and chooses to "carry back" the NOL it may be deducted from up to two prior years' taxable income. The corporation is then eligible for a refund equal to the difference between previously paid taxes and taxes owed after deducting the current year's loss. If the loss is too large to be fully carried back, it may be "carried forward" for up to 20 years and used to reduce future tax liabilities. Most corporate income is subject to a 35% statutory tax rate. Table 3 contains the marginal corporate tax rates faced by U.S. firms. Smaller firms face a progressive tax schedule. To increase the effective tax rate for larger firms, the statutory rate increases above 35% for two brackets: the 39% bracket for income between $100,000 and $335,000 and the 38% bracket for income between $15,000,000 and $18,333,333. Having these "bubble" rates, or higher marginal tax rates along part of the schedule, increases the effective tax rate for higher-income corporations. Essentially, these higher "bubble" brackets serve to reduce any tax savings larger corporations would have incurred from having their first $75,000 in income taxed at lower rates. In broad economic terms, the base of the corporate income tax is the return to equity capital. Wages are tax deductible, so labor's contribution to corporate revenue is excluded from the corporate tax base. Income produced by corporate capital investment includes that produced by corporate investment of borrowed funds, and that produced by investment of equity, or funds provided by stockholders. Profits from debt-financed investment are paid out as interest, which is deductible. Thus, the return to debt capital is excluded from the corporate tax base. Equity investments are financed by retained earnings and the sale of stock. The income equity investment generates is paid out as dividends and the capital gains that accrue as stock increases in value. Neither form of income is generally deductible. Thus, the base of the corporate income tax is largely the return to equity capital. Because of the nature of its base, the corporate income tax has several broad effects on the allocation of capital investment. First, it favors non-corporate investment--for example, unincorporated business and owner-occupied housing--over corporate investment. Second, it favors corporate debt over corporate equity investment since the former is not subject to the tax. However, while the base of the tax is largely equity income, the flow of capital out of the corporate sector and other economic adjustments probably cause the burden of the tax to spread to all owners of capital: owners of unincorporated business, bondholders, and homeowners. Government agencies analyzing the incidence of the corporate tax distribute most of the burden to owners of capital, with a smaller portion falling on labor income. Since owners of capital tend to be in higher income groups, and most of the corporate tax burden falls on capital, the corporate tax is widely viewed as being progressive. The United States has a worldwide (or resident-based) tax system. As a result, U.S. corporations are generally liable for tax on their worldwide income. Under current law, corporations are allowed a credit, known as the foreign tax credit, for taxes paid to other countries. The foreign tax credit may not reduce a corporation's tax liability below zero. Additionally, corporations are not required to pay U.S. tax on overseas income until income is repatriated to the United States. This ability to defer taxes is often known simply as "deferral." Deferral is not an option, however, with "Subpart F" income, which generally includes passive types of income such as interest, dividends, annuities, rents, and royalties. Payroll taxes are used to fund specific programs, largely Social Security and Medicare. Social Security and Medicare taxes are generally paid at a combined rate of 15.3% of wages, with 7.65% being paid by the employee and employer alike. The Social Security part of the tax, or the old age, survivors, and disability insurance (OASDI) tax, is 6.2% for both employees and employers (12.4% in total). In 2017, the tax applies to the first $127,200 in wages. This wage base is adjusted annually for inflation. The Medicare portion of the tax, or the Medicare hospital insurance (HI) tax, is 1.45% for both employees and employers (2.9% in total). There is no wage cap for the HI tax (the Medicare HI tax applies to all wage earnings). Certain higher-income taxpayers may be subject to an additional HI tax of 0.9%. For married taxpayers filing jointly, combined wages above $250,000 are subject to the additional 0.9% HI tax. The threshold for single and head of household filers is $200,000. These threshold amounts are not indexed for inflation. Employers may also be subject to a federal unemployment insurance payroll tax. This tax is 0.6% on the first $7,000 of wages. Federal unemployment insurance payroll taxes are used to pay for the administrative costs of the unemployment insurance (UI) program. State UI taxes generally pay for UI benefits. Most taxpayers pay more in payroll taxes than income taxes. The Tax Policy Center estimates that in 2016, 75% of tax units had positive payroll tax liability (compared to 56% of tax units with positive income tax liability) (this is discussed further in the context of Figure 9 , below). Of units with a positive tax liability (either positive payroll or income tax), 76% paid more in payroll taxes than income taxes. Payroll taxes are also regressive, with higher-income taxpayers paying a smaller share of their income in payroll taxes than lower-income taxpayers. This is a result of two factors. First, the OASDI tax wage cap results in income over that cap not being subject to the tax. Second, payroll taxes only apply to wage income, and non-wage income tends to be concentrated towards the higher end of the income distribution. Upon death, an individual's estate may be subject to tax. The base of the federal estate tax is generally property transferred at death, less allowable deductions and exemptions. An unlimited marital deduction is allowed for property transferred to a surviving spouse. Other allowable deductions include estate administration expenses and charitable bequests. The effective estate tax exemption is $5.49 million for 2017. The value of the estate over the exemption amount is generally taxed at a rate of 40%. The federal gift tax operates alongside the estate tax to prevent individuals from avoiding the estate tax by transferring property to heirs before dying. For 2017, the first $14,000 of gifts from one individual to another is excluded from taxation and does not apply to the lifetime exemption. The gift tax and estate tax are unified in that the same lifetime exemption amount applies to both taxes ($5.49 million in 2017). Being unified, taxable gifts reduce the exemption amount that is available for estate tax purposes. The gift tax rate is 40%, the same as the top rate for the estate tax, for gifts beyond the exemption amount. Few taxpayers pay the estate tax. In 2015, an estimated 11,917 estate tax returns were filed, and 41% (4,918) of those returns were taxable. Estimates suggest that through 2024, each year roughly 0.2% of decedents will face the estate tax. The estate tax is also progressive, up to the very top of the income distribution. For taxpayers in the 95 th to 99 th percentile, the estate tax has been estimated to be 0.2% of cash income in 2016. For taxpayers in the top 1% and top 0.1% of the income distribution, the estate tax has been estimated to be 0.5% of cash income in 2016. Excise taxes are levied on the consumption of goods and services rather than income. Unlike sales taxes, they apply to particular commodities, rather than to broad categories. Historically, the federal government has levied excise taxes, but not a broad-based sales tax, instead leaving sales taxes to the states as a revenue source. Federal excise taxes are levied on a variety of products. The collection point of the tax varies across products. For some goods, taxes are collected at the production level. Other excise taxes are collected on retail sales. In terms of receipts, the single largest tax is the excise tax on gasoline. Other prominent excise taxes are those on diesel and other fuels; trucks, trailers, and tractors; aviation-related taxes and fees; excise taxes on beer, wine, and distilled spirits; taxes on tobacco products; Affordable Care Act (ACA) taxes and fees (e.g., insurance provider fee, medical device excise tax, branded pharmaceuticals fee); and taxes on firearms and ammunition. Most federal excise taxes are paid into federal trust funds devoted to specific federal activities, as opposed to remaining in the federal budget's general fund . In 2016, of the $95 billion in excise tax revenue, approximately 64% supported trust funds, with the remainder being general fund revenue. The largest trust fund is the Highway Trust Fund. Devoted revenue sources include excise taxes on fuels, trucks, and tires. Aviation-related excise taxes support the Airport and Airway Trust Fund, the second largest of the excise-tax-supported trust funds. General fund excise taxes include taxes on alcohol and tobacco and ACA-related excise taxes. Excise taxes can result in consumers paying higher prices for goods and services. Overall, households from the lower part of the income distribution tend to pay a larger share of their income in excise taxes than higher-income households. Thus, taken as a whole, federal excise taxes are generally believed to be regressive. The degree of regressivity can vary for different types of excise taxes. For example, tobacco excise taxes are estimated to be more regressive than aviation-related excise taxes. Federal revenues are derived from several sources and have collectively ranged from roughly one-fifth to one-sixth the size of the economy. Figure 6 displays total federal tax revenues and major sources of federal tax revenue as percentages of gross domestic product (GDP) since 1945. Revenues in 2016 were 17.8% of GDP, slightly above the post-World War II average of 17.3% of GDP. Since the mid-1940s, the individual income tax has been the most important single source of federal revenue (business income may also be taxed under the individual income tax system, as discussed above in " The Individual Income Tax "). Between 2000 and 2010, however, the individual income tax receipts decreased relative to the size of the economy, falling from nearly 10% of GDP in 2000 to just over 6% in 2010. Individual income tax receipts have subsequently increased to 8.4% of GDP in 2016. Over time, the corporate income tax has fallen from the second- to the third-most important source of revenue. In the late 1960s, corporate taxes were replaced by social insurance and retirement taxes as the second-leading revenue source. Excise taxes and estate and gift taxes have also decreased in relative importance over time. The changing shares of federal revenues over time are more clearly shown in Figure 7 . For example, the corporate income tax accounted for roughly 30% of federal revenue in 1946, but less than 10% in 2016. Similarly, excise tax revenue is nearly 3% of federal receipts, down from nearly 18% in 1946. In contrast, receipts for social insurance and retirement taxes have risen post-World War II with the enactment of Social Security and Medicare and are now the second largest source of federal receipts at nearly 35%. The U.S. tax system is generally progressive. As shown in Figure 8 , households in the bottom four quintiles have greater shares of before-tax income than their share of federal taxes paid. In contrast, households in the top quintile received just over half of total before-tax income and paid over two-thirds of federal taxes. This is largely a result of the progressive rate structure of the individual income tax and results in a distribution of after-tax income that is slightly more even than the distribution of before-tax income. While Figure 8 highlights the distribution of the aggregate federal taxes borne by individuals along the income distribution, it does not provide a clear picture of the relative importance of federal taxes to most taxpayers. Figure 9 highlights the relative importance of the two largest categories of taxes (income and payroll) faced by most taxpayers. According to estimates from the Tax Policy Center, 62.3% of taxpayers pay more in payroll taxes than income taxes, while nearly 20% pay more in income taxes than payroll taxes. The remaining 18% who do not pay either tax is split evenly between retirees and those without jobs. How the U.S. tax system compares to those in other countries is a perennial tax policy question. As shown in Figure 10 , total U.S. taxes as a percentage of GDP is below the average for OECD countries. Four countries tend to have lower taxes as a percentage of GDP than the United States, with most others tending to have higher taxes relative to the size of the economy. Note that such a direct comparison can be difficult to interpret, as it does not take into account spending policies or deficit/surplus levels that provide more context. OECD Countries, 1987-2016 Table 4 provides this additional context for the United States and the other major democratic countries in the G-7. Among the G-7 countries, the United States has both the lowest revenue and spending as a percentage of GDP and the second highest deficit level. H.R. 1 includes broad changes to the federal tax system after the 2017 tax year. On the individual side, the act structurally changes the individual income tax system by repealing personal exemptions and increasing the standard deduction. Rates and brackets are modified, as are many individual income tax expenditures. The act also changes how businesses are taxed, with most pass-through business income being effectively taxed at rates that differ from the statutory tax rates under the individual income tax system. Corporations will face a reduced statutory tax rate, with many corporate and business tax expenditures otherwise modified. The act also moves towards a territorial tax system for multinational corporations. This report provides an overview of the federal tax system, as in effect in 2017. Changes to the federal tax system enacted in the 115 th Congress will be addressed in subsequent CRS products. The largest individual income tax expenditures are listed in Table A-1 . In 2016, the sum of individual income tax expenditures was $1.2 trillion. Of this total, $844.2 billion (or 69%) is attributable to the top 10 provisions. The largest corporate income tax expenditures are listed in Table A-2 . In 2016, the sum of corporate tax expenditures was $267.2 billion. Of this total, $222.8 billion (or 83%) is attributable to the top 10 provisions.

The 115th Congress has passed legislation that substantially changes the U.S. federal tax system (H.R. 1). This report describes the federal tax structure, provides some statistics on the tax system as a whole, as of 2017. Historically, the largest component of the federal tax system, in terms of revenue generated, has been the individual income tax. In fiscal year (FY) 2016, $1.5 trillion, or 47% of the federal government's revenue, was collected from the individual income tax. The corporate income tax generated another $300 billion in revenue in FY2016, or 9% of total revenue. Social insurance or payroll taxes generated $1.1 trillion, or 34% of revenue in FY2016. Revenues in 2016 were 17.8% of GDP, slightly above the post-World War II average of 17.3%. The federal individual income tax is levied on an individual's taxable income, which is adjusted gross income (AGI) less deductions and exemptions. Tax rates based on filing status (e.g., married filing jointly, head of household, or single individual) determine the level of tax liability. Tax rates in the United States are generally progressive, such that higher levels of income are typically taxed at higher rates. Once tentative tax liability is calculated, tax credits can be used to reduce tax liability. Tax deductions and tax credits are tools available to policymakers to increase or decrease the after-tax price of undertaking specific activities. Individuals with high levels of exemptions, deductions, and credits relative to income may be required to file under the alternative minimum tax (AMT). Corporate taxable income is also subject to varying rates, where those with higher levels of income pay higher levels of taxes. Social Security and Medicare tax rates are, respectively, 12.4% and 2.9% of earnings. In 2017, Social Security taxes are levied on the first $127,200 of wages. Medicare taxes are assessed against all wage income. Federal excise taxes are levied on specific goods, such as transportation fuels, alcohol, and tobacco. Looking at the tax system as a whole, several observations can be made. Notably, the composition of revenues has changed over time. Corporate income tax revenues have become a smaller share of overall tax revenues over time, while social insurance revenues have trended upwards as a share of total revenues. Social insurance revenues are a sizable component of the overall federal tax system. Most taxpayers pay more in payroll taxes than income taxes. Many taxpayers pay social insurance taxes but do not pay individual income taxes, having incomes below the amount that would generate a positive income tax liability. From an international perspective, the U.S. federal tax system tends to collect less in federal revenues as a percentage of GDP than other OECD countries. This report reflects the tax system as in effect in 2017. H.R. 1, the 2017 tax revision, as passed in both the House and Senate, substantially modifies the federal tax system. The purpose of this report is to review the federal tax system in 2017. Any changes to the federal tax system enacted in the 115th Congress will be explored in subsequent reports and other CRS products.

The following list reviews hundreds of instances in which the United States has used military forces abroad in situations of military conflict or potential conflict to protect U.S. citizens or promote U.S. interests. The list does not include covert actions or numerous occurrences in which U.S. forces have been stationed abroad since World War II in occupation forces or for participation in mutual security organizations, base agreements, or routine military assistance or training operations. Because of differing judgments over the actions to be included, other lists may include more or fewer instances. These cases vary greatly in size of operation, legal authorization, and significance. The number of troops involved ranges from a few sailors or marines landed to protect American lives and property to hundreds of thousands in Korea and Vietnam and millions in World War II. Some actions were of short duration, and some lasted a number of years. In some examples, a military officer acted without authorization; some actions were conducted solely under the President's powers as Chief Executive or Commander in Chief; other instances were authorized by Congress in some fashion. In 11 separate cases (listed in bold-face type ) the United States formally declared war against foreign nations. For most of the instances listed, however, the status of the action under domestic or international law has not been addressed. Most occurrences listed since 1980 are summaries of U.S. military deployments reported to Congress by the President as a result of the War Powers Resolution. Several of these presidential reports are summaries of activities related to an ongoing operation previously reported. Note that inclusion in this list does not connote either legality or level of significance of the instance described. This report covers uses of U.S. military force abroad from 1798 to December 2018. It will be revised as circumstances warrant. CRS In Focus IF10675, Army Security Force Assistance Brigades (SFABs) , by Andrew Feickert. CRS In Focus IF10534, Defense Primer: President's Constitutional Authority with Regard to the Armed Forces , by Jennifer K. Elsea. CRS In Focus IF10535, Defense Primer: Congress's Constitutional Authority with Regard to the Armed Forces , by Jennifer K. Elsea. CRS In Focus IF10539, Defense Primer: Legal Authorities for the Use of Military Forces , by Jennifer K. Elsea. CRS In Focus IF10165, South Korea: Background and U.S. Relations , by Mark E. Manyin, Emma Chanlett-Avery, and Brock R. Williams. CRS Insight IN10797, Attack on U.S. Soldiers in Niger: Context and Issues for Congress , by Alexis Arieff. CRS Report R44853, Additional Troops for Afghanistan? Considerations for Congress , by Kathleen J. McInnis and Andrew Feickert. CRS Report RL30588, Afghanistan: Post-Taliban Governance, Security, and U.S. Policy , by Kenneth Katzman. CRS Report R43344, Conflict in South Sudan and the Challenges Ahead , by Lauren Ploch Blanchard. CRS Report R41989, Congressional Authority to Limit Military Operations , by Jennifer K. Elsea, Michael John Garcia, and Thomas J. Nicola. CRS Report R43377, The Central African Republic: Background and U.S. Policy , by Alexis Arieff and Tomas F. Husted. CRS Report RL31133, Declarations of War and Authorizations for the Use of Military Force: Historical Background and Legal Implications , by Jennifer K. Elsea and Matthew C. Weed. CRS Report R42699, The War Powers Resolution: Concepts and Practice , by Matthew C. Weed. CRS Report R43612, The Islamic State and U.S. Policy , by Christopher M. Blanchard and Carla E. Humud. CRS Report R43478, NATO: Response to the Crisis in Ukraine and Security Concerns in Central and Eastern Europe , coordinated by Paul Belkin. CRS Report RL33460, Ukraine: Current Issues and U.S. Policy , by Vincent L. Morelli. CRS Report R41481, U.S.-South Korea Relations , coordinated by Mark E. Manyin. CRS Report R42077, The Unified Command Plan and Combatant Commands: Background and Issues for Congress , by Andrew Feickert. CRS Report RS21405, U.S. Periods of War and Dates of Recent Conflicts , by Barbara Salazar Torreon. In addition to the historical resources listed in the " Introduction ," below are official government websites that serve as authoritative sources of information for this report. Central Intelligence Agency (CIA), News & Information, Press Releases and Statements https://www.cia.gov/news-information/press-releases-statements Department of Defense (DOD), News Releases https://dod.defense.gov/News/Releases/ DOD, Secretary of Defense Speeches https://dod.defense.gov/News/Speeches/SECDEF-All-Speeches/ DOD, Transcripts https://dod.defense.gov/News/Transcripts/ DOD, America's Continued Commitment to European Security, Operation Atlantic Resolve https://dod.defense.gov/News/Special-Reports/0218_Atlantic-Resolve/ DOD, Operation Inherent Resolve (OIR), Targeted Operations to Defeat ISIS https://dod.defense.gov/OIR/ DOD, Unified Command Plan, Commanders' Area of Responsibility https://www.defense.gov/know-your-military/combatant-commands/ Department of the Army, Official Army Announcements https://www.army.mil/news/newsreleases Department of the Navy, Continuing Promise Humanitarian Missions http://www.navy.mil/local/cp/index.asp Department of State, Bureau of Public Affairs: Office of Press Relations http://www.state.gov/r/pa/prs/ The White House Briefing Room , Briefings and Statements https://www.whitehouse.gov/briefings-statements/

This report lists hundreds of instances in which the United States has used its Armed Forces abroad in situations of military conflict or potential conflict or for other than normal peacetime purposes. It was compiled in part from various older lists and is intended primarily to provide a rough survey of past U.S. military ventures abroad, without reference to the magnitude of the given instance noted. The listing often contains references, especially from 1980 forward, to continuing military deployments, especially U.S. military participation in multinational operations associated with NATO or the United Nations. Most of these post-1980 instances are summaries based on presidential reports to Congress related to the War Powers Resolution. A comprehensive commentary regarding any of the instances listed is not undertaken here. The instances differ greatly in number of forces, purpose, extent of hostilities, and legal authorization. Eleven times in its history, the United States has formally declared war against foreign nations. These 11 U.S. war declarations encompassed five separate wars: the war with Great Britain declared in 1812; the war with Mexico declared in 1846; the war with Spain declared in 1898; the First World War, during which the United States declared war with Germany and with Austria-Hungary during 1917; and World War II, during which the United States declared war against Japan, Germany, and Italy in 1941, and against Bulgaria, Hungary, and Rumania in 1942. Some of the instances were extended military engagements that might be considered undeclared wars. These include the Undeclared Naval War with France from 1798 to 1800; the First Barbary War from 1801 to 1805; the Second Barbary War of 1815; the Korean War of 1950-1953; the Vietnam War from 1964 to 1973; the Persian Gulf War of 1991; global actions against foreign terrorists after the September 11, 2001, attacks on the United States; and the war with Iraq in 2003. With the exception of the Korean War, all of these conflicts received congressional authorization in some form short of a formal declaration of war. Other, more recent instances have often involved deployment of U.S. military forces as part of a multinational operation associated with NATO or the United Nations. The majority of the instances listed prior to World War II were brief Marine Corps or Navy actions to protect U.S. citizens or promote U.S. interests. A number were engagements against pirates or bandits. Covert operations, domestic disaster relief, and routine alliance stationing and training exercises are not included here, nor are the Civil and Revolutionary Wars and the continual use of U.S. military units in the exploration, settlement, and pacification of the western part of the United States. For additional information, see CRS Report RL31133, Declarations of War and Authorizations for the Use of Military Force: Historical Background and Legal Implications, by Jennifer K. Elsea and Matthew C. Weed and CRS Report R41989, Congressional Authority to Limit Military Operations, by Jennifer K. Elsea, Michael John Garcia, and Thomas J. Nicola.

Thus far, more than 500 bills have been introduced in the 109 th Congress that apply, in whole or in part, specifically to Indians, federal Indian programs, or Native Hawaiians. Among the major Native American policy issues of concern to the 109 th Congress are: Indian health care, Indian trust fund management reform, Indian gaming lands, and Native Hawaiian recognition. Each of these issues is briefly discussed in this report. Congress has for more than five years been wrestling with the reauthorization of the Indian Health Care Improvement Act (IHCIA; P.L. 94-437 , as amended). Federal responsibility for Indian health care is met primarily through the Indian Health Service (IHS) in the Department of Health and Human Services (HHS). While IHS's permanent authorizing legislation, the Snyder Act of 1921, is very broad, the IHCIA authorizes a great many specific IHS programs, including health professional recruitment and retention, mental health services, urban Indian health services, construction and repair of health facilities, various special IHS funds, and IHS reimbursement by Social Security Act health programs (Medicare and Medicaid) and other public and private health insurance programs. Authorizations of appropriations for IHCIA programs expired at the end of FY2001, but Congress continues to appropriate funds for the programs. Leading Indian health proponents in and out of Congress suggested major changes in IHCIA. A number of significant changes have not been acceptable to HHS or other agencies, however, and ongoing negotiations have produced a succession of IHCIA reauthorization bills through the 106 th -109 th Congresses. The first IHCIA reauthorization bill introduced in this Congress, S. 1057 , was referred to the Senate Indian Affairs Committee and reported on March 16, 2006 ( S.Rept. 109-222 ). A House bill ( H.R. 5312 ), very similar to S. 1057 as reported, was referred to three House committees, and ordered reported by one committee, the Resources Committee, on June 21. A Senate Finance Committee bill, S. 3524 , amending the Social Security Act regarding Indian health provisions in Medicaid, Medicare, and SCHIP, was reported by the Committee July 12 ( S.Rept. 109-278 ). For detailed discussion of these bills and Indian health issues, see CRS Report RL33022, Indian Health Service: Health Care Delivery, Status, Funding, and Legislative Issues . Congress faces a possibly multi-billion-dollar problem stemming from Indian trust funds. The federal government's management of Indian trust funds and lands has led to financial claims against the United States by Indian individuals and tribes. The Indian individual claimants alone suggest they are owed as much as $176 billion. Besides lawsuits, the issue has also led to the controversial reorganization of two agencies, the Bureau of Indian Affairs (BIA) and the Office of Special Trustee for American Indians (OST) within DOI. The BIA has long managed funds, lands, and related physical assets held in trust for Indian tribes and individuals. Trust lands total about 56 million acres (almost 46 million acres for tribes and 10 million acres for individuals). The funds' asset value recently totaled about $3.3 billion, of which about $2.9 billion was in about 1,400 tribal accounts and $400 million was in more than 260,000 Individual Indian Money (IIM) accounts. The Treasury Department houses the accounts, including making payments to beneficiaries. Historically, the BIA was frequently criticized for its management of trust lands and funds. Investigations and audits in the 1980s and after showed that, among other problems, the BIA could not document the asset values of all trust fund accounts and could not link all trust lands to their owners and accounts. Congress enacted the American Indian Trust Fund Management Reform Act of 1994 to reform the management of Indian trust funds and assets; the act directed the Secretary of the Interior to account for trust fund balances and created the OST to oversee trust management reforms. Two years later, based on the 1994 act and general trust law, IIM account holders filed a class action suit in the federal district court for the District of Columbia against the various U.S. officials, demanding an accounting of their funds and correction of fund mismanagement ( Cobell v. Norton , Civil No. 96-1285, D.D.C.). In addition, at least 25 tribal suits have been filed, covering specific tribes' funds. These events have led to the current reorganization of the BIA and OST and to congressional consideration of the settlement of IIM and tribal claims arising from trust fund and lands mismanagement. In the first of two stages of the Cobell case, the district court in 1999 found that DOI and Treasury had breached their trust duties regarding (1) the document retention and data gathering necessary for an accounting and (2) the business systems and staffing to fix trust management. The court ordered DOI and Treasury to bring trust management up to current trust standards. The final stage of the lawsuit will determine the amount of money that ought to be in the IIM plaintiffs' accounts. In an intervening stage, the district court decided what historical accounting method should be used to determine the amount owed the plaintiffs. DOI in 2003 proposed reconciling all trust account transactions above a certain value but only a sampling of transactions below that value, back to 1938, while the plaintiffs had proposed using production and mapping databases and DOI data to estimate the total amount due. DOI estimated its method would show IIM losses in the tens of millions, while the plaintiffs' methods have shown estimated losses (including interest) of well over $100 billion. The district court has twice issued orders (September 2003 and February 2005) requiring the DOI to perform a historical accounting of all IIM trust account transactions and assets since 1887, without using statistical sampling. After the second order, DOI estimated that compliance would cost $12-13 billion. Both times the U.S. Court of Appeals for the D.C. Circuit overturned the district court's order. To date the district court has not issued another order on historical accounting. The DOI continues to carry out its historical accounting plan. Congress has acted on the Cobell suit chiefly through oversight hearings and through provisions in Interior appropriation acts and reports. Both the House Appropriations Committee and the conference committee, in their reports on the FY2006 Interior appropriations act ( P.L. 109-54 ), stated that they rejected the position that Congress intended in the 1994 Act to require an historical accounting on the scale of that ordered by the district court, but no bills have been introduced in this Congress to amend the 1994 Act to delineate the extent of the historical accounting obligation. Congress has long been concerned that the costs of the Cobell lawsuit may jeopardize DOI trust reform implementation, reduce spending on other Indian programs, and be difficult to fund. Current costs include the expenses of the ongoing litigation. Possible future costs include $12-$13 billion for the court-ordered historical accounting, a Cobell settlement that might cost as much as the court-ordered historical accounting, the $27.5 billion that the Cobell plaintiffs have proposed as a settlement amount (in their statement of principles for settlement legislation), or the more than $100 billion that Cobell plaintiffs estimate their IIM accounts are owed. Among the funding sources for these large costs are discretionary appropriations and the Treasury Department's "Judgment Fund," although some senior appropriators consider the Fund insufficient for a $12-$13 billion dollar settlement, much less a larger one. Among other options, Congress may await further court actions, delay a court-ordered accounting, delineate DOI's historical accounting obligations, or direct a settlement. Thus far two settlement bills, S. 1439 and H.R. 4322 , have been introduced in the 109 th Congress. Both bills would establish an IIM accounting-claim settlement fund (whose size was left blank in the introduced bills) from which payments would be distributed to IIM claimants (under a formula to be determined by the Treasury Secretary), establish a commission to review and recommend changes in Indian trust asset management, allow increased payments for fractionated individual Indian trust interests, create a tribal trust management demonstration project, combine BIA and OST under a new Under Secretary for Indian Affairs, and require an annual independent audit of all Indian trust funds (for detailed discussion, see CRS Report RS22343, Indian Trust Fund Litigation: Legislation to Resolve Accounting Claims in Cobell v. Norton ). The Senate Indian Affairs Committee held hearings on S. 1439 in July 2005 (S.Hrg. 109-194) and March 28, 2006 (S.Hrg. 109-483), and, with the House Resources Committee, on both bills on March 1, 2006 (S.Hrg. 109-441). H.R. 4322 awaits further committee action. Senate Indian Affairs Committee mark-up of an amended S. 1439 , with a settlement amount of $8 billion, was scheduled for August 2 but withdrawn at the Administration's request, pending more negotiations over including IIM land mismanagement claims as well as IIM accounting and funds mismanagement claims under the $8-billion settlement. The DOI, BIA, and OST have undertaken, or proposed, a number of administrative and organizational changes to implement trust management reform since the 1994 Act. One of the more important changes was the 1996 transfer from BIA to OST of the office that manages the trust funds; management of trust lands and other physical assets stayed with BIA. In April 2003 the DOI undertook a new, and ongoing, reorganization that splits the BIA trust management operations off from other BIA services at the regional and agency levels, and creates OST field operations (by placing fiduciary trust officers and administrators at BIA regional and agency offices) to oversee trust management and provide information to Indian trust beneficiaries. Tribal leaders and the Cobell plaintiffs vigorously oppose the current reorganization, claiming it included insufficient consultation with tribes, insufficiently defined new OST duties, and should have followed, not preceded, creation of new trust management procedures. The DOI responded that it had consulted with tribes for a year beforehand and that it had faced a court-ordered deadline. Attempts to halt the reorganization in recent Congresses have been defeated, and bills in previous Congresses proposing various changes in DOI and BIA trust management, such as abolishing OST, assigning trust line authority to a new office, or establishing a commission to recommend improvements in federal Indian trust laws and policies, have not been reported from committee. S. 1439 and H.R. 4322 , however, as noted above, propose to reorganize DOI management of Indian trust assets, and S. 1439 may be marked up pending the negotiations mentioned above. The Indian Gaming Regulatory Act (IGRA; P.L. 100-497 ) was enacted to provide a regulatory structure for gambling on Indian reservations and certain other lands, with the intent that tribes would use gaming revenues for tribal economic development and governmental programs. IGRA prohibits gaming on any trust lands acquired after its enactment in 1988, but allows eight exceptions to this prohibition, including ones for tribes without reservations in 1988, newly recognized tribes, restored tribes, and land-claim settlements, and in circumstances where the Interior Secretary and the state governor agree that the acquisition would benefit the tribe and not harm the local community. Critics assert that the exceptions allow "reservation shopping," where tribes seek trust lands for gaming "off-reservation" (i.e., distant from tribes' existing reservations or current or historic locations), and also undermine the on-reservation economic development intended by Congress and encourage land claims and investor-funded tribal petitions for federal acknowledgment. Two of the bills introduced to curb the exceptions, S. 2078 and H.R. 4893 , have been reported. Both bills delete the exception requiring secretarial and gubernatorial agreement, but allow applications filed before a certain 2006 date (March 7 for H.R. 4893 , April 15 for S. 2078 ) to go forward, although H.R. 4893 adds a geographic limitation to lands with a "nexus" to the tribe. Both bills retain exceptions for tribes without reservations in 1988, newly recognized tribes, and restored tribes (but with limitations for the latter two exceptions, including a tribal land "nexus," Interior Secretary approval, and, for H.R. 4893 , a tribal-local mitigation agreement). The land claim exception is repealed by H.R. 4893 but retained by S. 2078 although with geographic and legal limitations. H.R. 4893 adds a new exception for tribes landless on the date of its enactment, but applies the same limits as for newly recognized tribes. Opponents object that the bills add new and unfair burdens on newly recognized, restored, and landless tribes, that the exceptions for secretarial/gubernatorial agreements and land claims have been used only rarely since 1988, and especially that H.R. 4893 's requirement for mitigation agreements is an unprecedented subjection of tribal sovereignty to local governments. S. 2078 awaits Senate floor action. H.R. 4893 was considered by the House September 13 and failed to pass. (For more information, see CRS Report RS21499, Indian Gaming Regulatory Act: Gaming on Newly Acquired Lands .) Native Hawaiians, the indigenous people of Hawaii, are not currently considered Indians under federal Indian law and have no political entity that, like Indian tribes, is recognized by the federal government. Congress has however authorized a number of federal programs to benefit Native Hawaiians. Supporters of recognition are concerned that the absence of a recognized Native Hawaiian political entity endangers federal and state Native Hawaiian programs, exposing them to current legal challenges that claim the programs are race-based. At present, Indian tribes are usually recognized either by Congress or through the DOI's administrative process; Native Hawaiians, however, are excluded from the DOI process, which means congressional action is needed for a Native Hawaiian political entity to be recognized. Three bills in the 109 th Congress, S. 147 , H.R. 309 , and S. 3064 , would establish a process by which a Native Hawaiian political entity would be organized and federally recognized. The bills leave for later negotiations (and legislation) questions concerning the political entity's governmental powers and lands, and exclude the Native Hawaiian political entity from BIA programs and from coverage under the Indian Gaming Regulatory Act. Some of the arguments for and against the bills are summarized here. Proponents argue that Congress has power to recognize a Native Hawaiian political entity because Congress's constitutional authority over "commerce with ... the Indian tribes" extends to all indigenous native peoples in the United States. They also argue that Congress has recognized a "special political and legal relationship with the Native Hawaiian people" ( S. 147 , SS2(21)) identical with that with Indian tribes. They point to the numerous Native Hawaiian programs that Congress has established, especially the Hawaiian homelands program, which was established in 1921 when Hawaii was a territory but is now under Hawaii state control (with certain continuing congressional duties), under which certain public lands are reserved for lease only to Native Hawaiians. Proponents argue that Native Hawaiians have not given up their claims to sovereignty but rather had sovereignty forcibly withdrawn in the 1893 overthrow of the Kingdom of Hawaii, an action led by Americans living in Hawaii and with the active support of certain U.S. officials and armed forces there. (The new Republic of Hawaii agreed to U.S. annexation in 1898.) They further state that Native Hawaiians, like Indian tribes, have maintained a single distinct community, with cultural and political institutions. Opponents dispute these points. They argue that Congress's authority extends only to Indian tribes, not to all indigenous peoples, and that hence Congress does not have constitutional authority to recognize a Native Hawaiian political entity. A September 2005 Justice Department statement echoed this concern over constitutionality. Opponents also argue that the United States does not have a special responsibility to Native Hawaiians as it has for Indian tribes. Opponents also contend that recognition of a Native Hawaiian political entity would be based on race alone, arguing that unlike Indian tribes the Native Hawaiian entity would not need to meet criteria of geography, community, and continuous political autonomy. They argue further that Native Hawaiian recognition would set a precedent for political recognition of other, race-based, non-Indian groups. For instance, the U.S. Civil Rights Commission on May 5, 2006, issued a briefing report opposing passage of S. 147 as reported, citing racial discrimination concerns. In addition, some opponents dispute the claims regarding Native Hawaiian sovereignty, arguing among other things that Native Hawaiians' sovereignty ended well before 1893 because the kingdom gave political rights to non-Native Hawaiians, or that sovereignty resided in the monarch, not the Native Hawaiian people, and ended with the 1893 overthrow. Bills similar to S. 147 and H.R. 309 received extensive consideration in the previous three Congresses. S. 147 was reported by the Senate Indian Affairs Committee on May 16, 2005 ( S.Rept. 109-68 ). S. 3064 , an amended version of S. 147 introduced May 25, 2006, is based on discussions among congressional offices, the Administration, and the state of Hawaii. The Senate on June 8, 2006, failed to invoke cloture on a motion to proceed to consider S. 147 , effectively ending Senate consideration of S. 147 and S. 3064 . H.R. 309 was referred to the House Resources Committee and has not been reported. Separately, the House Judiciary Committee's Subcommittee on the Constitution held a hearing on July 19, 2005, on constitutional issues raised by H.R. 309 (Serial No. 109-37).

Native American issues before Congress are numerous and diverse, covering such areas as federal recognition of tribes, trust land acquisition, gambling regulation, education, jails, economic development, welfare reform, homeland security, tribal jurisdiction, highway construction, taxation, and many more. This report focuses on four Native American issues currently of great salience before Congress: health care, energy, trust fund management reform, and Native Hawaiian recognition. This report will be updated as developments warrant.

The notion of Japan developing nuclear weapons has long been considered far-fetched and even taboo, particularly within Japan. Hailed as an example of the success of the international non-proliferation regime, Japan has consistently taken principled stands on non-proliferation and disarmament issues. Domestically, the largely pacifist Japanese public, with lingering memories of the destruction of Hiroshima and Nagasaki by atomic bombs in the closing days of World War II, has widely rejected any nuclear capacity as morally unacceptable. The inclusion of Japan under the U.S. nuclear "umbrella," with regular reiterations from U.S. officials, provides a guarantor to Japanese security. Successive Japanese administrations and commissions have concluded that Japan has little to gain and much to lose in terms of its own security if it pursues a nuclear weapons capability. Today, Japanese officials and experts remain remarkably uniform in their consensus that Japan is unlikely to move toward nuclear status in the short-to-medium term. However, as the security environment has shifted significantly, the topic is no longer toxic and has been broached by several leading politicians. North Korea's test of a nuclear device in 2006 and China's military modernization have altered the strategic dynamics in the region, and any signs of stress in the U.S.-Japan alliance raises questions among some about the robustness of the U.S. security guarantee. An ascendant hawkish, conservative movement--some of whom openly advocate for Japan to develop an independent nuclear arsenal--has gained more traction in Japanese politics, moving from the margins to a more influential position. In addition, previous security-related taboos have been overcome in the past few years: the dispatch of Japanese military equipment and personnel to Iraq and Afghanistan, the elevation of the Japanese Defense Agency to a full-scale ministry, and Japanese co-development of a missile defense system with the United States. All of these factors together increase the still unlikely possibility that Japan will reconsider its position on nuclear weapons. Any reconsideration of Japan's policy of nuclear weapons abstention would have significant implications for U.S. policy in East Asia. Globally, Japan's withdrawal from the Nuclear Non-Proliferation Treaty (NPT) could damage the most durable international non-proliferation regime. Regionally, Japan "going nuclear" could set off a nuclear arms race with China, South Korea, and Taiwan and, in turn, India, and Pakistan may feel compelled to further strengthen their own nuclear weapons capability. Bilaterally, assuming that Japan made the decision without U.S. support, the move could indicate Tokyo's lack of trust in the American commitment to defend Japan. An erosion in the U.S.-Japan alliance could upset the geopolitical balance in East Asia, a shift that could indicate a further strengthening of China's position as an emerging hegemonic power. These ramifications would likely be deeply destabilizing for the security of the Asia Pacific region and beyond. Japan's post-war policy on nuclear weapons and non-proliferation has been to reject officially a military nuclear program. The Japanese Army and Navy each conducted nuclear weapons research during World War II, but neither was successful in gaining enough resources for the endeavor. Despite the fact that by the early 1970s Japan had already acquired the technical, industrial and scientific resources needed to develop its own nuclear weapons, Japanese policy has repeatedly stated its opposition to the development of nuclear weapons. Complicating Japan's anti-nuclear weapons policy has been a post-World War II dependence on the U.S. "nuclear umbrella" and security guarantee. Under the terms of the Mutual Security Assistance Pact signed in 1952 and the 1960 Treaty of Mutual Cooperation and Security, Japan grants the U.S. military basing rights on its territory in return for a U.S. pledge to protect Japan's security. The rejection of nuclear weapons by the Japanese public appears to be overwhelmingly driven by moral, rather than pragmatic, considerations, but Japan's leaders have based their policy of forswearing nuclear weapons on protection by the U.S. nuclear arsenal. The bedrock of domestic law on the subject, the "Atomic Energy Basic Law" of 1955, requires Japan's nuclear activities to be conducted only for peaceful purposes. In 1967, the "Three Non-Nuclear Principles" ( hikaku sangensoku ) were announced by Prime Minister Eisaku Sato, enshrining the policy of not possessing, not producing, and not permitting the introduction of nuclear weapons into Japan. When Japan ratified the Nuclear Non-Proliferation Treaty (NPT) in 1976, it reiterated its three non-nuclear principles, placed itself under the treaty obligation as a non-nuclear weapons state, and pledged not to produce or acquire nuclear weapons. Japan has been a staunch NPT supporter in good standing ever since. Despite multiple reiterations of Japan's non-nuclear status, this orthodoxy has been challenged on several occasions, usually when Japan has felt strategic vulnerability. Probably the most prominent episode occurred in the mid-1960s: China tested a nuclear device for the first time in 1964, and the United States was engaged in the Vietnam War. Prime Minister Eisaku Sato secretly commissioned several academics to produce a study exploring the costs and benefits of Japan's possible nuclearization, the so-called "1968/70 Internal Report." Another secret investigation into Japan's nuclear option was done by the Japan Defense Agency (JDA) in 1995 as Japan assessed its standing in the new post-Cold War environment after the 1994 North Korean nuclear crisis in 1994 and as the international community was considering the indefinite extension of the NPT. Both reports concluded that Japan should continue to rely on the U.S. security guarantee and that development of nuclear weapons would threaten that relationship. Since the end of the Cold War, and particularly in the past decade, developments in the region have increased Japan's sense of vulnerability and caused some in the policy community to rethink Japan's policy of forswearing nuclear weapons development. During the Cold War, the U.S. military presence in Japan represented the Pacific front of containing the Soviets, a reassuring statement of commitment to Japan's security to many Japanese. North Korea's test of a ballistic missile over Japan in August 1998 dispelled the sense of a more secure post-Cold War environment for the archipelago. Moreover, India and Pakistan both conducted underground nuclear weapons tests earlier that year, which to many undermined the success of the international non-proliferation regime and set off fears of a new nuclear arms race. Japan was particularly alarmed at the tests, and instituted a freeze on new loans and grants to the two states. Since then, more provocative behavior from Pyongyang, particularly its 2006 tests of medium-range missiles and a nuclear device, have heightened Japan's fear of potential attacks. The nuclear test prompted prominent officials in the ruling party to call for an open debate on whether to pursue nuclear arms: both then-Foreign Minister (and current Prime Minister) Taro Aso and chairman of the party's policy council called for such a debate before later backing off their comments. In addition to North Korea's activities, a U.S.-India civilian nuclear deal has led to concern among some Japanese non-proliferation experts that the NPT has weakened further. To these experts, the legitimacy and deterrent effect of the global non-proliferation regime underpins Japan's commitment to its own non-nuclear status. While North Korea represents a more immediate danger, many defense experts see China as the more serious and long-term threat to Japan's security. China's rapid military modernization and advancements in weapons systems have compounded Tokyo's concern. Japanese defense papers have pointed to Beijing's apparent progress in short and medium range missiles, its submarine force (some of which have on occasion intruded into Japan's territorial waters), and nuclear force modernization as specific areas of concern. As Chinese military spending continues to accelerate, Japanese defense budgets have stagnated or declined. Although Sino-Japanese relations appear to have stabilized since a period of tension under former Prime Minister Junichiro Koizumi's administration, fundamental distrust and the potential for conflict remains between the Pacific powers. Japan is a country poor in natural resources but with a high level of energy consumption. Since the 1960s, Japan has relied on nuclear power for a significant portion of its energy; nuclear energy currently provides 35% of its electricity. The Japan Atomic Energy Commission's 2005 Framework for Nuclear Energy Policy emphasizes the importance of nuclear power for energy independence and carbon emission reduction. Japan is currently the third-largest user of nuclear energy in the world, with 55 light-water nuclear power reactors (49.58 million kW) operated by 10 electric power companies. The first commercial power reactor began operation in 1966. Two nuclear power plants are under construction, four are in regulatory review, and an additional seven may be built over the next decade. Japan's policy is to achieve a fully independent, or "closed," fuel cycle. The closed fuel cycle promotes the use of mixed-oxide (MOX) fuel in light-water reactors. The set goal is to have 16-18 such reactors by FY2010, and utilities in Japan are now in the process of being licensed for MOX loading and obtaining consent from the local governments. The Japan Atomic Energy Agency (JAEA) was established on October 1, 2005, to integrate Japan's R&D institutes, the Japan Atomic Energy Research Institute and the Japan Nuclear Cycle Development Institute. JAEA carries out R&D work on the full range of fuel cycle activities. Two of the more controversial aspects of Japan's civilian power program are its large stocks of separated plutonium and advanced fuel cycle facilities. Plutonium is a by-product of the uranium fuel used in all nuclear reactors. Plutonium in spent fuel is not weapons-usable. Once this reactor-grade plutonium is separated out of spent fuel through reprocessing, it is potentially directly usable in nuclear weapons. This separated plutonium can also be "recycled" into MOX fuel for light-water power reactors. France, India, Japan, Russia and the U.K. currently all produce reactor fuel through reprocessing. The global stockpile of separated plutonium is estimated to be about 500 tons, including military and civilian stocks. Stocks of civilian separated plutonium are growing around the world. Japan possesses 6.7 MT of civilian stocks of separated plutonium stored in Japan, and 38 MT of separated plutonium stored outside the country. This material has the potential to make over 1,000 nuclear weapons. Japan's civilian separated plutonium stockpile is expected to grow to 70 tons by 2020. To date, Japan has sent its spent fuel to the United Kingdom (Sellafield) and France (La Hague) for reprocessing and MOX fuel fabrication. But Japan is completing facilities which will eliminate the need for such outsourcing. The private company Japan Nuclear Fuel Limited (JNFL) has built and is currently running active testing on a large-scale commercial reprocessing plant at Rokkasho-mura. The testing phase is expected to be completed in August 2009. Its expected capacity is 800tons/year. Advance site preparation work was started in October 2008 for a MOX fuel fabrication plant being built by JNFL at Rokkasho-mura. An experimental reprocessing plant has operated at Tokai-mura since 1977. It completed its contractual work to reprocess spent fuel for nuclear power utilities in March 2006. The Tokai plant is currently being prepared to conduct R&D work for fast reactor fuels. Around 2050, Japan plans to shift from MOX fuel in light water reactors to using MOX fuel in fast breeder reactors. R&D work continues using the prototype MONJU and JOYO fast breeder reactors, despite earlier accidents and continued technical difficulties. A final disposal site for high level radioactive waste has not yet been selected. Japan plans to store and dispose of its nuclear waste domestically. Japan also has a uranium enrichment R&D facility at Tokai-mura and is developing an advanced centrifuge uranium enrichment plant at Rokkasho-mura. The industrial-scale Rokkasho-mura reprocessing plant, the first in a non-nuclear weapon state, has raised some proliferation concerns. Fast breeder reactors also produce more plutonium than they consume, potentially posing a proliferation risk. Some cautionary voices point out that advanced countries have been shifting away from the pursuit of reprocessing technologies as the international community strives to find appropriate multilateral approaches to containing the spread of enrichment and reprocessing technologies to new countries. To counteract public concern, Japan emphasizes transparency in all aspects of its nuclear activities to assure the public and international community that atomic energy is used solely for peaceful purposes. All reactor-operating electric power utilities in Japan are required by law to make public the quantity of plutonium in possession and a plutonium use plan each fiscal year. All of Japan's nuclear facilities are subject to IAEA full-scope safeguards, and an Additional Protocol to its IAEA safeguards agreement came into force in December 1999. The protocol augments the agency's authority to verify that nuclear activities are not diverted to military purposes. Once the Rokkasho Reprocessing Plant starts operation, it will be the largest facility ever placed under IAEA safeguards. Japan has worked with the IAEA since the design phase to incorporate unique IAEA verification measures into the plant. Japan has been a leader in developing advanced safeguards technologies with the IAEA, and participates in multilateral advanced research efforts for future fuel cycle technologies, such as Generation IV International Forum (Gen-IV), International Project on Innovative Nuclear Reactors and Fuel Cycles (INPRO) and the U.S.-led Global Nuclear Energy Partnership (GNEP). Japan's technological advancement in the nuclear field, combined with its stocks of separated plutonium, have contributed to the conventional wisdom that Japan could produce nuclear weapons in a short period of time. In 1994, Prime Minister Tsutomu Hata famously told reporters that "it's certainly the case that Japan has the capability to possess nuclear weapons but has not made them." Indeed, few dispute that Japan could make nuclear weapons if Tokyo were to invest the necessary financial and other resources. However, the ability to develop a few nuclear weapons versus the technological, financial and manpower requirements of a full nuclear deterrent should be considered. Producing nuclear weapons would require expertise on bomb design including metallurgists and chemists; while a reliable deterrent capability may also require reliable delivery vehicles, an intelligence program to protect and conceal assets from a first-strike, and a system for the protection of classified information. The 1995 JDA report stated that Japan's geography and concentrated populations made the political and economic costs of building the infrastructure for a nuclear weapons program "exorbitant." If one assumes that Japan would want weapons with high reliability and accuracy, then more time would need to be devoted to their development unless a weapon or information was supplied by an outside source. As some analysts have pointed out, if Japan manufactured nuclear warheads, then it would need to at the minimum perform one nuclear test--but where this could be carried out on the island nation is far from clear. Furthermore, Japan's nuclear materials and facilities are under IAEA safeguards, making a clandestine nuclear weapons program difficult to conceal. The Rokkasho-mura reprocessing plant was built in close consultation with the IAEA, with safeguards systems installed in process lines during construction. Japan seems to have intentionally built its nuclear program so it would not be ideal for military use, in compliance with Japanese law. In general, public opinion on defense issues in Japan appears to be shifting somewhat, but pacifist sentiment remains significant. In the past, Japanese public opinion strongly supported the limitations placed on the Japanese military, but this opposition has softened considerably since the late 1990s. Despite this overall shifting tide, the "nuclear allergy" among the general public remains strong. The devastation of the atomic bombings led Japanese society to recoil from any military use of nuclear energy. Observers say that the Japanese public remains overwhelmingly opposed to nuclearization, pointing to factors like an educational system that promotes pacifism and the few surviving victims of Hiroshima and Nagasaki who serve as powerful reminders of the bombs' effects. While Japanese public opinion remains, by most accounts, firmly anti-nuclear, some social currents could eventually change the conception of nuclear development. Many observers have recognized a trend of growing nationalism in Japan, particularly among the younger generation. Some Japanese commentators have suggested that this increasing patriotism could jeopardize closer cooperation with the United States: if Japan feels too reliant on U.S. forces and driven by U.S. priorities, some may assert the need for Japan to develop its own independent capability. Another wild card is the likelihood that Japan will face a major demographic challenge because of its rapidly ageing population: such a shock could either drive Japan closer to the United States because of heightened insecurity, or could spur nationalism that may lean toward developing more autonomy. A review of recent articles and interviews with prominent Japanese opinion-makers and experts revealed a near-consensus of opposition to the development of nuclear weapons. Realist-minded security observers cite the danger of threatening China and causing unnecessary instability in the region, while foreign policy managers point to the risk of weakening the U.S. alliance. Some observers claim, however, that a younger generation of upcoming elites may be more nationalistic and therefore potentially more supportive of the option in the future. There is some degree of disagreement in Japan on if a debate itself about whether Japan should consider the nuclear option would be a valuable exercise. Some nuclear critics argue that such a debate would solidify Japan's non-nuclear stance by articulating for the public why not possessing nuclear weapons serves the national interest. The debate could also reassure those who oppose Japan's nuclear development. Others, however, argue that simply raising the issue would alarm Japan's neighbors, arouse distrust, and negatively affect regional security. Domestically, some analysts think that a public debate on nuclear weapons would outrage the Japanese public, making most politicians averse to the proposal. There are several legal factors that could restrict Japan's ability to develop nuclear weapons. The most prominent is Article 9 of the Japanese constitution, drafted by American officials during the post-war occupation, that outlaws war as a "sovereign right" of Japan and prohibits "the right of belligerency." However, Japan maintains a well-funded and well-equipped military for self-defense purposes, and the current interpretation of the constitution would allow, in theory, the development of nuclear weapons for defensive purposes. Beginning with Prime Minister Nobusuke Kishi in 1957, and continuing through Shinzo Abe in 2006, Japanese administrations have repeatedly asserted that Article 9 is not the limiting factor to developing nuclear weapons. As Chief Cabinet Secretary in 2002, former Prime Minister Yasuo Fukuda said that the constitution did not prohibit nuclear weapons, adding that "depending upon the world situation, circumstances and public opinion could require Japan to possess nuclear weapons." Although the Constitution may be interpreted to allow for possession of nuclear weapons, since 1955 Japanese domestic law prohibited any military purpose for nuclear activities. Its basic policy statement (Article 2) says: "the research, development, and utilization of atomic energy shall be limited to peaceful purposes, aimed at ensuring safety and performed independently under democratic management, the results therefrom shall be made public to contribute to international cooperation." This law, which also established regulatory bodies for safety and control issues, is at the core of Japanese policy in maintaining a peaceful, transparent nuclear program. Japanese leaders have often cited the "Three Non-Nuclear Principles" as another obstacle to Japanese development of nuclear weapons. The trio consists of Japanese pledges not to allow the manufacture, possession, or importation of nuclear weapons. Many security experts, however, point out that the principles, passed as a Diet resolution in 1971 as part of domestic negotiations over the return of Okinawa from U.S. control, were never formally adopted into law, and therefore are not legally binding. Although not technically a legal constraint, Japanese leaders have consistently stated their commitment to the principles, including a reiteration by Prime Minister Shinzo Abe in the aftermath of North Korea's nuclear test in 2006. Japan is obligated under Article 2 of the NPT not to "receive the transfer from any transferor whatsoever of nuclear weapons or other nuclear explosive devices or of control over such weapons or explosive devices directly, or indirectly; not to manufacture or otherwise acquire nuclear weapons or other nuclear explosive devices; and not to seek or receive any assistance in the manufacture of nuclear weapons or other nuclear explosive devices." Under Article 3 of the NPT, Japan is required to accept IAEA full-scope safeguards on its civilian nuclear program. Japan signed an Additional Protocol in 1998 under which the IAEA can use an expanded range of measures to verify that civilian facilities and materials have not been diverted to a military program. Lacking adequate indigenous uranium supplies, Japan has bilateral civilian nuclear cooperation agreements with the United States, France, United Kingdom, China, Canada, and Australia. If a Japanese nuclear program for military purposes were declared or discovered, Japan would need to return the supplied material to its country of origin. Japan's civilian nuclear energy program--which supplies over a third of Japan's energy--would then be cut off from world supplies of natural uranium, enriched uranium and related equipment. The United States most recent nuclear energy cooperation agreement with Japan took effect on July 17, 1988. Article 12 of this agreement states that, if either party does not comply with the agreement's nonproliferation provisions or violates their IAEA safeguards agreement, the other party has the right to cease further cooperation, terminate the agreement, and require the return of any material, nuclear material, equipment or components transferred or "any special fissionable material produced through the use of such items." If Japan withdrew from the NPT, it would likely be subject to UN Security Council-imposed sanctions and economic and diplomatic isolation. Penalties under a U.N. Security Council resolution could include economic sanctions beyond the Nuclear Suppliers Group cut-off of nuclear-related supply. Diplomatically, the policy turn-about would have profound implications. Japan has built a reputation as a leader in non-proliferation and as a promoter of nuclear disarmament. It has consistently called for a "safe world free of nuclear weapons on the earliest possible date." Japan submits a resolution to the General Assembly's First Committee each year on a nuclear-free world and submits working papers to the NPT review conferences and preparatory committees on disarmament. It has been a vocal advocate for IAEA verification and compliance and was the first to respond with sanctions to nuclear tests in South Asia and North Korea. It has been a constant voice in support of nuclear disarmament in international fora. An about-face on its non-nuclear weapon state status would dramatically change the global view of Japan, or might dramatically change the perception of nuclear weapons possession in the world. This move could have profound implications for nuclear proliferation elsewhere, perhaps leading to additional NPT withdrawals. Acquiring nuclear weapons could also hurt Japan's long-term goal of permanent membership on the U.N. Security Council. Perhaps the single most important factor to date in dissuading Tokyo from developing a nuclear arsenal is the U.S. guarantee to protect Japan's security. Since the threat of nuclear attack developed during the Cold War, Japan has been included under the U.S. "nuclear umbrella," although some ambiguity exists about whether the United States is committed to respond with nuclear weapons in the event of a nuclear attack on Japan. U.S. officials have hinted that it would: following North Korea's 2006 nuclear test, former Secretary of State Condoleezza Rice, in Tokyo, said, " ... the United States has the will and the capability to meet the full range, and I underscore full range, of its deterrent and security commitments to Japan." Most policymakers in Japan continue to emphasize that strengthening the alliance as well as shared conventional capabilities is more sound strategy than pursuing an independent nuclear capability. During the Cold War, the threat of mutually assured destruction to the United States and the Soviet Union created a sort of perverse stability in international politics; Japan, as the major Pacific front of the U.S. containment strategy, felt confident in U.S. extended deterrence. Although the United States has reiterated its commitment to defend Japan, the strategic stakes have changed, leading some in Japan to question the American pledge. Some in Japan are nervous that if the United States develops a closer relationship with China, the gap between Tokyo's and Washington's security perspectives will grow and further weaken the U.S. commitment. These critics also point to what they perceive as the soft negotiating position on North Korea's denuclearization in the Six-Party Talks as further evidence that the United States does not share Japan's strategic perspective. A weakening of the bilateral alliance may strengthen the hand of those that want to explore the possibility of Japan developing its own deterrence. Despite these concerns, many long-time observers assert that the alliance is fundamentally sound from years of cooperation and strong defense ties throughout even the rocky trade wars of the 1980s. Perhaps more importantly, China's rising stature likely means that the United States will want to keep its military presence in the region in place, and Japan is the major readiness platform for the U.S. military in East Asia. If the United States continues to see the alliance with Japan as a fundamental component of its presence in the Pacific, U.S. leaders may need to continue to not only restate the U.S. commitment to defend Japan, but to engage in high-level consultation with Japanese leaders in order to allay concerns of alliance drift. Disagreement exists over the value of engaging in a joint dialogue on nuclear scenarios given the sensitivity of the issue to the public and the region, with some advocating the need for such formalized discussion and others insisting on the virtue on strategic ambiguity. U.S. behavior plays an outsized role in determining Japan's strategic calculations, particularly in any debate on developing nuclear weapons. Security experts concerned about Japan's nuclear option have stressed that U.S. officials or influential commentators should not signal to the Japanese any tacit approval of nuclearization. Threatening other countries with the possibility of Japan going nuclear, for example, could be construed as approval by some quarters in Tokyo. U.S.-Japanese joint development of a theater missile defense system reinforces the U.S. security commitment to Japan, both psychologically and practically. The test-launch of several missiles by North Korea in July 2006 accelerated existing plans to jointly deploy Patriot Advanced Capability 3 (PAC-3) surface-to-air interceptors as well as a sea-based system on Aegis destroyers. If successfully operationalized, confidence in the ability to intercept incoming missiles may help assuage Japan's fear of foreign attacks. This reassurance may discourage any potential consideration of developing a deterrent nuclear force. In addition, the joint effort would more closely intertwine U.S. and Japan security, although obstacles still remain for a seamless integration. To many security experts, the most alarming possible consequence of a Japanese decision to develop nuclear weapons would be the development of a regional arms race. The fear is based on the belief that a nuclear-armed Japan could compel South Korea to develop its own program; encourage China to increase and/or improve its relatively small arsenal; and possibly inspire Taiwan to pursue nuclear weapons. This in turn might have spill-over effects on the already nuclear-armed India and Pakistan. The prospect--or even reality--of several nuclear states rising in a region that is already rife with historical grievances and contemporary tension could be deeply destabilizing. The counter-argument, made by some security experts, is that nuclear deterrence was stabilizing during the Cold War, and a similar nuclear balance could be achieved in Asia. However, most observers maintain that the risks outweigh potential stabilizing factors. The course of the relationship between Beijing and Washington over the next several years is likely to have a significant impact on the nuclearization debate in Japan. If the relationship chills substantially and a Cold War-type standoff develops, there may be calls from some in the United States to reinforce the U.S. deterrent forces. Some hawkish U.S. commentators have called for Japan to be "unleashed" in order to counter China's strength. Depending on the severity of the perceived threat from China, Japanese and U.S. officials could reconsider their views on Japan's non-nuclear status. Geopolitical calculations likely would have to shift considerably for this scenario to gain currency. On the other hand, if U.S.-Sino relations become much closer, Japan may feel that it needs to develop a more independent defense posture. This is particularly true if the United States and China engaged in any bilateral strategic or nuclear consultations. Despite improved relations today, distrust between Beijing and Tokyo remains strong, and many in Japan's defense community view China's rapidly modernizing military as their primary threat. Any eventual reunification of the Korean peninsula could further induce Japan to reconsider its nuclear stance. If the two Koreas unify while North Korea still holds nuclear weapons and the new state opts to keep a nuclear arsenal, Japan may face a different calculation. Indeed, some Japanese analysts have claimed that a nuclear-armed reunified Korea would be more of a threat than a nuclear-armed North Korea. Such a nuclear decision would depend on a variety of factors: the political orientation of the new country, its relationship with the United States, and how a reunified government approached its historically difficult ties with Japan. Although South Korea and Japan normalized relations in 1965, many Koreans harbor resentment of Japan's harsh colonial rule of the peninsula from 1910-1945. If the closely neighboring Koreans exhibited hostility toward Japan, it may feel more compelled to develop a nuclear weapons capability. The United States is likely to be involved in any possible Korean unification because of its military alliance with South Korea and its leading role in the Six-Party Talks. U.S. contingency planning for future scenarios on the Korean peninsula should take into account Japan's calculus with regard to nuclear weapon development. If Japan decided to go nuclear, its international reputation as a principled advocate for non-proliferation would erode. Many observers say this would rule out Japan's ambition of eventually holding a seat on the United Nations Security Council. Japan, of course, would bear the brunt of these consequences, but it could be harmful to U.S. interests as well. Japan is generally viewed overwhelmingly positively by the international community, and its support for U.S.-led international issues can lend credibility and legitimacy to efforts such as democracy promotion, peacekeeping missions, environmental cooperation, and multilateral defense exercises, to name a few. Japan's development of its own nuclear arsenal could also have damaging impact on U.S. nonproliferation policy. It would be more difficult for the United States to convince non-nuclear weapon states to keep their non-nuclear status or to persuade countries such as North Korea to give up their weapons programs. The damage to the NPT as a guarantor of nuclear power for peaceful use and the IAEA as an inspection regime could be irreparable if Japan were to leave or violate the treaty. If a close ally under its nuclear umbrella chose to acquire the bomb, perhaps other countries enjoying a strong bilateral relationship with the United States would be less inhibited in pursuing their own option. It could also undermine confidence in U.S. security guarantees more generally.

Japan, traditionally one of the most prominent advocates of the international non-proliferation regime, has consistently pledged to forswear nuclear weapons. Nevertheless, evolving circumstances in Northeast Asia, particularly North Korea's nuclear test in October 2006 and China's ongoing military modernization drive, have raised new questions about Japan's vulnerability to potential adversaries and, therefore, the appeal of developing an independent nuclear deterrent. The previous taboo within the Japanese political community of discussing a nuclear weapons capability appears to have been broken, as several officials and opinion leaders have urged an open debate on the topic. Despite these factors, a strong consensus--both in Japan and among Japan watchers--remains that Japan will not pursue the nuclear option in the short-to-medium term. This paper examines the prospects for Japan pursuing a nuclear weapons capability by assessing the existing technical infrastructure of its extensive civilian nuclear energy program. It explores the range of challenges that Japan would have to overcome to transform its current program into a military program. Presently, Japan appears to lack several of the prerequisites for a full-scale nuclear weapons deterrent: expertise on bomb design, reliable delivery vehicles, an intelligence program to protect and conceal assets, and sites for nuclear testing. In addition, a range of legal and political restraints on Japan's development of nuclear weapons, including averse public and elite opinion, restrictive domestic laws and practices, and the negative diplomatic consequences of abandoning its traditional approach is analyzed. Any reconsideration and/or shift of Japan's policy of nuclear abstention would have significant implications for U.S. policy in East Asia. In this report, an examination of the factors driving Japan's decision-making--most prominently, the strength of the U.S. security guarantee--analyzes how the nuclear debate in Japan affects U.S. security interests in the region. Globally, Japan's withdrawal from the Nuclear Non-Proliferation Treaty (NPT) would damage the world's most durable international non-proliferation regime. Regionally, Japan "going nuclear" could set off an arms race with China, South Korea, and Taiwan. India and/or Pakistan may then feel compelled to further expand or modernize their own nuclear weapons capabilities. Bilaterally, assuming that Japan made the decision without U.S. support, the move could indicate a lack of trust in the U.S. commitment to defend Japan. An erosion in the U.S.-Japan alliance could upset the geopolitical balance in East Asia, a shift that could strengthen China's position as an emerging hegemonic power. All of these ramifications would likely be deeply destabilizing for the security of the Asia Pacific region and beyond. This report will be updated as circumstances warrant.

The Congressional Review Act ("CRA" or the act) establishes a statutory procedure by which Congress can disapprove a regulation issued as a final rule by a federal agency. Disapproval under this procedure requires the enactment into law of a joint resolution, the text of which is specified by section 802(a) of the act (a "disapproval resolution"). In order to fall under the provisions of the act, this disapproval resolution must have the specified text, and also must be submitted in each chamber within a specified time period after the rule itself is transmitted to Congress. For a joint resolution that meets these requirements, the act makes available, for a specified period after the rule is transmitted and published in the Federal Register , an expedited procedure for its consideration in the Senate. This statutory procedure expedites action by making consideration of the disapproval resolution privileged, limiting debate, and prohibiting amendment. (Except in relation to final action to clear the measure for presentation to the President, the CRA presumes that the House will act on a disapproval resolution under its generally applicable rules.) If a disapproval resolution under the CRA is enacted into law, the disapproved rule becomes of no force and effect; even if it has already taken effect, the CRA specifies that it is to be treated as though it had never taken effect. In addition, if a rule is disapproved under the CRA, the issuing agency may not reissue the same or a substantially similar rule without subsequent statutory authorization from Congress. Under most circumstances, congressional disapproval under the CRA is difficult because the President is likely to veto any disapproval of a rule issued by his own administration, and in that case the disapproval can become law only if both houses can override the veto. This obstacle, however, may be mitigated in cases in which the disapproval resolution is presented, not to the President under whom the rule was issued, but to his successor, perhaps especially one of a different political party. The CRA potentially facilitates action in such situations by explicitly establishing procedures for a new Congress to disapprove rules issued near the end of the preceding Congress. This report briefly describes the CRA provisions for disapproval of rules issued in a preceding Congress and considers their implications for congressional action at the beginning of a new presidential administration. In particular, however, it considers to what extent, and by what means, it may be feasible for Congress to act, under these circumstances, to disapprove potentially large numbers of rules. The CRA makes such action more difficult by requiring that each resolution under the act may provide for the disapproval only of a single rule. This report discusses some procedural means by which this difficulty might be addressed. To be eligible for action under the CRA, a disapproval resolution must be submitted within 60 days after Congress receives the rule in question, not counting days on which either house is in a recess for more than three days within a session (sometimes called the "initiation period"). The Senate may use the expedited procedure provided by the CRA to consider a disapproval resolution at any time during the 60 days on which the Senate actually meets in session following the receipt of the rule (or following its publication in the Federal Register , if so published after the rule is received). Except for this "action period" in the Senate, the CRA places no time limit on congressional action pursuant to the act. If a resolution is submitted during the required period, it could be enacted at any time within the same Congress, and would still have the effects specified by the act. If Senate consideration occurs when the expedited procedure is no longer available, however, the disapproval could be filibustered or amended in that chamber. If amended, it would no longer have the text required by the act, and so would not automatically have the additional effects specified by the act. If a rule is received near the end of a Congress, Congress may adjourn sine die before the periods for initiation of the disapproval and for expedited Senate action are concluded. Under these conditions, opponents of the rule may find it impracticable to submit a disapproval resolution and secure action on it under the CRA during the abbreviated time remaining. The following Congress also might find use of the CRA to disapprove the rule unfeasible. Any previously submitted disapproval resolution (like every other legislative measure) would have died with the expiration of the previous Congress. The language of the CRA could be read as permitting the periods for submitting a disapproval resolution and for expedited Senate action thereon to extend into a new Congress, but even if this interpretation is accepted, the time remaining for action in the new Congress might also be too short to make feasible the use of the act to disapprove the rule. The CRA provides for these situations by establishing that, for any rule transmitted near the end of a session, statutory periods for submitting disapproval resolutions and for Senate action thereon begin anew in the following session. This provision applies to any rule transmitted on or after either the 60 th day of session in the Senate, or the 60 th legislative day in the House, before the sine die adjournment of a session. For any rule transmitted during this "carryover period" in either chamber, the act makes available, in the following session, a new period of 60 days (not counting recesses) for submitting disapproval resolutions in each chamber, and a new period of 60 days of session for Senate action on the resolution. These new periods begin, for each chamber, on the 15 th day of session in that chamber after the new session convenes. At the start of new Presidential and congressional terms, especially during transitions in party control when the incoming Congress and President are of a party different from that of the outgoing President, the likelihood may be especially great for congressional interest in disapproving rules that were issued during the "carryover period" in the final session of the previous Congress. Once the 110 th Congress reached its final sine die adjournment, it became possible to ascertain that rules transmitted after May 15, 2008 (the 60 th legislative day before the sine die adjournment of the House), will be subject to disapproval under the CRA in the early months of the 111 th Congress. Many rules published by the Bush Administration after that date have been spoken of as potential candidates for such action. The possibility of congressional action to disapprove a potentially large number of these rules raises the prospect that consideration of the respective disapproval resolutions could occupy a large portion of the early agenda of Congress. The expedited procedure established for the Senate by the CRA permits the Senate to take up a disapproval resolution by a non-debatable motion, limits debate on the disapproval resolution itself to 10 hours, and allows a simple majority to reduce this time by a non-debatable motion. Even if this motion is persistently applied, nevertheless, significant time in the consideration of a series of disapproval resolutions might be consumed, not only in debate, but also by roll call votes (on such questions as proceeding to consider the measure and reducing the time for debate, as well as on adoption of the resolution). In the House, similarly, although the time for consideration of any measure always either is limited, or can be limited by majority vote (for example, by adoption of a special rule), significant time might also be consumed not only in debate, but also in roll call votes (such as on ordering the previous question on each special rule and adoption of each special rule itself, as well as on adoption of each disapproval resolution). Although these conditions would not normally present a severe obstacle to consideration of any single disapproval resolution, they might collectively render impracticable the consideration of any significant number of them. One suggested means of overcoming these difficulties has been to consolidate, or "bundle," a group of disapprovals into a single joint resolution (or bill) that could be considered and disposed of by each house, as a unit, in a single proceeding. Consolidated consideration and voting on a single measure could readily enable either chamber to address an entire list of rules in substantially less time than might be consumed by a series of separate resolutions disapproving the same rules. A related approach might be to include provisions disapproving regulations in a measure with the principal purpose of addressing other issues, such as a bill reauthorizing activities of the agency issuing the regulations. This approach might be used with particular facility in the Senate, where no general rule requires amendments to address the same subject as the underlying legislation. For example, a provision disapproving a regulation might be inserted in a bill carrying appropriations for the implementing agency, if the chamber in which the measure was being considered was willing to waive its rule against including provisions changing permanent law in an appropriations bill ("legislation in an appropriations bill"). Finally, the implementation of a regulation could be forestalled by including in a bill carrying appropriations for the implementing agency a prohibition against the expenditure of any funds in the bill for the purpose, known as a limitation, as long as the provision did not prescribe new duties or authorities for the agency. In general, however, a limitation is treated as a legislative provision unless its effect is limited to the funds in the bill. Because this type of action would not disapprove or repeal the regulation, preventing its implementation by this means would require a similar limitation to be included again in each subsequent bill appropriating funds for the agency. Enactment of a measure disapproving a regulation in any of these forms could undoubtedly prevent the regulation from taking effect (or remaining in effect), inasmuch as Congress, in general, always retains the ability to override regulations by action under its general legislative powers. The text prescribed by section 802(a) of the act for a disapproval resolution includes a directive that "such rule shall have no force or effect." If each provision disapproving a regulation that was included in a measure followed this prescribed text, the quoted phrase would no doubt suffice to vitiate the effectiveness of the respective rule. Section 802(a) of the CRA, however, specifies that, for purposes of its congressional disapproval procedure: the term 'joint resolution' means only a joint resolution introduced in the period beginning on the date when [Congress receives the rule, as described earlier] and ending 60 days thereafter (excluding days either House of Congress is adjourned for more than 3 days during a session of Congress), the matter after the resolving clause of which is as follows: 'That Congress disapproves the rule submitted by the _____ relating to _____, and such rule shall have no force or effect.' (The blank spaces being appropriately filled in). This provision sets three conditions that a measure must meet to be covered by the act: it must take the form of a joint resolution, it must be submitted within the required time period, and it must have the specified text. Any broader measure that included provisions disapproving regulations, including a consolidated measure consisting solely of such provisions, would not meet the third part of this requirement even if it was a joint resolution and was submitted during the required period. Even if each section of the measure conformed to the text prescribed by section 802(a), the text of the measure as a whole would fail to match that required for a disapproval resolution. Accordingly, the measure would presumably be held not to qualify as a "joint resolution" described by section 802(a). On these grounds, a consolidated measure consisting of the text of several disapproval resolutions (or any broader measure including such disapproval provisions) would presumably be ineligible for consideration in the Senate under the expedited procedure established by the CRA for a covered disapproval resolution. Enactment of the measure, in addition, presumably would not bring about the statutory consequences the CRA makes automatic for a covered disapproval resolution. If the disapproval provisions in the measure included only the text prescribed by the act, the explicit language of those provisions would presumably suffice to take out of effect the regulations identified therein. Without the inclusion of additional specific language, however, enactment of these provisions presumably would not take the regulations out of effect retroactively, nor would it disable the issuing agency from re-submitting a substantially similar rule, as the CRA prescribes for disapproval resolutions enacted pursuant to its provisions. Although it appears that a joint resolution "bundling" several disapproval provisions into a single measure could not have standing as a disapproval resolution under the CRA, it may be possible to frame such a measure in a form that would allow it to accomplish effects similar to those intended by the CRA with respect to multiple rules. Inasmuch as the consolidated measure would presumably not fall under the CRA in the first place, the drafting of the individual sections would not have to conform to the requirements of section 802(a). Instead, each section could include language specifying that the rule being disapproved not only cease to have force and effect, but also (where appropriate) be treated as if it had never taken effect. Language could also be included directing that the respective issuing agency be precluded from issuing a substantially similar regulation in the absence of subsequent statutory authority. Alternatively, each section disapproving a rule could be couched in terms conforming to section 802(b), and the measure could include additional provisions specifying that each section disapproving a rule was to have force and effect as if enacted as a separate disapproval resolution under the CRA. A provision of this sort would presumably suffice to permit the measure to achieve the desired effects even if it were introduced outside the period prescribed by section 802(b). In addition, given that a consolidated measure would in any case not be subject to consideration under the CRA, its use might also give Congress more latitude in framing its individual provisions. For example, the text required by the CRA permits disapproval under the act only of a single regulation in its entirety. Acting outside the requirements of the CRA, Congress could provide for the disapproval only of the specific parts of a proposed regulation to which it objected, or could include language replacing or otherwise modifying certain provisions of the regulation. Further, inasmuch as consideration of a consolidated joint resolution of disapproval would not be covered by the CRA to begin with, either chamber could consider and adopt amendments to the measure without incurring any additional consequences for violating CRA requirements. As long as the measure still contained provisions specifying that the effects of the disapproval provisions were to include retroactive vitiation and prohibition on proposing a similar rule, its lack of the form required by the CRA would not prevent its enactment from having the same effects as provided by the CRA. A consolidated measure that lacked the form prescribed by the CRA also would not be eligible for consideration under the terms provided by the CRA, including the statutory expedited procedures for Senate consideration and the automatic procedures to facilitate clearance for Presidential action. In contrast to the considerations described in the preceding section, this difficulty could not be overcome by including appropriate provisions in the consolidated measure (unless, of course, the measure were to be converted into the form required by the statute in the first place). Otherwise, the measure could be considered as provided by the statute only if the chambers separately took action to provide that consideration occur under procedures corresponding to those of the statute. The Senate might be able to achieve this result only by unanimous consent; the House might do so by adopting a special rule. In the Senate, a consolidated disapproval measure would presumably suffer from ineligibility for consideration under the statutory expedited procedure, by reason of its failure to satisfy the requirements of section 802(a). Presumably, as a result, the Senate would have to choose between considering either (1) a consolidated measure under its regular procedures or (2) a series of individual disapproval resolutions, each under the expedited procedures of the CRA (or, perhaps, both). Although the Senate could determine to consider a specific consolidated measure under limitations on debate and amendment comparable to those of the CRA, it could do so only by unanimous consent. To the extent that components of the measure might be highly controversial, this consent would likely prove unobtainable. On the other hand, inasmuch as a consolidated measure would, in any case, be ineligible for the expedited procedure of the act, the 60-day period during which the act makes that procedure available would be no constraint on the timing of Senate action thereon. If a consolidated measure were considered under the general rules of the Senate, it would be subject to amendment, including amendments that were non-germane or otherwise inconsistent with the objectives of the CRA. In addition, if the consolidated measure were considered under the general rules, opponents might attempt to prevent action by extended debate on the measure or on a motion to proceed to its consideration, or by other parliamentary means. In that case the Senate might be able to reach a vote on passage only if cloture could be invoked. Under these conditions, action on a consolidated measure might become feasible if its components could be compiled in such a way as to attract sufficient support to permit cloture to be invoked on the package. Composing such a package might require omitting disapproval proposals for certain rules on which Senators might place high importance. Supporters of the package might also have to protect it by securing the rejection of any amendments that would make cloture harder to obtain. Assuming sufficient support to invoke cloture, nevertheless, action on the consolidated measure might permit the Senate to dispose, in a relatively limited time, of a significant number of disapproval proposals. It might then become practicable for the Senate also to disapprove at least a limited number of additional rules by means of separate disapproval resolutions. These resolutions could be stated and submitted in a way that met the requirements of section 802(a), so that each would be eligible for consideration under the statutory expedited procedure, including the non-debatable motion to proceed, the prohibition on amendment, the limit on debate, and the possibility of reducing that time limit by majority vote on a non-debatable motion. Persistent use of this latter motion, in particular, might enable consideration of a significant number of individual resolutions. Careful consideration would no doubt still be required about how many resolutions could feasibly be considered in this way, and which ones might be best worth taking up. In the House, where the CRA prescribes no expedited procedure, the general rules of the chamber might be used in such a way as to facilitate action to disapprove a large number of rules. Two circumstances might make such action easier here than in the Senate. First, the general rules of the House always entail limits on debate and amendment or permit their imposition by a voting majority. Second, inasmuch as the CRA provides no expedited procedure for the House anyway, the House would lose no procedural advantage by considering a consolidated measure that failed to comport with the requirements of section 802(a). One approach might be for the House to consider a consolidated measure that comprised sections each of which disapproved a rule in the terms required by section 802(a)), and that also contained language providing that each disapproval section would have the same effects as if separately enacted under the CRA. Even if the disapproval provisions did not conform to the requirements of section 802(a), it still might be possible to provide that each section had the effect of a CRA disapproval resolution. In its consideration of such a vehicle, the House might preserve the intent of the statutory mechanism by adopting a special rule that prohibited amendment to the text of any section, but permitted amendments that would only strike a section, or that would only add a section reflecting the text required for a disapproval resolution. This way of proceeding would preserve the ability of the House to make individual decisions on which regulations to disapprove. An alternative approach would be for the House to consider a single special rule providing for consideration of a series of separate disapproval resolutions with a strict time limit and a prohibition against amendment for each. The special rule might even provide for a single consolidated period of debate on all the covered disapproval resolutions, although a separate vote on adoption of each resolution would presumably be required, so as to preserve the opportunity for a motion to recommit required by House rules. In this way, the House would still retain the opportunity to reject any individual disapproval resolution. It might still be possible, as well, to provide that additional resolutions meeting the requirements of section 802(a) could be considered if offered from the floor during consideration of the series of resolutions. For individual disapproval resolutions under the CRA, section 802(f) of the CRA provides that if one chamber considers a disapproval resolution when it has already received a companion from the other, then the final vote in the receiving chamber occurs on the companion measure. For this reason, in any case in which both houses, pursuant to the CRA, pass individual resolutions disapproving the same rule, no problem need arise at the stage of bicameral agreement. If either chamber initially acts on a consolidated disapproval resolution, however, difficulties might arise in the other chamber. Even if the other chamber also acts initially on an identical consolidated measure, the statutory mechanism for automatic clearance of a single measure for Presidential action would not be available. In both chambers, however, it is common in such cases to follow passage of its own measure with agreement, often by unanimous consent or other routine means, to the identical measure already received from the other. If the consolidated measures initially adopted in two chambers differ in content, on the other hand, the chamber acting second will normally pass the received measure only after amending it with the text of its own measure. Although this action often also occurs routinely, the subsequent clearance of a final measure for presentation to the President in these cases requires action to resolve differences between the two versions, either by conference or through an exchange of amendments. This action would have to take place under the general rules of both houses, and could result in delay or deadlock. A third possibility is that the chamber acting second might take up, from the outset, the consolidated measure received from the other. In this case, however, insufficient support may exist in the second chamber to adopt the package in the same form as passed the first. The receiving chamber may prove able to adopt the measure received only with amendments, in which case action to resolve differences between the two versions would become necessary. These difficulties might be most notable for the Senate in dealing with a consolidated measure received from the House, for any successful disposition of the House measure might require marshalling the support of a supermajority to invoke cloture. For this reason, if action through a consolidated measure is contemplated, House consideration of a measure originating in the Senate might prove more practicable. The House might more readily be able at least to pass a version of the Senate measure that could become the basis for a resolution of differences. Additional complications could arise if certain regulations are disapproved by one chamber in a consolidated measure and by the other in separate resolutions under the CRA. Such situations might most readily be resolved through action by the chamber that adopted the consolidated measure. This chamber might be able to provide that, upon passage of its own measure, if any disapproval resolution already received from the other corresponds to a provision of the consolidated measure, it be deemed to have passed the received resolution, or that it be in order immediately to consider and pass that resolution without debate. The same chamber might also provide that any disapproval resolution subsequently received, and corresponding to a provision of the consolidated measure, be deemed passed by the receiving chamber when received. If both chambers entered such an order, it could ensure the completion of congressional action on any disapproval resolution adopted by one chamber for a rule disapproved by the other in a consolidated measure. It might then be possible to resolve the status of any disapprovals included in both consolidated measures through ordinary processes of resolving differences between the two measures. In the House, it might be possible to provide for these proceedings through the terms of a special rule for considering the consolidated measure, but in the Senate unanimous consent would presumably be required. In addition, if the House transmitted numerous separate disapproval resolutions to the Senate, the Senate might have more difficulty than the House in limiting the time required for action sufficiently to enable it to act on all the measures received. For these reasons, action by the House on individual disapproval resolutions of the Senate might be found easier than action by the Senate on disapproval resolutions of the House. It might accordingly become important for advocates of disapprovals to consider to what extent initial action by the Senate on individual disapproval resolutions under the expedited procedure would carry the greatest promise of success. In principle, a chamber that initially acted to disapprove rules in a consolidated measure might also facilitate action in the other chamber by directing that each component of the consolidated measure be engrossed as a separate joint resolution of disapproval before being transmitted to the other. If each of these separately engrossed joint resolutions had the text required by section 802(a) and originated during the period required by that section, it might be possible for it to be regarded as satisfying the requirements for a disapproval resolution under the CRA, so that it could be eligible for the expedited procedure in the Senate, automatic clearance for presentation to the President, and the additional effects of enactment prescribed by the statute. In either chamber, however, it appears that separate engrossment of provisions in this way might be feasible only by unanimous consent. In the House, a special rule providing for separate engrossment would apparently be out of order as precluding a proper motion to recommit with respect to each of the separately engrossed measures. The same objection would evidently apply against another form of special rule that might have been taken as a means to an equivalent result, a "self-executing" rule providing that its own adoption would also adopt an entire group of separate disapproval resolutions.

The Congressional Review Act (CRA) establishes expedited procedures for Congress to disapprove regulations issued by Federal agencies. Disapproval under these procedures requires enactment of a joint resolution that has a specified text and is submitted within 60 days (excluding recesses) after Congress receives the regulation. For these disapproval resolutions, the act provides expedited procedures for Senate consideration and to clear the measure for Presidential action. If the resolution becomes law, the rule not only becomes of no force and effect, but is treated as if it had never taken effect, and the issuing agency may issue no "substantially similar" rule without subsequent authorization by law. If vetoed, a disapproval resolution can become law only if Congress overrides the veto. For regulations submitted 60 or fewer session days before a sine die adjournment, however, the CRA provides a further 60-day period for submitting disapproval regulations, starting on the 15th session day of the next session. Interest has arisen in using the CRA in this way in the 111th Congress to disapprove regulations issued late in the Bush Administration. Using the CRA in this way for numerous regulations, however, could consume large amounts of floor time. The question has accordingly been raised whether the CRA permits multiple disapproval resolutions to be "bundled," or consolidated into a single measure. Congress could always overturn regulations through a consolidated measure under its general legislative powers. Even if such a consolidated measure was submitted during the required time period, however, it would not have the text required by the CRA, which permits the statement only of a single disapproval. If enacted, as a result, it would not have the special effects for which the act provides. A consolidated measure, nevertheless, could include provisions specifying that the component disapproval provisions have the same effects as if they were separate disapproval resolutions enacted pursuant to the CRA. Any consolidated measure also would not be eligible for the expedited procedures provided in the CRA. In the Senate, as a result, its approval might be possible only by constructing it to include provisions that could attract sufficient support to invoke cloture. If the Senate could dispose of some disapprovals in this way, moreover, it might be able to deal with others through individual disapproval resolutions under the expedited procedure, especially by persistent use of its provisions for limiting debate by majority vote. In the House, a special rule could limit debate and amendment of a consolidated measure. Alternatively, a single special rule might provide for limited and consolidated debate on a group of individual disapproval resolutions. House rules protecting the motion to recommit would require final action on each resolution to be separate. If each chamber agreed to some disapprovals in a consolidated measure and others in separate resolutions under the CRA, the two chambers would have to resolve differences between the consolidated measures under their general rules. Either chamber might also provide for routine passage, when received, of any separate disapproval resolution of the other that corresponded to a provision in its own consolidated measure. The House might provide for this treatment of Senate disapproval resolutions, through a provision in its special rule for considering its consolidated measure, more easily than could the Senate for those of the House. No update of this report is planned.

Public concern and confusion regarding the proper respect shown to the United States flag has given rise to many questions on the law relating to the flag's handling, display, and use. Both the state governments and the federal government have enacted legislation on this subject. On the national level the Federal Flag Code provides uniform guidelines for the display of and respect shown to the flag. In addition to the Code, Congress has by statute designated the national anthem and set out the proper conduct during its presentation. The Code is designed "for the use of such civilian groups or organizations as may not be required to conform with regulations promulgated by one or more executive departments" of the federal government. Thus, the Flag Code does not prescribe any penalties for non-compliance nor does it include enforcement provisions; rather the Code functions simply as a guide to be voluntarily followed by civilians and civilian groups. The Federal Flag Code does not purport to cover all possible situations. Although the Code empowers the President of the United States to alter, modify, repeal, or prescribe additional rules regarding the flag, no federal agency has the authority to issue "official" rulings legally binding on civilians or civilian groups. Consequently, different interpretations of various provisions of the Code may continue to be made. The Flag Code itself, however, suggests a general rule by which practices involving the flag may be fairly tested: "No disrespect should be shown to the flag of the United States of America." Therefore, actions not specifically included in the Code may be deemed acceptable as long as proper respect is shown. In addition to the Flag Code, a separate provision contained in the Federal Criminal Code established criminal penalties for certain treatment of the flag. Prior to 1989, this provision provided criminal penalties for certain acts of desecration to the flag. In response to the Supreme Court decision in Texas v. Johnson (which held that anti-desecration statutes are unconstitutional if aimed at suppressing one type of expression), Congress enacted the Flag Protection Act of 1989 to provide criminal penalties for certain acts which violate the physical integrity of the flag. This law imposed a fine and/or up to one year in prison for knowingly mutilating, defacing, physically defiling, maintaining on the floor, or trampling upon any flag of the United States. In 1990, however, the Supreme Court held that the Flag Protection Act was unconstitutional as applied to a burning of the flag in a public protest. On June 22, 1942, President Franklin D. Roosevelt approved House Joint Resolution 303 codifying the existing customs and rules governing the display and use of the flag of the United States by civilians. Amendments were approved on December 22 nd of that year. The law included provisions of the code adopted by the National Flag Conference, held in Washington, D.C. on June 14, 1923, with certain amendments and additions. The Code was reenacted, with minor amendments, as part of the Bicentennial celebration. In the 105 th Congress, the Flag Code was removed from title 36 of the United States Code and re-codified as part of title 4. The Pledge of Allegiance to the Flag: "I pledge allegiance to the Flag of the United States of America, and to the Republic for which it stands, one Nation under God, indivisible, with liberty and justice for all.", should be rendered by standing at attention facing the flag with the right hand over the heart. When not in uniform men should remove any non-religious headdress with their right hand and hold it at the left shoulder, the hand being over the heart. Persons in uniform should remain silent, face the flag, and render the military salute. The following codification of existing rules and customs pertaining to the display and use of the flag of the United States of America is established for the use of such civilians or civilian groups or organizations as may not be required to conform with regulations promulgated by one or more executive departments of the Government of the United States. The flag of the United States for the purpose of this chapter shall be defined according to Sections 1 and 2 of Title 4 and Executive Order 10834 issued pursuant thereto. (a) It is the universal custom to display the flag only from sunrise to sunset on buildings and on stationary flagstaffs in the open. However, when a patriotic effect is desired, the flag may be displayed 24 hours a day if properly illuminated during the hours of darkness. (b) The flag should be hoisted briskly and lowered ceremoniously. (c) The flag should not be displayed on days when the weather is inclement, except when an all-weather flag is displayed. (d) The flag should be displayed on all days, especially on New Year's Day, January 1; Inauguration Day, January 20; Martin Luther King Jr.'s birthday, the third Monday in January; Lincoln's Birthday, February 12; Washington's Birthday, third Monday in February; Easter Sunday (variable); Mother's Day, second Sunday in May; Armed Forces Day, third Saturday in May; Memorial Day (half-staff until noon), the last Monday in May; Flag Day, June 14; Independence Day, July 4; National Korean War Veterans Armistice Day, July 27; Labor Day, first Monday in September; Constitution Day, September 17; Columbus Day, second Monday in October; Navy Day, October 27; Veterans Day, November 11; Thanksgiving Day, fourth Thursday in November; Christmas Day, December 25; and such other days as may be proclaimed by the President of the United States; the birthdays of States (date of admission); and on State holidays. (e) The flag should be displayed daily on or near the main administration building of every public institution. (f) The flag should be displayed in or near every polling place on election days. (g) The flag should be displayed during school days in or near every schoolhouse. The flag, when carried in a procession with another flag or flags, should be either on the marching right; that is, the flag's own right, or, if there is a line of other flags, in front of the center of that line. (a) The flag should not be displayed on a float in a parade except from a staff, or as provided in subsection (i) of this section. (b) The flag should not be draped over the hood, top, sides, or back of a vehicle or of a railroad train or a boat. When the flag is displayed on a motorcar, the staff should be fixed firmly to the chassis or clamped to the right fender. (c) No other flag or pennant should be placed above or, if on the same level, to the right of the flag of the United States of America, except during church services conducted by naval chaplains at sea, when the church pennant may be flown above the flag during church services for the personnel of the Navy. No person shall display the flag of the United Nations or any other national or international flag equal, above, or in a position of superior prominence or honor to or in place of the flag of the United States or any Territory or possession thereof: Provided, That nothing in this section shall make unlawful the continuance of the practice heretofore followed of displaying the flag of the United Nations in a position of superior prominence or honor, and other national flags in positions of equal prominence or honor, with that of the flag of the United States at the headquarters of the United Nations. (d) The flag of the United States of America, when it is displayed with another flag against a wall from crossed staffs, should be on the right, the flag's own right, and its staff should be in front of the staff of the other flag. (e) The flag of the United States of America should be at the center and at the highest point of the group when a number of flags of States or localities or pennants of societies are grouped and displayed from staffs. (f) When flags of States, cities, or localities, or pennants of societies are flown on the same halyard with the flag of the United States, the latter should always be at the peak. When the flags are flown from adjacent staffs, the flag of the United States should be hoisted first and lowered last. No such flag or pennant may be placed above the flag of the United States or to the United States flag's right. (g) When flags of two or more nations are displayed, they are to be flown from separate staffs of the same height. The flags should be of approximately equal size. International usage forbids the display of the flag of one nation above that of another nation in time of peace. (h) When the flag of the United States is displayed from a staff projecting horizontally or at an angle from the window sill, balcony, or front of a building, the union of the flag should be placed at the peak of the staff unless the flag is at half-staff. When the flag is suspended over a sidewalk from a rope extending from a house to a pole at the edge of the sidewalk, the flag should be hoisted out, union first, from the building. (i) When displayed either horizontally or vertically against a wall, the union should be uppermost and to the flag's own right, that is, to the observer's left. When displayed in a window, the flag should be displayed in the same way, with the union or blue field to the left of the observer in the street. (j) When the flag is displayed over the middle of the street, it should be suspended vertically with the union to the north in an east and west street or to the east in a north and south street. (k) When used on a speaker's platform, the flag, if displayed flat, should be displayed above and behind the speaker. When displayed from a staff in a church or public auditorium, the flag of the United States of America should hold the position of superior prominence, in advance of the audience, and in the position of honor at the clergyman's or speaker's right as he faces the audience. Any other flag so displayed should be placed on the left of the clergyman or speaker or to the right of the audience. (l) The flag should form a distinctive feature of the ceremony of unveiling a statue or monument, but it should never be used as the covering for the statue or monument. (m) The flag, when flown at half-staff, should be first hoisted to the peak for an instant and then lowered to the half-staff position. The flag should be again raised to the peak before it is lowered for the day. On Memorial Day, the flag should be displayed at half-staff until noon only, then raised to the top of the staff. By order of the President, the flag shall be flown at half-staff upon the death of principal figures of the United States Government and the Governor of a state, territory, or possession, as a mark of respect to their memory. In the event of the death of other officials or foreign dignitaries, the flag is to be displayed at half-staff according to Presidential instructions or orders, or in accordance with recognized customs or practices not inconsistent with law. In the event of the death of a present or former official of the government of any state, territory, or possession of the United States or the death of a member of the Armed Forces from any State, territory, or possession of the United States, the Governor of that State, territory, or possession may proclaim that the National flag shall be flown at half-staff, and the same authority is provided to the Mayor of the District of Columbia with respect to present or former officials of the District of Columbia and members of the Armed Forces from the District of Columbia. When the Governor of a State, territory, or possession, or the Mayor of the District of Columbia, issues a proclamation under the preceding sentence that the National flag be flown at half-staff in that State, territory, or possession or in the District of Columbia because of the death of a member of the Armed Forces, the National flag flown at any Federal installation or facility in the area covered by that proclamation shall be flown at half-staff consistent with that proclamation. The flag shall be flown at half-staff thirty days from the death of the President or a former President; ten days from the day of death of the Vice-President, the Chief Justice or a retired Chief Justice of the United States or the Speaker of the House of Representatives; from the day of death until interment of an Associate Justice of the Supreme Court, a Secretary of an executive or military department, a former Vice-President, or the Governor of a state, territory, or possession; and on the day of death and the following day for a Member of Congress. The flag shall be flown at half-staff on Peace Officers Memorial Day, unless that day is also Armed Forces Day. As used in this subsection-- (1) The term "half-staff" means the position of the flag when it is one-half the distance between the top and bottom of the staff; (2) the term "executive or military department" means any agency listed under Sections 101 and 102 of Title 5, United States Code; and (3) the term "Member of Congress" means a Senator, a Representative, a Delegate, or the Resident Commissioner from Puerto Rico. (n) When the flag is used to cover a casket, it should be so placed that the union is at the head and over the left shoulder. The flag should not be lowered into the grave or allowed to touch the ground. (o) When the flag is suspended across a corridor or lobby in a building with only one main entrance, it should be suspended vertically with the union of the flag to the observer's left upon entering. If the building has more than one main entrance, the flag should be suspended vertically near the center of the corridor or lobby with the union to the north, when entrances are to the east and west or to the east when entrances are to the north and south. If there are entrances in more than two directions, the union should be to the east. No disrespect should be shown to the flag of the United States of America; the flag should not be dipped to any person or thing. Regimental colors, state flags, and organization or institutional flags are to be dipped as a mark of honor. (a) The flag should never be displayed with union down, except as a signal of dire distress in instances of extreme danger to life or property. (b) The flag should never touch anything beneath it, such as the ground, the floor, water, or merchandise. (c) The flag should never be carried flat or horizontally, but always aloft and free. (d) The flag should never be used as wearing apparel, bedding, or drapery. It should never be festooned, drawn back, nor up, in folds, but always allowed to fall free. Bunting of blue, white, and red, always arranged with the blue above, the white in the middle, and the red below, should be used for covering a speaker's desk, draping in front of the platform, and for a decoration in general. (e) The flag should never be fastened, displayed, used, or stored in such a manner as to permit it to be easily torn, soiled, or damaged in any way. (f) The flag should never be used as a covering for a ceiling. (g) The flag should never have placed upon it, nor on any part of it, nor attached to it any mark, insignia, letter, word, figure, design, picture, or drawing of any nature. (h) The flag should never be used as a receptacle for receiving, holding, carrying, or delivering anything. (i) The flag should never be used for advertising purposes in any manner whatsoever. It should not be embroidered on such articles as cushions or handkerchiefs and the like, printed or otherwise impressed on paper napkins or boxes or anything that is designed for temporary use and discard. Advertising signs should not be fastened to a staff or halyard from which the flag is flown. (j) No part of the flag should ever be used as a costume or athletic uniform. However, a flag patch may be affixed to the uniform of military personnel, firemen, policemen, and members of patriotic organizations. The flag represents a living country and is itself considered a living thing. Therefore, the lapel flag pin being a replica, should be worn on the left lapel near the heart. (k) The flag, when it is in such condition that it is no longer a fitting emblem for display, should be destroyed in a dignified way, preferably by burning. During the ceremony of hoisting or lowering the flag or when the flag is passing in a parade or in review, all persons present in uniform should render the military salute. Members of the Armed Forces and veterans who are present but not in uniform may render the military salute. All other persons present should face the flag and stand at attention with the right hand over the heart, or if applicable, remove their headdress with their right hand and hold it at the left shoulder, the hand being over the heart. Citizens of other countries present should stand at attention. All such conduct toward the flag in a moving column should be rendered at the moment the flag passes. Any rule or custom pertaining to the display of the flag of the United States of America, set forth herein, may be altered, modified, or repealed, or additional rules with respect thereto may be prescribed, by the Commander-in-Chief of the Armed Forces of the United States, whenever he deems it to be appropriate or desirable; and any such alteration or additional rule shall be set forth in a proclamation. (a) Designation.--The composition consisting of the words and music known as the Star-Spangled Banner is the national anthem. (b) Conduct During Playing.--During a rendition of the national anthem-- (1) when the flag is displayed-- (A) individuals in uniform should give the military salute at the first note of the anthem and maintain that position until last note; (B) members of the Armed Forces and veterans who are present but not in uniform may render the military salute in the manner provided for individuals in uniform; and (C) all other persons present should face the flag and stand at attention with their right hand over the heart, and men not in uniform, if applicable, should remove their headdress with their right hand and hold it at the left shoulder, the hand being over the heart; and (2) when the flag is not displayed, all present should face toward the music and act in the same manner they would if the flag were displayed.. The Pledge of Allegiance is set forth in 4 U.S.C. SS 4. In 1954, Congress added to the "Pledge of Allegiance" the phrase "under God" after "nation." Questions about the "Pledge of Allegiance" usually involve practices and requirements of local and state statutes mandating participation in the recitation of the "Pledge" in some manner (e.g., flag salute and pledge, standing quietly, standing at attention) in schools. Provisions involving compulsory participation in "Pledge" activities are usually attacked as violations of the free speech clause of the First Amendment or the free exercise of religion clause. In 1943, the Supreme Court held that a state-required compulsory flag salute-Pledge of Allegiance violated the First Amendment rights of members of the Jehovah's Witnesses religious group. In 2002, a three-judge panel of the Ninth Circuit had held both the 1954 federal statute adding the words "under God" to the Pledge of Allegiance and a California school district policy requiring teachers to lead willing school children in reciting the pledge each school day to violate the Establishment Clause of the First Amendment. A subsequent modification eliminated the holding regarding the federal statute but retained the ruling holding that the California statute coerces children into participating in a religious exercise. The Supreme Court, on Flag Day 2004, reversed the Ninth Circuit, finding that Newdow lacked standing to challenge the school district's policy. The Flag Code is a codification of customs and rules established for the use of certain civilians and civilian groups. No penalty or punishment is specified in the Flag Code for display of the flag of the United States in a manner other than as suggested. Cases which have construed the former 36 U.S.C. SS 175 have concluded that the Flag Code does not proscribe conduct, but is merely declaratory and advisory. There is no absolute prohibition in federal law on flying the flag 24 hours a day. The Flag Code states: It is the universal custom to display the flag only from sunrise to sunset on buildings and on stationary flagstaffs in the open. However, when a patriotic effect is desired, the flag may be displayed 24 hours a day if properly illuminated during hours of darkness. There are eight sites in the United States where the flag is flown day and night under specific legal authority: Fort McHenry National Monument, Baltimore, Maryland; Flag House Square, Baltimore, Maryland; the United States Marine Corps Iwo Jima Memorial, Arlington, Virginia; Lexington, Massachusetts; the White House; the Washington Monument; United States Customs ports of entry; and Valley Forge State Park, Pennsylvania. The reports that accompanied these official acts indicate that the specific authority was intended only as a form of tribute to certain historic sites rather than as exceptions to the general rule of the Code. As a matter of custom, and without specific statutory or official authorization, the flag is flown at night at many other sites, including the United States Capitol. It would seem that display of the flag in a respectful manner with appropriate lighting does not violate the spirit of the Flag Code since the dignity accorded to the flag is preserved by lighting that prevents its being enveloped in darkness. The Flag Code states: The flag should not be displayed on days when the weather is inclement, except when an all weather flag is displayed. The language of this section reflects the now-popular use of flags made of synthetic fabrics that can withstand unfavorable weather conditions. It is not considered disrespectful to fly such a flag even during prolonged periods of inclement weather. However, since the section speaks in terms of "days when the weather is inclement," it apparently does not contemplate that on an otherwise fair day, the flag should be lowered during brief periods of precipitation. The Flag Code sets out detailed instructions on flying the flag at half-staff on Memorial Day and as a mark of respect to the memory of certain recently deceased public officials. This section embodies the substance of Presidential Proclamation No. 3044, entitled "Display of Flag at Half-Staff Upon Death of Certain Officials and Former Officials." The section provides that the President shall order the flag flown at half-staff for stipulated periods "upon the death of principal figures of the United States Government and the Governor of a state, territory, or possession." After the death of other officials or foreign dignitaries, the flag may be flown at half-staff according to presidential instructions or in accordance with recognized custom not inconsistent with law. In addition, the governor of a state, territory, or possession, or the mayor of the District of Columbia, may direct that the national flag be flown at half-staff, in the event of the death of a present or former official of the respective government or in the event of the death of a member of the Armed Forces from that jurisdiction. Presidents also have ordered the flag to be flown at half-staff on the death of leading citizens, not covered by law, as a mark of official tribute to their service to the United States. Martin Luther King, Jr. is among those who have been so honored. Again, the provisions of the Flag Code on flying the flag at half-staff are, like all the Code's provisions, a guide only. They do not apply, as a matter of law, to the display of the flag at half-staff by private individuals and organizations. No federal restrictions or court decisions are known that limit such an individual's lowering his own flag or that make such display alone a form of desecration. The Flag Code is silent as to ornaments (finials) for flagstaffs. We know of no law or regulation which restricts the use of a finial on the staff. The eagle finial is used not only by the President, the Vice-President, and many other federal agencies, but also by many civilian organizations and private citizens. The selection of the type finial used is a matter of preference of the individual or organization. The placing of a fringe on the flag is optional with the person or organization, and no act of Congress or Executive Order either requires or prohibits the practice. Fringe is used on indoor flags only, as fringe on flags used outdoors would deteriorate rapidly. The fringe on a flag is considered an "honorable enrichment only" and its official use by the Army dates from 1895. A 1925 Attorney General's Opinion states: The fringe does not appear to be regarded as an integral part of the flag, and its presence cannot be said to constitute an unauthorized addition to the design prescribed by statute. An external fringe is to be distinguished from letters, words, or emblematic designs printed or superimposed upon the body of the flag itself. Under the law, such additions might be open to objection as unauthorized; but the same is not necessarily true of the fringe. The Flag Code states: The flag, when it is in such condition that it is no longer a fitting emblem for display, should be destroyed in a dignified way, preferably by burning. The act is silent on procedures for burning a flag. It would seem that any procedure which is in good taste and shows no disrespect to the flag would be appropriate. The Flag Protection Act of 1989, struck down albeit on grounds unrelated to this specific point, prohibited inter alia "knowingly" burning of a flag of the United States, but excepted from prohibition "any conduct consisting of disposal of a flag when it has become worn or soiled." The Flag Code sets out rules for position and manner of display of the flag in 4 U.S.C. SS 7. The question as to the propriety of flying the flag of another nation at an equal level with that of the flag of the U.S. is not clear from the face of the statute. Section 7 contains two subsections on point and these provisions appear to be contradictory. Subsection 7(c) states: (c) No other flag or pennant should be placed above or, if on the same level, to the right of the flag of the United States of America, except during church services conducted by naval chaplains at sea, when the church pennant may be flown above the flag during church services for the personnel of the Navy. No person shall display the flag of the United Nations or any other national or international flag equal, above, or in a position of superior prominence or honor to or in place of the flag of the United States or any Territory or possession thereof: Provided, That nothing in this section shall make unlawful the continuance of the practice heretofore followed of displaying the flag of the United Nations in a position of superior prominence or honor, and other national flags in positions of equal prominence or honor, with that of the flag of the United States at the headquarters of the United Nations. Subsection 7(g) states: (g) When flags of two or more nations are displayed, they are to be flown from separate staffs of the same height. The flags should be of approximately equal size. International usage forbids the display of the flag of one nation above that of another nation in time of peace. The wording of SS 7(g) is identical to that of the original Flag Code enacted in 1942. The second sentence of SS 7(c) prohibiting flying international flags equal in height to the flag of the United States was not in the original Flag Code. This provision was added in 1953. The legislative history of this amendment clearly states that is purpose was to "make it an offense against the United States to display the flag of the United Nations or any other national or international flag equal to, above, or in a position of superior prominence or honor to, or in place of, the flag of the United States at any place within the United States or any possession or territory thereof,...." The only exception recognized is at the headquarters of the United Nations. When a statute contains apparently contradictory provisions, the rules of statutory construction first mandate an attempt to interpret the provisions so both can be given effect. If this proves futile, the usual rule is to give effect to the latest in time. The reasoning is that this represents the most recent statement of the will of the legislature. Following this second rule of construction would lead to the conclusion that flying a flag of another nation at the same height as the flag of the United States may not be proper etiquette under the Federal Flag Code, but this creates no right of action in private individuals. When the United States flag is displayed with the flags of states of the union or municipalities and not with the flags of other nations, the federal flag, which represents all states, should be flown above and at the center of the other flags. Where there is only one flag pole, the federal flag should be displayed above state or municipal flags. The Flag Code addresses the impropriety of using the flag as an article of personal adornment, a design on items of temporary use, and item of clothing. The evident purpose of these suggested restraints is to limit the commercial or common usage of the flag and, thus, maintain its dignity. The 1976 amendments to the Code recognized the wearing of a flag patch or pin on the left side (near the heart) of uniforms of military personnel, firemen, policemen, and members of patriotic organizations. The Code also states that the flag should never be used for advertising purposes in any manner whatsoever. While wearing the colors may be in poor taste and offensive to many, it is important to remember that the Flag Code is intended as a guide to be followed on a purely voluntary basis to insure proper respect for the flag. It is, at least, questionable whether statutes placing civil or criminal penalties on the wearing of clothing bearing or resembling a flag could be constitutionally enforced in light of Supreme Court decisions in the area of flag desecration. In the past, the Supreme Court has held that states may restrict use of pictures of the flag on commercial products. There is a federal criminal prohibition on the use of the flag for advertising purposes in the District of Columbia. While commercial speech does not receive the full protection of the First Amendment, the status of these statutes and cases can not be taken for granted in light of Eichman and Johnson . Questions on size and dimensions usually arise in the context of the display of huge flags. The Flag Code is silent on recommendations for proper flag size and dimensions. Regulations governing size and dimensions and other requirements for flags authorized for federal executive agencies can be found in Executive Order No. 10834. These regulations provide that the length of the flag should be 1.9 times the width. The Freedom to Display the American Flag Act of 2005 prohibits a condominium, cooperative, or real estate management association from adopting or enforcing any policy or agreement that would restrict or prevent a member of the association from displaying the flag in accordance with the Federal Flag Code on residential property to which the member has a separate ownership interest. The Secretary of the Department of Veterans' Affairs is required to supply a United States flag to drape the casket of each deceased veteran. The Secretary may not procure any flag for this purpose that is not wholly produced in the United States. The Secretary may only waive this requirement if he determines that the requirement cannot be reasonably met or that compliance with the requirement would not be in the national interest of the United States. In the case of such determination, the Secretary is required to submit to Congress written notice not later than 30 days after the date on which such determination is made. A flag shall be considered to be wholly produced in the United States only if the materials and components of the flag are entirely grown, manufactured, or created in the United States; the processing (including spinning, weaving, dyeing, and finishing) of such materials and components is entirely performed in the United States; and the manufacture and assembling of such materials and components into the flag is entirely performed in the United States.

This report presents, verbatim, the United States "Flag Code" as found in Title 4 of the United States Code and the section of Title 36 which designates the Star-Spangled Banner as the national anthem and provides instructions on how to display the flag during its rendition. The "Flag Code" includes instruction and rules on such topics as the pledge of allegiance, display and use of the flag by civilians, time and occasions for display, position and manner of display, and how to show respect for the flag. The "Code" also grants to the President the authority to modify the rules governing the flag. The report also addresses several of the frequently asked questions concerning the flag. The subject matter of these questions includes the pledge of allegiance and the court decisions concerning it, the nature of the codifications of customs concerning the flag in the "Flag Code," display of the flag 24 hours a day, flying the flag in bad weather, flying the flag at half-staff, ornaments on the flag, destruction of worn flags, display of the U.S. flag with flags of other nations or of states, commercial use of the flag, size and proportion of the flag, restrictions upon display of the flag by real estate associations, and the country of origin of flags used on the caskets of veterans.

In December 2008, the United States and Russia signed a protocol aimed at resolving various emerging trade issues between the two countries in order to continue U.S. livestock and poultry exports to Russia through the end of 2009. By December 2009, however, Russia had escalated these trade issues in a series of actions that threatened to effectively shut out U.S. livestock and poultry exports. These actions, in part, followed on Russia's threats throughout 2008 and 2009 regarding its concerns about antimicrobial use in U.S. meat production. Efforts to resolve these issues were making progress in early 2010. Foreign sales are a critical source of income for the U.S. meat and poultry industries. Russia has become an important, and expanding, market. It purchased more than $1.2 billion in U.S. meat and poultry in 2008, more than double the amount purchased a decade earlier ( Table 1 ). In 2008, Russia was the single largest export market for U.S. poultry products, with exports valued at more than $820 million (about 18% of total U.S. poultry exports). Russia was also among the leading export markets for U.S. pork and beef products, valued at $330 million and nearly $70 million, respectively. Each of these export categories had also experienced strong growth in the Russian market ( Table 1 ). Russia was among the countries to ban U.S. beef imports after the December 2003 discovery of a cow in the United States with bovine spongiform encephalopathy (BSE, or mad cow disease), but it not had been a major purchaser of such products before then. Russia is again accepting U.S. beef and veal, with imports in 2008 nearing pre-2003 levels. Agriculture has been a sensitive part of the economy throughout Russian (and Soviet) history. Its political importance far outweighs its share of the Russian economy (5.2% of Russian GDP in 2009). Agriculture has been severely affected by the transition to a market economy, as much as, or more than, any other economic sector. According to one estimate, agricultural production has declined about 40% in volume since 1991, with much of the decline occurring in livestock production. Russia is not competitive in global markets for red meats and poultry, and its domestic production has not kept pace with consumption as incomes rise. In recent years, imports have accounted for half or more of Russian poultry consumption, even though government policies have attempted to encourage domestic production. On January 30, 2010, for example, the Russian President signed a new Food Security Doctrine outlining the country's agricultural production and policy goals. Among other things it sets minimum self-sufficiency (i.e., domestic source) targets for various commodity groups. For meat and meat products, the document sets a target of at least 85%, although no deadline for meeting this target was established. Russia has been one of the major world importers in recent years of meat and poultry products. Imports have accounted for roughly 30% of pork consumption, and roughly 40% of both poultry and beef/veal. Some analysts conclude that this domestic situation underlies Russian actions that periodically have constrained the country's imports of poultry and meat products. The Russian federal government has been under pressure from regional and local governments and from factions within the Russian parliament to protect agriculture from further erosion and to provide time and resources to permit it to become competitive. One major trade constraint was Russia's imposition, in early 2003, of new import quotas on poultry, and of tariff-rate quotas (TRQs) on beef and pork, affecting not only the United States but other exporting countries. At that time, Russia's poultry quotas threatened what had become an important market for U.S. producers. Although sales of U.S. pork and beef to Russia accounted for a relatively smaller share of total exports, U.S. industry officials contended that the new pork and beef TRQs would effectively block any future U.S. growth. In 2005 the United States and Russia signed an agreement that set quota levels for Russian imports of U.S. poultry, pork, and beef products through 2009. In 2008, under the agreement, the United States had 901,400 MT or 74% of Russia's worldwide quota of 1,211,600 MT for poultry. The U.S. allocation for pork was 49,800 MT or 10% of Russia's 2008 worldwide TRQ (493,500 MT), and for beef was 18,300 MT or 18% of Russia's 2008 global TRQ (445,000 MT; Table 2 ). Quota levels for 2009 were adjusted in a protocol to the 2005 agreement that lowered the 2009 quota for poultry but raised the TRQ for pork. For 2009, the United States had 750,000 MT or 79% of Russia's global poultry quota (952,000 MT); the U.S. allocation for pork was 100,000 MT or 19% of Russia's global pork TRQ (531,900 MT). The beef TRQ was virtually unchanged ( Table 2 ). Russia's import tariff for poultry products under quota is about 25%. Under the beef and pork TRQ, the in-quota tariff is 15%. Russia's out-of quota tariffs on beef and pork imports are prohibitive at 60%-80%, depending on the product. In December 2009, media reports first indicated that Russia has reduced its 2010 global import quotas for pork and poultry below 2009 quota levels. Within these global totals, 2010 quota levels for U.S. pork are more than 40% lower than the previous year, at 57,500 MT in 2010 compared to 100,000 MT in 2009. Quota allocations for U.S. poultry are 600,000 MT in 2010, down from 750,000 MT in 2009. U.S. quota allocations reportedly are to be reduced even further in both 2011 and 2012. Russia's beef import quotas, both global and for the United States, reportedly increased above 2009 levels, from 450,000 MT to 560,000 MT, and from 18,500 MT to 21,700 MT, respectively, for 2010. Russia periodically has imposed sanitary and phytosanitary (SPS) measures that have impeded U.S. meat and poultry imports in recent years. For example, in March 2002, Russia announced a ban on U.S. poultry imports because of the possible presence of avian influenza in the United States. U.S. officials countered that the ban was not scientifically defensible and was discriminatory. Months of negotiations ensued, extending into 2003, when the two sides announced a resolution to the dispute. Nonetheless, U.S. meat and poultry exporters remain wary that Russia could continue to raise safety concerns as a reason to impose future import bans. Exporter concerns were reawakened in June 2008 when Russia announced it would block U.S. poultry imports by prohibiting the use of chlorine in antimicrobial washes to kill surface pathogens on poultry, a common U.S. industry practice (discussed in the section " Poultry Products "). The Office of the U.S. Trade Representative (USTR) reported in March 2010: Russia's SPS standards are extremely prescriptive with detailed requirements for facilities and production processes. Russia has attempted to impose these requirements on trading partners by accepting imports only from facilities that are certified as complying with Russian requirements. Since these requirements are not always based on science or consistent with international recommendations or guidelines, this has created difficulties for U.S. exporters of a range of products. With regard to livestock products, the report noted, "Russia requests certification that the United States is free from various livestock diseases even when there is no risk of transmission from the product in question." In 2003, when Russia announced the imposition of quotas and TRQs for meat and poultry, the United States and other meat-exporting WTO member countries expressed stiff opposition, claiming that the restrictions would slow the process of Russia's accession to the World Trade Organization (WTO). The United States and others specifically argued that Russia was violating the "standstill" principle, under which countries applying for WTO membership are to refrain from imposing new trade restrictions during the accession process. Russia countered that it was imposing the restrictions to protect its domestic meat producers from import surges, a right that is enjoyed by WTO members. As noted earlier, in June 2005 the United States and Russia signed an agreement on livestock and poultry trade, which set the U.S. share of Russia's worldwide quota for poultry, and its share of the TRQs for pork and beef, through the end of calendar 2009 ( Table 2 ). The "2005 U.S.-Russia Agreement on Trade in Certain Types of Poultry, Beef, and Pork" also set rules for the allocation of veterinary permits and import licenses necessary to ship products to Russia, and established mechanisms for resolving trade-related problems, including sanitary issues. In November 2006, the United States and Russia reached a bilateral market access agreement associated with Russia's request to join the WTO. The agreement provided for phased reductions in Russia's tariffs for a range of U.S. export sectors, including agricultural products. These commitments would come into force upon Russia's accession to the WTO. The agreement allowed the United States to address a broad number of sensitive issues in its economic relations with Russia, although it did not accomplish all of the original U.S. objectives. With regard to agriculture, the U.S.-Russia 2006 bilateral market access agreement, or side letters, committed Russia to: permitting the immediate resumption of imports of de-boned beef, bone-in beef, and beef by-products from cattle younger than 30 months and allowing imports of beef and beef by-products from cattle of all ages, once the United States received a positive evaluation as a beef producer from the World Organization for Animal Health; accepting safety certifications by the U.S. Department of Agriculture's Food Safety Inspection Service (FSIS) of pork and poultry slaughter, processing, and cold storage facilities to export products to Russia, along with procedures to expedite the certification process; accepting U.S. freezing treatments as an adequate measure to prevent trichinae infestation in pork to be sold for retail sale as well as for further processing (Russia previously had only allowed frozen pork to be imported for further processing); and continuing to apply until 2009 the provisions of the 2005 U.S.-Russia bilateral agreement on meat that established tariff-rate quotas, including in- and over-quota tariff rates, and to conduct bilateral negotiations on the treatment of meat imports after the agreement expires. In December 2008, the U.S. Trade Representative (USTR) announced that the United States and Russia had signed a protocol to the 2005 agreement that was aimed at continuing U.S. poultry, pork, and beef exports there through the end of 2009. The protocol adjusted previously set 2009 quota levels for poultry and pork, but did not address other issues affecting U.S.-Russia livestock and poultry trade. The protocol to the 2005 agreement followed several months of uncertainty after Russia blocked meat exports from several U.S. meat processing companies, as discussed in the following section. Russian officials also signaled that they might reduce U.S. permits to import poultry and pork under that country's quota system. Russian Prime Minister Putin further indicated that the country might suspend several trade agreements reached during its WTO accession negotiations, including those covering pork TRQs as well as poultry quotas. Putin reportedly said that, under the agreements, Russia had not received anything in return of benefit to the economy, including agriculture. Any suspensions could be reversed once Russia joined the WTO, he added. Despite these agreements, throughout 2008, 2009, and early 2010, a number of issues continued to plague U.S.-Russian livestock and poultry trade relations. For example, according to the USTR report, in October 2008 Russia's official veterinary service announced "that it no longer recognized USDA's authority to inspect and relist [meat and poultry] plants that completed corrective actions." This announcement contradicts a key provision in the 2006 agreements that Russia would accept U.S. safety certifications. By December 2009, Russia had escalated these trade issues in a series of actions that threatened to effectively shut out U.S. livestock and poultry exports to Russia. Information on current requirements for U.S. livestock and poultry exports to Russia is available from USDA. Among the concerns were Russia's delisting of major U.S. livestock and poultry processors that had been eligible for import (and were importing) into Russia, and Russia's implementation of a ban prohibiting the use of chlorine in antimicrobial washes to kill surface pathogens on poultry. As noted, Russia already has further reduced its import quotas and TRQs for U.S. livestock and poultry exports. Russia continued to cite food safety concerns, including but not limited to its findings of antimicrobial residues (legal in the United States) and the use of chlorine rinses on U.S. meat exports. Many U.S. market analysts viewed the delisting of U.S. plants as a precursor to additional actions regarding allowable import quotas for U.S. meat that could further constrain U.S. livestock and poultry exports to Russia. A discussion of these issues specifically as they relate to U.S. pork and poultry products follows. During this time Russia identified several U.S. pork processing companies as ineligible to export products to Russia. Throughout 2008 and 2009, Russia has refused imports of meat products from several European countries and from several U.S. plants--including plants owned by Tyson Foods Inc. and a unit of Smithfield Foods--because trace amounts of tetracycline and oxytetracycline were found in some of the pork tested. By January 2010, nearly 30 U.S. plants had been delisted as ineligible for export to Russia; this was regarded by the U.S. pork industry as a "full market closure." Some further point out that Russia's perceived "zero tolerance" regarding antimicrobial use is the most restrictive among all U.S. trading partners. In addition, for most of 2009, Russia was among other U.S. trading partner countries that initiated H1N1-related import restrictions on U.S. pork or pork products, following initial reports about influenza virus in April 2009. Russia's restrictions covered fresh/frozen poultry meat, pork, and beef from animals raised or slaughtered in most U.S. states, as well as from certain slaughtering facilities. Trade suspensions were limited to uncooked pork and pork products; heat-treated (not less than 80deg Celsius for not less than 30 minutes) meat and poultry products were allowed. Russia eventually lifted its H1N1-related import restrictions on pork products from all countries in mid-October 2009. In early March 2010, the United States and Russia announced they had reached a new agreement intended to reopen the Russian market to U.S. pork and pork products. The agreement follows a series of negotiations leading "to the development of a new veterinary certificate to ensure that pork exports from the United States meet specific Russian microbiological and tetracycline-group antibiotic residue requirements." Under the agreement, U.S. plants that want to export to Russia must apply for approval with USDA's Agricultural Marketing Service (AMS), which, with USDA's Food Safety and Inspection Service (FSIS), has developed an export verification (EV) for pork that is aimed at meeting specific Russian requirements. AMS EV programs first gained widespread attention when such a program was established several years ago to gain re-entry to the lucrative Japanese beef market, after U.S. exporters were blocked due to concerns about BSE (bovine spongiform encephalopathy, or "mad cow disease") in a U.S. cow. By late March 2010, reports in the trade press were that USDA had approved most U.S. plants' EV programs, and that Russia had lifted its ban on most of these suppliers. However, "[b]efore we start exporting, we need written confirmation of these verbal statements.... We're waiting for the process to be completed and everything to be documented," a U.S. Meat Export Federation official was quoted as saying. Starting in late August 2008, Russia announced a ban on poultry shipments from 16 U.S. establishments, effective September 1, 2008. (Three other establishments had been delisted on August 6, bringing the total to 19, the number widely reported in the press.) The bans followed a round of joint U.S.-Russian plant inspections in late July and early August 2008 that uncovered what the Russians claimed were a number of safety problems. Many plants had not corrected problems found in earlier visits, they stated, adding that another 29 plants could also lose their eligibility. Again, in March 2009, Russia temporarily suspended poultry imports from three U.S. processing plants because antibiotic residues were found in poultry from these plants. The Russian Veterinary and Phytosanitary Service (VPSS) claimed that tested products from the delisted plants showed higher levels of antibiotics and arsenic than Russia allows. One of the primary reasons VPSS cited for suspending the first group of U.S. processing plants in 2008 was an inability to visit U.S. poultry farms, although the U.S.-Russia poultry agreement provides for no such visits, according to the USA Poultry and Egg Export Council. The council acknowledged that U.S. commercial producers administer small amounts of antibiotics and trace amounts of arsenic-containing compounds for animal health reasons, but stated that they were within established tolerances. In June 2008, Russia's Chief Medical Officer signed a resolution potentially affecting virtually all U.S. poultry imports by prohibiting the use of chlorine in antimicrobial washes to kill surface pathogens on poultry, a common U.S. industry practice. That rule would set the maximum chlorine level at no higher than the hygienic requirements for drinking water. Initially, the rule was set to be implemented on January 1, 2009. In late July 2008, U.S. and Russian poultry industry leaders reportedly forged a position whereby Russia would not enforce the antimicrobial rule and would extend the expiring poultry quota allocations beyond 2009, but at reduced levels. The ban on chlorine rinses was postponed for one year. However, Russian health and safety officials continued to threaten to enforce the ban on chlorine treatments, referring to such treatments as outdated technologies. Russia's ban went into effect on January 1, 2010, banning poultry imports treated with chlorine washes from all exporting countries, including the United States. As noted above, since pathogen reduction rinses are commonplace in U.S. poultry production, this action was expected to effectively ban all U.S. poultry exports to Russia. Other acceptable alternative practices and technologies, such as treating birds with cold air or acid sprays, would be allowed for import. The United States and Russia have been negotiating the terms of this new restriction. By late March 2010, the trade press was reporting further progress toward a settlement of the dispute. For example, U.S. negotiators reportedly presented their Russian counterparts with a list of 17 different types of safe and suitable anti-microbial treatments, with the hope that the Russians would deem a number of them acceptable alternatives. Another point of discussion was whether Russia would permit a transition period for plants to convert to one of these alternatives. The United States has had a longstanding similar trade dispute with the EU since the EU first banned the use of antimicrobial rinses or pathogen reduction treatments (PRTs) on poultry, effectively shutting out U.S. poultry exports. Members of Congress with important poultry and meat industry constituents have been closely monitoring events and ongoing negotiations between the United States and Russia to resolve these trade disputes. Several have weighed in with their concerns in communications with the Administration. For example, the Chair and the ranking Republican on the Senate Agriculture Committee sent a January 15, 2010, letter to the President urging him "to fully engage all Administration resources to address these agricultural trade issues, especially with respect to U.S. exports of pork, poultry, and beef." Other Members of Congress have proposed alternative measures to address these types of issues. In particular, in response to the most recent developments regarding antibiotic residues and chlorine rinses, Representative Slaughter has recommended that the United States take more proactive steps and consider legislation that she has introduced in H.R. 1549 (Preservation of Antibiotics for Medical Treatment Act of 2009, PAMTA). This bill aims to curtail the use of certain medically significant antibiotics in animal production, similar to legislation enacted in other countries. A similar bill has been introduced in the Senate ( S. 619 ) by Senator Reid (for Senator Kennedy). For more information on H.R. 1549 and S. 619 , see CRS Report R40739, Antibiotic Use in Agriculture: Background and Legislation .

In December 2008, the United States and Russia signed a protocol aimed at resolving various emerging trade issues between the two countries in order to continue U.S. livestock and poultry exports to Russia through the end of 2009. By December 2009, however, Russia had escalated these trade issues in a series of actions that threatened to shut out U.S. livestock and poultry exports. These actions, in part, followed on Russia's statements throughout 2008 and 2009 regarding its concerns about antimicrobial use in U.S. meat production. Russia has continued to cite various food safety concerns, including concerns about antimicrobial residues and the use of chlorine rinses on U.S. meat exports, and identified several U.S. poultry and meat processing companies as ineligible to export meat to Russia. In 2008 and again in 2009, Russia announced that it was banning poultry imports from several U.S. establishments due to safety concerns. In addition, throughout 2008 and 2009, Russia refused imports of pork products from several U.S. plants because trace amounts of antibiotics were found in some of the meat tested. As part of these actions, Russian officials signaled that U.S. permits to import poultry and pork under that country's quota system might be restricted. (Russia also banned pork products for most of 2009 from several countries, including the United States, following reports about the H1N1 influenza virus in April 2009.) In December 2009, Russia announced that it would implement its previously proposed ban on poultry imports treated with chlorine washes from all exporting countries, effective January 1, 2010. This action was expected to effectively ban all U.S. poultry exports to Russia, since pathogen reduction rinses are commonplace in U.S. poultry production. (A similar European Union (EU) prohibition has kept U.S. chicken out of the EU since 1997.) By late March 2010, trade reports were indicating that a potential resolution of the poultry dispute might be close. The delistings, as of late 2009, of virtually all U.S. pork plants that exported to Russia (purported to be mainly due to concerns about findings of trace amounts of antimicrobials on pork) was reportedly resolved earlier in March. Also in December 2009, reports emerged that Russia would reduce its 2010 import quotas for U.S. pork and poultry below 2009 quota levels. Russia's import quotas for U.S. beef, however, would be increased above 2009 levels. Quota allocations for U.S. pork and poultry are expected to be reduced even further in both 2011 and 2012. Many U.S. producers believe that Russia's food safety restrictions, including those regarding antimicrobial use, are not science-based, but are instead intended to protect and promote Russia's own growing domestic pork and poultry production. Some further point out that Russia's perceived "zero tolerance" regarding antimicrobial use is the most restrictive among all U.S. trading partners. For U.S. poultry and meat producers, the economic stakes of Russian import actions are significant. In 2008, Russia was the single largest export market for U.S. poultry products, with exports valued at more than $820 million (about 18% of total U.S. poultry exports). Russia was also among the leading export markets for U.S. pork and beef products, valued at $330 million and nearly $70 million, respectively. All these export products had also experienced strong growth in the Russian market. Members of Congress with important poultry and meat industry constituents have been monitoring events and ongoing negotiations between the United States and Russia to resolve these disputes.

In December 2014, Congress passed the Revitalize American Manufacturing and Innovation Act of 2014 (RAMIA), as Title VII of Division B of the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ). President Obama signed the bill into law on December 16, 2014. RAMIA directs the Secretary of Commerce to establish a Network for Manufacturing Innovation (NMI) program within the Commerce Department's National Institute of Standards and Technology (NIST). The act comes about two years after President Obama first proposed the establishment of a National Network for Manufacturing Innovation in his FY2013 budget. President Obama first proposed the establishment of a National Network for Manufacturing Innovation (NNMI) in his FY2013 budget, requesting $1 billion to support the establishment of up to 15 institutes. Shortly thereafter, he formally introduced the concept in a speech at a manufacturing facility in Virginia on March 9, 2012. No legislation to enact the President's proposal was introduced in the 112 th Congress. In 2013, the President renewed his call for an NNMI in his FY2014 budget request, again seeking $1 billion in mandatory funding. The President's FY2015 budget proposal also sought authority and funding to establish the NNMI. The request was not part of the President's FY2015 base budget request, but rather a part of an adjunct $56 billion Opportunity, Growth, and Security Initiative (OGSI) proposal. The OGSI request included $2.4 billion to establish up to 45 NNMI institutes. In August 2013, bills entitled the Revitalize American Manufacturing and Innovation Act of 2013 were introduced in the House ( H.R. 2996 ) and the Senate ( S. 1468 ) to establish a Network for Manufacturing Innovation. H.R. 2996 passed the House in September 2014. S. 1468 was reported by the Senate Committee on Commerce, Science, and Transportation in August 2014. In December 2014, provisions of H.R. 2996 were incorporated in the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ) as Title VII of Division B, the Revitalize American Manufacturing and Innovation Act of 2014 (RAMIA). P.L. 113-235 was signed into law by President Obama on December 16, 2014. RAMIA includes provisions establishing and providing for the operation of a Network for Manufacturing Innovation. RAMIA, in part, amends the National Institute of Standards and Technology Act (codified at 15 USC 271 et seq.) establishing the NMI program, setting forth its purposes, and authorizing its structure, funding, and operation. The act also establishes a National Program Office to support the NMI program. RAMIA articulates eight purposes of the NMI program: to improve the competitiveness of U.S. manufacturing and to increase the production of goods manufactured predominantly within the United States; to stimulate U.S. leadership in advanced manufacturing research, innovation, and technology; to facilitate the transition of innovative technologies into scalable, cost-effective, and high-performing manufacturing capabilities; to facilitate access by manufacturing enterprises to capital-intensive infrastructure, including high-performance electronics and computing, and the supply chains that enable these technologies; to accelerate the development of an advanced manufacturing workforce; to facilitate peer exchange and the documentation of best practices in addressing advanced manufacturing challenges; to leverage non-federal sources of support to promote a stable and sustainable business model without the need for long-term federal funding; and to create and preserve jobs. The act directs the Secretary of Commerce to establish a Network for Manufacturing Innovation program in the Commerce Department's National Institute of Standards and Technology. The Secretary, acting through NIST, is directed to support the establishment of centers for manufacturing innovation and to establish and support a network of centers for manufacturing innovation. The act defines a "center for manufacturing innovation"--including centers established prior to the act, as well as ones established under the provisions of the act--as one that meets each of the following criteria: has been established to address challenges in advanced manufacturing and to assist manufacturers in retaining or expanding industrial production and jobs in the United States; has a predominant focus on a manufacturing process; novel material; enabling technology; supply chain integration methodology; or another relevant aspect of advanced manufacturing, such as nanotechnology applications, advanced ceramics, photonics and optics, composites, bio-based and advanced materials, flexible hybrid technologies, and tool development for microelectronics; has the potential, as determined by the Secretary of Commerce, to improve the competitiveness of U.S. manufacturing; to accelerate non-federal investment in advanced manufacturing production capacity in the United States; or to enable the commercial application of new technologies or industry-wide manufacturing processes; includes active participation among representatives from multiple industrial entities, research universities, community colleges, and such other entities as the Secretary of Commerce considers appropriate, which may include industry-led consortia; career and technical education schools; federal laboratories; state, local, and tribal governments; businesses; educational institutions; and nonprofit organizations. The act authorizes activities of a center to include research, development, and demonstration projects (including proof-of-concept development and prototyping) to reduce the cost, time, and risk of commercializing new technologies and improvements in existing technologies, processes, products, and research and development (R&D) of materials to solve precompetitive industrial problems with economic or national security implications; development and implementation of education, training, and workforce recruitment courses, materials, and programs; development of innovative methodologies and practices for supply chain integration and introduction of new technologies into supply chains; outreach and engagement with small and medium-sized manufacturing enterprises, including women- and minority-owned manufacturing enterprises, in addition to large manufacturing enterprises; and such other activities as the Secretary of Commerce, in consultation with federal departments and agencies whose missions contribute to or are affected by advanced manufacturing, considers consistent with the purposes specified in the act. The act allows a number of existing manufacturing centers to be classified as a center for manufacturing innovation for participation in the network of centers. President Obama initiated the establishment of several such centers prior to enactment of RAMIA under the existing general statutory authority of several agencies, including the Department of Defense and Department of Energy. In particular, the act incorporates the National Additive Manufacturing Innovation Institute and other manufacturing centers formally recognized as manufacturing innovation centers pursuant to Federal law or executive actions, or under pending interagency review for such recognition as of the date of enactment of the Revitalize American Manufacturing and Innovation Act of 2014. However the act prohibits such centers from receiving any financial assistance authorized under the act's Financial Assistance to Establish and Support Centers for Manufacturing Innovation provisions (described in the next section). The National Additive Manufacturing Innovation Institute (NAMII) is led by the Department of Defense (DOD). In addition, DOD and the Department of Energy (DOE) have established, are in the process of establishing, or have announced plans for several other manufacturing centers since the President's original NNMI proposal. Several of these centers include the participation of other federal agencies, including the Department of Commerce, the National Aeronautics and Space Administration, and the National Science Foundation. These centers include Digital Manufacturing and Design Innovation Institute (DOD-led); Lightweight and Modern Metals Manufacturing Innovation Institute (DOD-led); Next Generation Power Electronics National Manufacturing Innovation Institute (DOE-led); Clean Energy Manufacturing Innovation Institute for Composite Materials and Structures (DOE-led); Integrated Photonics Institute for Manufacturing Innovation (DOD-led); Flexible Hybrid Electronics Manufacturing Innovation Institute (DOD-led); and Clean Energy Manufacturing Innovation Institute on Smart Manufacturing: Advanced Sensors, Controls, Platforms and Modeling for Manufacturing (DOE-led). These centers may be considered candidates for inclusion in the Network for Manufacturing Innovation. RAMIA authorizes the Secretary of Commerce to award financial assistance to a person or group of persons to assist in planning, establishing, or supporting a center for manufacturing innovation. The act requires an open process for the solicitation of applications that allows for the consideration of all applications relevant to advanced manufacturing, regardless of technology area, and competitive merit-based review of the applications that incorporates peer review by a "diverse group of individuals with relevant experience from both the public and private sectors." Political appointees are prohibited from participating on any peer review panel, and the Secretary of Commerce is required to implement a conflict of interest policy that ensures public transparency and accountability, as well as full disclosure of any real or potential conflicts of interest of individuals participating in the center selection process. The Secretary of Commerce is required to make publicly available at the time of any award of financial assistance to a center a description of the bases for the award, including the merits of the winning proposal relative to other applicants. The Secretary must also develop and implement performance measures to assess the effectiveness of the funded activities. In making center selections, the act requires the Secretary, working through the National Program Office (discussed later in this report), to collaborate with federal departments and agencies whose missions contribute to or are affected by advanced manufacturing. RAMIA requires the Secretary to apply certain considerations in the selection of centers for manufacturing innovation. The considerations specified in the act include the potential of a center to advance domestic manufacturing and the likelihood of economic impact, including creation or preservation of jobs, in the predominant focus areas of the center for manufacturing innovation; the commitment of continued financial support, advice, participation, and other contributions from non-federal sources to provide leverage and resources to promote a stable and sustainable business model without the need for long-term federal funding; whether the financial support provided to the center from non-federal sources significantly exceeds the requested federal financial assistance; how the center will increase the non-federal investment in advanced manufacturing research in the United States; how the center will engage with small and medium-sized manufacturing enterprises to improve the capacity of such enterprises to commercialize new processes and technologies; how the center will carry out educational and workforce activities that meet industrial needs related to its predominant focus areas; how the center will advance economic competitiveness and generate substantial benefits to the United States that extend beyond the direct return to participants in the program; whether the predominant focus of the center is a manufacturing process, novel material, enabling technology, supply chain integration methodology, or other relevant aspect of advanced manufacturing that has not already been commercialized, marketed, distributed, or sold by another entity; how the center will strengthen and leverage the assets of a region; and how the center will encourage education and training of veterans and individuals with disabilities. In addition, the act allows for other factors to be considered. RAMIA includes several provisions related to center funding: Financial assistance may not be awarded to a center more than seven years after the date the Secretary of Commerce first awards financial assistance to that center. Total federal assistance awarded to a center, including funding made under the provisions of RAMIA, may not exceed 50% of the total funding of the center in that year. The Secretary of Commerce may make exceptions in circumstances in which a center is making large capital facilities or equipment purchases. The Secretary is directed to give preference to centers seeking less than the maximum federal share of funds allowed. Centers are to receive decreasing levels of funding in each subsequent year of funding. The Secretary may make exceptions to this requirement when a center is otherwise meeting its stated goals and metrics, unforeseen circumstances have altered the center's anticipated funding, and the center can identify future non-federal sources of funding that would warrant a temporary exemption. RAMIA authorizes NIST to use $5 million per year for FY2015-FY2024 from funds appropriated to its Industrial Technology Services account to carry out the Network for Manufacturing Innovation program. The act also authorizes the Department of Energy to transfer to NIST up to $250 million over the FY2015-FY2024 period from funds appropriated for advanced manufacturing R&D in its Energy Efficiency and Renewable Energy account. The Secretary of Commerce, in addition to amounts appropriated to carry out the NMI program, may accept funds, services, equipment, personnel, and facilities from any covered entity to carry out the NMI program, subject to certain conditions and constraints. RAMIA directs the Secretary of Commerce to establish, within NIST, a National Program Office of the Network for Manufacturing Innovation to oversee and carry out the program. The act specifies the following functions of the National Program Office: to oversee planning, management, and coordination of the program; to enter into memoranda of understanding with federal departments and agencies whose missions contribute to or are affected by advanced manufacturing, to carry out the authorized purposes of the program; to develop a strategic plan to guide the program no later than one year from the date of enactment of the act, and to update the strategic plan at least once every three years thereafter; to establish such procedures, processes, and criteria necessary and appropriate to maximize cooperation and coordination of the activities of the program with programs and activities of other federal departments and agencies whose missions contribute to or are affected by advanced manufacturing. The act, in particular, calls for the Secretary to ensure that the NIST Hollings Manufacturing Extension Partnership (MEP) is incorporated into NMI program planning to ensure the results of the program reach small and medium-sized entities; to establish a clearinghouse of public information related to the activities of the program; and to act as a convener of the Network for Manufacturing Innovation. In support of the development and updating of the strategic plan, the Secretary of Commerce is directed by the act to solicit recommendations and advice from a wide range of stakeholders, including industry, small and medium-sized manufacturing enterprises, research universities, community colleges, and other relevant organizations and institutions on an ongoing basis. The Secretary is directed to transmit the strategic plan to the Senate Committee on Commerce, Science, and Transportation and the House Committee on Science, Space, and Technology. The act authorizes any federal government employee to be detailed to the National Program Office without reimbursement and without interruption or loss of civil service status or privilege to the employee. RAMIA requires several reports and audits to be conducted with respect to the NMI program. RAMIA directs the Secretary of Commerce to require each recipient of federal assistance under the act to submit an annual report to the Secretary that describes the finances and performance of the center for which assistance was awarded. Each report is required to include an accounting of expenditures of amounts awarded under the program to the center; a description of the performance of the center with respect to its goals, plans, financial support, and accomplishments; and an explanation of how the center has advanced the purposes of the NMI program as specified by the act. RAMIA requires the Secretary of Commerce to report annually to Congress through December 31, 2024, on the performance of the program during the most recent one-year period. Each report is to include a summary and assessment of the annual reports provided by each center; an accounting of the funds expended by the Secretary under the program, including any temporary exemptions granted; an assessment of the participation in, and contributions to, the network by any centers for manufacturing innovation not receiving financial assistance under the NMI program; and an assessment of the NMI program with respect to meeting the purposes described in the act. RAMIA requires the Comptroller General of the United States to conduct an assessment of the NMI program at least once every two years during the operation of the program, covering the two most recent years of the program on the overall success of the NMI program, and a final assessment to be made not later than December 31, 2024. Each assessment is to include, for the period covered by the report: a review of the management, coordination, and industry utility of the NMI program; an assessment of the extent to which the program has furthered the purposes identified in the act; such recommendations for legislative and administrative action as the Comptroller General considers appropriate to improve the NMI program; and an assessment as to whether any prior recommendations for improvement made by the Comptroller General have been implemented or adopted. Other provisions of RAMIA authorize: the Secretary of Commerce to appoint such personnel and enter into such contracts, financial assistance agreements, and other agreements as the Secretary considers necessary or appropriate to carry out the program, including support for R&D activities involving a center for manufacturing innovation; the Secretary of Commerce to transfer to other federal agencies such sums as the Secretary considers necessary or appropriate to carry out the program--however, such funds may not be used to reimburse or otherwise pay for the costs of financial assistance incurred or commitments of financial assistance made prior to the date of enactment of RAMIA; agencies to accept funds transferred to them by the Secretary of Commerce, in accordance with the provisions of RAMIA, to award and administer, under the same conditions and constraints applicable to the Secretary, all aspects of financial assistance awards under RAMIA; and the Secretary of Commerce to use, with the consent of a covered entity and with or without reimbursement, land, services, equipment, personnel, and facilities of such covered entity. RAMIA also specifies that the provisions of 35 USC 18, Patent Rights in Inventions Made with Federal Assistance, shall apply to any funding agreement awarded to new or existing centers. This chapter of the U.S. Code is widely known as the Bayh-Dole Act and formally titled the University and Small Business Patent Procedures Act of 1980. While RAMIA establishes the NMI program; sets forth its purposes; and authorizes its structure, funding, and operation; a number of broad policy issues and ones related to the program's implementation remain. The appropriate role of the federal government in fostering technological innovation or supporting a particular company, industry, or industrial sector (e.g., manufacturing) has been the focus of a long-running national policy debate. Views range from those who believe that the federal government should take a hands-off or minimalist approach to those who support targeted federal investments in promising technologies, companies, and industries. And while there has been broad agreement on federal support for fundamental research, the consensus in favor of federal support frays as technology matures toward commercialization. Advocates for a strong federal role in advancing technologies and industries often assert that such interventions are justified by the economic, national security, and societal benefits that generally accompany technological advancement and U.S. technological and industrial leadership. For such reasons, the manufacturing sector has received the attention of the federal government since the nation's founding. Critics of a strong federal role provide a variety of arguments. For example, some contend that such interventions skew technology development and competition by replacing market-based decisions of companies, capital providers, and researchers with the judgment of government bureaucrats or politicians (sometimes referred to as the government "picking winners and losers"). Those who hold this view generally assert that this may result in inefficient allocation of capital, development and deployment of inferior technologies, and political favoritism (sometimes referred to as "crony capitalism"). Others assert that such interventions often represent a transfer of wealth from taxpayers to already-prosperous companies and their shareholders (sometimes referred to as "corporate welfare"). Others may prefer an approach that is more technology- or industry-neutral, such as reducing costs and other burdens on manufacturers by reducing taxes, regulations, and frivolous lawsuits. The NMI--with its focus on advanced manufacturing research, innovation, and technology--is likely at the intersection of these viewpoints. While RAMIA included a number of findings that highlight the role manufacturing plays in the U.S. economy, it did not identify specific shortcomings of the U.S. manufacturing sector that the NMI program is to address. Analysts hold divergent views of the health of U.S. manufacturing. While some may be supportive of the effort, others may question whether there is a compelling national need for the Network for Manufacturing Innovation program. Some analysts believe that the U.S. manufacturing sector is at risk. Expressed concerns of those holding this view include a "hollowing-out" of U.S. manufacturing resulting from the decision of many U.S. manufacturers to move production activities and other corporate functions (e.g., research and development, accounting, information technology, tax planning, legal research) offshore; focused efforts by other nations to grow the size, diversity, and technological prowess of their manufacturing capabilities and to attract manufacturing operations of U.S.-headquartered multinational companies using a variety of policy tools (e.g., tax holidays, worker training incentives, market access, and access to rare earth minerals); and a decades-long declining trend in U.S. manufacturing employment, punctuated by a steeper drop from 2001 to 2010. In January 2010, U.S. manufacturing employment fell to its lowest level (11.5 million) since March 1941, down more than 41% from its peak of 19.6 million in June 1979. In support of the President's proposal for a National Network for Manufacturing Innovation, the Information Technology and Innovation Foundation, a Washington, DC-based think tank, articulated a variety of reasons why there is a need for an NMI-like federal program in a report titled Why America Needs a National Network for Manufacturing Innovation . Among the ITIF's assertions: An NMI-like program would address two issues important to U.S. manufacturing competitiveness: technology and talent. Spillovers from successful innovations resulting from a firm's investments can yield substantial benefits captured by competitors producing a market failure that results in underinvestment in manufacturing R&D and innovation. Other types of market failures--for example, the need for large-scale capital investments and training outlays that may require many years to pay off--may "limit the scale-up of innovative manufacturing processes, the installation of new capital equipment, and the full integration of manufacturing systems across supply chains." Foreign governments engage in a variety of policy and programmatic activities designed to attract U.S. and other manufacturing firms to their countries; subsidize and protect domestic producers; or "repress labor, condone intellectual property theft, and manipulate their currency values in order to expand their manufacturing footprint." The federal government provides little support for manufacturing-focused U.S. based research activities: such funding is scattered among multiple agencies and "has rarely been a priority for any of them." This position contends that U.S. academia, in general, does not incentivize engineering advances and practical problem-solving, but rather "originality and breakthroughs." The emphasis on "engineering as a science" in U.S. academic engineering programs contributes further to this bias. Other analysts see the U.S. manufacturing sector as vibrant and healthy. Those holding this view tend to point to, among other things, the sector's strong growth in output and productivity, as well as the United States' substantial share (17.4%) of global manufacturing value-added (second only to China, 22.4%). In addition, between January 2010 and September 2014, manufacturing employment added approximately 707,000 jobs, growing to 12.2 million. In addition, many analysts attribute U.S. manufacturing employment losses to broader global technology and business trends, such as technology-driven productivity improvements, increases in capital-labor substitution, movement of labor-intensive production activities to lower wage regions of the world, foreign competition in manufactured goods in both U.S. and foreign markets, and disaggregation of work processes resulting in the contracting of service work previously performed by employees of manufacturing firms as well as the offshoring of manufacturing activities. Independent of their perspective on the health of the U.S. manufacturing sector, some analysts may believe that there should not be an NMI program. Some may assert that the role envisioned for the NMI should be performed by the private sector; that the federal government should not favor or subsidize particular companies, industries, or technologies; that the NMI would be ineffective or counterproductive; that the funds that would go to the NMI should be used to support manufacturing in other ways; that the funds should be used for different federal functions altogether; or that the funds should be directed toward deficit reduction. Some may also believe that the NMI is, in part or in whole, duplicative of other federal programs, such as the NIST Advanced Manufacturing Technology (AmTech) consortia program or the Manufacturing Extension Partnership; or, as a new and separate program, represents an increasing fragmentation of federal efforts to help manufacturers. Some may question whether additional federal funding will produce more innovation and whether and how the U.S. manufacturing base will effectively absorb such innovations. Others may prefer an expanded direct role for the federal government. This could include increasing federal funding for manufacturing R&D, providing grants and loan guarantees for domestic manufacturing, and, in some cases, subsidizing production of products for which there are deemed positive benefits for the nation that cannot be captured by the manufacturer. Still others argue that long-term employment losses in manufacturing are inevitable and that federal policy should focus elsewhere. In a July 2014 Wall Street Journal article, former Treasury Secretary Lawrence Summers argued that, "The economic challenge of the future will not be producing enough. It will be providing enough good jobs." Summers described the loss of manufacturing jobs over the long-term as "inexorable and nearly universal," a result of technology and market forces mirroring the earlier loss of agricultural jobs, only, he added, this "change will come faster and affect a much larger share of the economy." Summers did not offer a prescriptive alternative, but rather stated the need for government policies and approaches that "meet the needs of the information age." When considered in the context of the overall U.S. economy, manufacturing output, or federal spending, the NMI appropriations authorizations provided in P.L. 113-235 are relatively small. Nevertheless, both proponents and opponents of the NMI may see such appropriations authorizations as opening the door to future increases in funding for the NMI as well as establishing a precedent for the creation of additional programs of a similar nature for manufacturing or other sectors of the U.S. economy. The act provides for the Secretary of Commerce to use up to $5 million in funds appropriated to the NIST Industrial Technology Services account to carry out the NMI program. The availability of funds from this authorization, however, will depend on the level of annual appropriations made to the NIST ITS account. In addition, whatever appropriations are made to the ITS account may be subject to congressional prioritization and restrictions included in report language accompanying the appropriations bill. In FY2015, Congress appropriated $138.1 million for the ITS account, directing NIST to spend $130.0 million on the Hollings Manufacturing Extension Partnership and $8.1 million on NIST's Advanced Manufacturing Technology Consortia program. It did not provide explicit funding for the NMI in FY2015. For FY2016, if Congress desires to provide funding to NIST to carry out the NMI program under the act's authorization, it may choose to increase funding for the ITS account in an amount equal to the level of funding it wishes to provide for the administration of the NMI program, reduce funding for one or both of the existing programs being funded by this account, or leave the determination of the allocation of the ITS appropriation to the Secretary of Commerce or NIST. A second source of funding provided for by the act is authority given to the Department of Energy to transfer to NIST up to $250 million for the period FY2015-FY2024. However, the availability of funds provided by the DOE to NIST depends, in part, on the level of annual appropriations made to the DOE's Energy Efficiency and Renewable Energy account specifically for advanced manufacturing R&D. This source of funding for the NMI may also be subject to prioritization and potential restrictions included in report language accompanying the appropriations bill. In addition, the availability of these funds to NIST will depend on DOE's willingness to transfer funds to NIST for the NMI program. A third possibility for funding the program is the authority given to the Secretary to accept funds, services, equipment, personnel, and facilities from any covered entity to carry out the program. The act does not specify how the funds provided by NIST, DOE, or other agencies are to be allocated between program management activities and funding for the centers. In the absence of such specifications, it appears that the funds from these sources may be used for either or both of these purposes. In addition to authorizing the establishment of centers for manufacturing innovation, the act authorizes the establishment of a network of these centers. In this regard, the act specifies which centers are eligible to be a part of the network and designates the National Program Office as "a convener of the Network." However, the act does not further specify the purpose, federal role, or activities of the network. Congress may opt to consider amending the act to clarify these points or to authorize NIST and participating agencies to do so. The act authorizes the NMI through FY2024 and requires the Comptroller General of the United States to make a final assessment by December 31, 2024. No specifications are made for a federal role after the end of FY2024. As the program progresses, Congress may opt to consider whether to continue the NMI beyond FY2024 or to allow it to expire. Congress may opt to conduct oversight hearings on the implementation of the NMI program to ensure that it is operating as Congress intends, with respect to funding, interagency cooperation, the establishment of new centers, the incorporation of existing manufacturing centers as part of the network, the integration of the NMI with existing federal manufacturing activities, and other related issues.

In December 2014, Congress passed the Revitalize American Manufacturing and Innovation Act of 2014 (RAMIA), as Title VII of Division B of the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235). President Obama signed the bill into law on December 16, 2014. RAMIA directs the Secretary of Commerce to establish a Network for Manufacturing Innovation (NMI) program within the Commerce Department's National Institute of Standards and Technology (NIST). The act comes about two years after President Obama first proposed the establishment of a National Network for Manufacturing Innovation in his FY2013 budget. RAMIA includes provisions authorizing NIST, the Department of Energy, and other agencies to support the establishment of centers for manufacturing innovation and establishing and providing for the operation of a Network for Manufacturing Innovation. NIST is authorized to use up to $5.0 million per year of appropriated funds for FY2015-FY2024 to carry out its responsibilities under the act. The Department of Energy is authorized to transfer to NIST up to $250.0 million of appropriated funds over the same FY2015-FY2024 period. The Secretary of Commerce is also authorized to accept funds, services, equipment, personnel, and facilities from any covered entity--federal department, federal agency, instrumentality of the United States, state, local government, tribal government, territory, or possession of the United States, or of any political subdivision thereof, or international organization, or any public or private entity or individual--to carry out the program. The act also establishes a National Office of the Network for Manufacturing Innovation Program (also referred to in this report as the National Program Office) at NIST to oversee and carry out the program. Each center receiving financial assistance under the NMI program must submit annual reports to the Secretary. The Secretary must submit annual reports to Congress on the performance of the program. And the Comptroller General of the United States is directed to perform biennial assessments of the program, with a final assessment due by December 31, 2024. Several factors could affect the implementation of the NMI program. Although the act authorizes funding for establishment of the centers and the network, the act does not appropriate any funds. Funding availability for the program will depend on congressional appropriations, priorities, and allocations. In addition, the Department of Energy is authorized, but not required, to transfer funds to NIST to carry out the program. Another program uncertainty relates to the network of centers. While the act specifies which new and existing centers are eligible to be a part of the network and designates the National Program Office as "a convener of the Network," it does not further specify the purpose, federal role, and activities of the network.

The estimated 4.1 million barrels of oil released during the 2010 Deepwater Horizon oil spill is considered to be the largest accidental marine oil spill in the history of the petroleum industry and will have an impact on the natural resources of the Gulf region for the foreseeable future. Under the Oil Pollution Act of 1990 (OPA), federal, state, tribal, and foreign governments may seek compensation for the costs of restoring damaged natural resources from the parties responsible through the Natural Resource Damage Assessment (NRDA) process. Under the NRDA process, damages are assessed to restore the natural resources to their prior condition and to compensate the public for their lost use of these resources. This report examines the NRDA process under the OPA in the context of the Deepwater Horizon spill. In particular, this report describes the statutory requirements of OPA, the NRDA process under the implementing regulations, and developments in the Gulf of Mexico. OPA (sometimes known as OPA 90) applies to discharges of oil into the navigable waters of the United States, adjoining shorelines, and the exclusive economic zone of the United States. It was enacted partially in response to the Exxon Valdez spill in 1989, where liability was imposed primarily through the Clean Water Act (CWA). OPA amended the CWA and several other statutes imposing oil spill liability to create a unified oil spill liability regime, to expand the coverage of such statutes, increase liability, to strengthen federal response authority, and to establish a fund to ensure that claims are paid up to a stated amount. Several federal district courts have held that OPA preempts other general maritime remedies. Pursuant to OPA, the parties responsible for causing the oil spill are responsible for damages to natural resources. In the case of offshore drilling, a responsible party is the lessee or permittee of the area in which the facility is located. When the Coast Guard receives information of an incident, it is required to designate the responsible parties. Liability under OPA is strict, and joint and several. Joint and several liability means that where there are multiple responsible parties, each is potentially liable for the whole amount of the damages, regardless of its share of blame. Responsible parties, however, can bring separate actions for subrogation to resolve reimbursement issues among themselves. Strict liability means liability is assigned regardless of fault or blame. There does not have to be a mistake, negligence, or a willful action for a party to be responsible. It is important to note that while OPA provides a federal remedy for natural resource damages, it does not preclude liability under other laws. For instance, the federal government may impose criminal liability for harming protected species. Moreover, OPA specifically allows states to impose additional liability for oil spills and/or requirements for removal activities. Under OPA, each responsible party for an oil spill is liable for removal costs and six specified categories of damages. One of these categories is natural resource damages, which replaced the CWA natural resource damages provisions for oil spills. OPA defines natural resource damages as "[d]amages for injury to, destruction of, loss of, or loss of use of, natural resources, including the reasonable costs of assessing the damage, which shall be recoverable by a United States trustee, a State trustee, an Indian tribe trustee, or a foreign trustee." Removal is defined as "containment and removal of oil or a hazardous substance from water and shorelines or the taking of other actions as may be necessary to minimize or mitigate damage to the public health or welfare." Thus, harm to natural resources is categorized as a damage under OPA; removal is separate. In the case of natural resource damages, OPA provides that responsible parties are liable to the United States government, states, Indian tribes, or foreign governments for damages to natural resources under each of their respective jurisdictions. OPA provides three factors for measuring natural resource damages. The first allows for "the cost of restoring, rehabilitating, replacing, or acquiring the equivalent of, the damaged natural resources." The second considers "the diminution in value of those natural resources pending restoration." And the third allows for recovery of the reasonable costs incurred in "assessing those damages." Damages are capped under OPA unless one of the enumerated statutory exceptions applies. For offshore facilities, a responsible party's liability for economic damages is limited to $75 million, but there is no cap on removal costs. Exceptions that would nullify the cap include gross negligence, willful misconduct, or violating an applicable federal regulation. The governmental entities with jurisdiction over resources--federal, state, tribal, and foreign--are the Trustees throughout the NRDA process. Under OPA, the function of the Trustees is to assess natural resource damages, as well as to "develop and implement a plan for the restoration, rehabilitation, replacement, or acquisition of the equivalent, of the natural resources under their trusteeship." Accordingly, they are charged with acting "on behalf of the public." The Trustees must give a written invitation to the responsible parties to participate in the NRDA process, and if the responsible parties accept, they must do so in writing. Significantly, OPA requires presenting NRDA claims to the responsible parties before any suit can be filed or other action taken to allow for pre-trial settlement. Under Section 1006(e)(2) of OPA, if the Trustees satisfy the NOAA's NRDA regulations in estimating damages, their assessment is treated as having a rebuttable presumption of accuracy in any judicial or administrative proceeding. This means that a responsible party would have the burden of proving that the assessment is wrong, rather than the Trustees having to show that the assessment is right. Typically, Trustees form a Trustee Council, to develop a restoration plan that addresses the damages to all of the Trustees' resources. These Trustees must reach consensus on the extent of damages and restoration when issuing a unified plan. When the goal is to have one plan to address all of the impacts, which is how NRDA generally operates, the Trustees must work cooperatively to determine the magnitude and extent of injury to natural resources and create a plan to restore those injured resources to baseline (pre-spill) levels. When more than one state's natural resources are involved, each state gets one vote on these issues, even if a state has multiple state agencies represented among the Trustees. Each federal department also gets one vote, despite the number of subagencies involved. Litigation may be avoided altogether if the responsible parties consent to the Trustees' restoration plan. Once money is recovered by a Trustee under OPA, including to cover the costs of assessing the damages, it is deposited in a special trust account in order "to reimburse or pay costs by the trustee ... with respect to the damaged natural resource." By establishing a collaborative process for resolving liability issues, NRDA is thus designed to avoid litigation. According to discussion on the House floor about OPA, "[OPA] is intended to allow for quick and complete payment of reasonable claims without resort to cumbersome litigation." OPA also includes a citizen suit provision for natural resource damages. It states that "any person" is permitted to sue a federal official "where there is alleged to be a failure of that official to perform a duty ... that is not discretionary with that official." OPA provides for an Oil Spill Liability Trust Fund (OS Trust Fund), which is financed chiefly by a per-barrel tax on crude oil produced in or imported to the United States. Administered by the National Pollution Funds Center, an independent Coast Guard unit that serves as its fiduciary, the OS Trust Fund can be used to remedy natural resource damages if the responsible parties refuse to accept the Final Restoration Plan and the Trustees choose not to sue. The OS Trust Fund can likewise be used in the interim period before the responsible parties are identified, as well as in circumstances where the responsible parties cannot be identified. OS Trust Fund monies are available for a range of remedial and compensatory uses, including the payment of removal costs and costs incurred by Trustees during the NRDA process. For example, the Trustees may use the Fund for assessing natural resource damages and for developing and implementing restoration plans. Money for the Trustees' immediate assessment of the natural resource damage may come from the OS Trust Fund until the responsible parties are identified and provide reimbursement to the Fund. The OS Trust Fund has compensation limits for damaged natural resources. It can be used to pay damages up to its per-incident cap of $1 billion. However, only $500 million of that amount can go toward natural resource damage assessments and claims in connection with any single incident. The remaining money from the OS Trust Fund can be used for the payment of removal costs and the other costs, expenses, claims, and economic damages included in OPA. The money available from the OS Trust Fund exceeds an offshore facility's liability limit of $75 million for economic damages under OPA. With some exceptions, a claim for removal costs or damages must first be presented to a responsible party or its guarantor before it may be presented to the National Pollution Funds Center for payment from the Fund. The OS Trust Fund could also be used if the responsible parties are not known, insolvent, or refuse to give money for assessment before they are found responsible by a court. The National Oceanic and Atmospheric Administration (NOAA) of the Department of Commerce oversees the NRDA process under OPA. Currently, NOAA is involved in 13 other NRDA oil spill cases in the Gulf in addition to the BP spill. Although Trustees are not obligated to follow NOAA's NRDA regulations, Trustees have an incentive to comply with the regulations because of the rebuttable presumption accorded such determinations. Under the OPA regulations, the Trustees may take emergency restoration action before completing the NRDA process, provided that (1) the action is needed to avoid irreversible loss of natural resources; (2) the action will not be undertaken by the lead response agency; (3) the action is feasible and likely to succeed; (4) delay would result in increased damages; and (5) the costs of the action are not unreasonable. The regulations also provide that settlement for natural resource damages may occur at any time, if the terms of the settlement are adequate to satisfy the goal of OPA and are "fair, reasonable, and in the public interest." Under the OPA regulations, the Trustees are required to invite the responsible parties to participate in the NRDA process "as soon as practicable" but not later than the delivery of a Notice of Intent to Conduct Restoration Planning. The regulations further state that the Trustees and responsible parties should consider entering into binding agreements to facilitate their interactions and resolve any disputes. Once the responsible parties accept an invitation to participate, the Trustees determine the scope of their participation in accordance with the regulations. Furthermore, the regulations allow Trustees to take other actions to expedite the restoration of injured natural resources, including pre-incident planning and the development of regional restoration plans. The Trustees' work occurs in three steps: a Preassessment Phase, the Restoration Planning Phase, and the Restoration Implementation Phase. These phases are discussed in detail below. In the Preassessment Phase, the Trustees initially establish whether there is jurisdiction under OPA and whether it is appropriate to try to restore the damaged resources. Under 15 C.F.R. Section 990.42, the Trustees must determine that there are injuries, that those injuries have not been remedied, and that there are feasible restoration actions available to fix the injuries. If any of those evaluations result in a negative finding, the NRDA process ends. Determining whether injuries exist involves data gathering, and the Trustees use multiple sources, including the public, to obtain the information they need. Once injuries have been found, the Trustees complete the second step of the Preassessment Phase--preparation of a Notice of Intent to Conduct Restoration Planning Activities. This Notice is published in the Federal Register and also is delivered directly to the responsible parties. Finally, the Trustees open a publicly available administrative record, which includes the documents considered by the Trustees throughout the process. This record stays open until the Final Restoration Plan is delivered to the responsible parties. The second phase in the NRDA process, known as the Restoration Planning Phase, focuses on designing the restoration plan. This phase is composed of two primary steps: (1) injury assessment and (2) developing restoration alternatives. First, the Trustees determine if the injuries to natural resources resulted from the incident. An injury is defined by the regulations as "an observable or measurable adverse change in a natural resource or impairment of a natural resource service." The Trustees will also evaluate harm resulting from the response actions, such as the in situ burning, the use of dispersants, or vehicle damage to shores and marshes. These injuries are also compensable under OPA. The Trustees must likewise quantify the injuries and identify possible restoration projects. In particular, they must quantify the degree, and spatial and temporal injuries relative to the baseline. The baseline is the level the Trustees agree the resources were at prior to the injury and to which they will be restored under NRDA. The regulations allow the Trustees to use historical data, reference data, control data, and/or data on incremental changes to establish the baseline. Thus, the activities that occur in the Restoration Planning Phase may include field studies, data evaluation, modeling, injury assessment, and quantification of damage, either in terms of money needed to restore the resource or in terms of habitat or resource units. To quantify injury, the Trustees are required to estimate the time for natural recovery without restoration, but including any response actions. Information from the injury assessment is used to develop a restoration plan that includes specific projects for remediation. Restoration can include restoring, replacing, rehabilitating, or acquiring the equivalent of the natural resource harmed or destroyed by the incident. Once the information on the injuries justifies restoration, the Trustees must "consider a reasonable range of restoration alternatives before electing their preferred alternative." Only alternatives considered technically feasible can be included in a restoration plan. The regulations indicate that each restoration alternative is composed of primary and/or compensatory restoration components that will address one or more of the specific injuries resulting from an oil spill incident. For each alternative, the trustees must consider primary restoration actions, which is action taken to return injured natural resources and services to the baseline. This must include a natural recovery alternative, in which no intervention would be taken to restore injured natural resources and services to baseline. At the same time, the Trustees must consider compensatory restoration actions for the interim loss of natural resources or services pending recovery. For compensatory restoration, the Trustees are first directed to consider actions that would provide services of the same type and quality as the injured resources. If these cannot provide a reasonable range of alternatives, the Trustees should then identify actions that "provide natural resources and services of comparable type and quality as those provided by the injured natural resources." According to the House Conference Report, the priority in planning restoration is "to restore, rehabilitate and replace damaged resources. The alternative of acquiring equivalent resources should be chosen only when the other alternatives are not possible, or when the cost of those alternatives would, in the judgment of the trustee, be grossly disproportionate to the value of the resources involved." Once the range of alternatives is chosen, the Trustees evaluate the alternatives and choose one as the basis of the restoration plan. At a minimum, the proposed alternatives must be evaluated based on (1) the cost to carry out the alternative; (2) the extent to which each alternative is expected to meet the trustees' goals; (3) the likelihood of success for each alternative; (4) the extent to which each alternative will prevent future injury and avoid collateral injury; (5) the extent to which each alternative benefits more than one natural resource; and (6) the effect of each alternative on public health and safety. The Trustees are required to select a "preferred" restoration alternative, and if the Trustees conclude that two or more are equally preferable, they must select the most cost-efficient alternative. The regulations set forth what the Draft Restoration Plan should include, such as a summary of the injury assessment procedures, a description of the injuries, the range of restoration alternatives considered, and the objectives of restoration. The regulations also require that the Trustees "establish restoration objectives that are specific to the injuries," which "should clearly specify the desired outcome, and the performance criteria by which successful restoration will be judged." OPA requires the Trustees to provide opportunities for public involvement during the development of restoration plans. A Draft Damage Assessment and Restoration Plan is submitted to the public for formal comment. Those comments are addressed within the Final Restoration Plan. NEPA requires that major federal actions that significantly affect the human environment must be reviewed to assess the impacts of the action. The extent of the environmental review depends on the extent of the impacts on the environment. Final Restoration Plans that have significant impacts on the human environment will require an environmental impact statement, which will evaluate the impacts, provide alternatives to the chosen activity, consider possible mitigation, and involve the public in the process. Lesser impacts may mean that an environmental assessment is appropriate. Once the Trustees have agreed on a Final Restoration Plan, they begin phase three, Restoration Implementation. Within a "reasonable time" after completed restoration planning, the Trustees must close the administrative record and present a written demand in writing to the responsible parties. The demand must invite the responsible parties to implement the Final Restoration Plan subject to Trustee oversight and reimburse the Trustees for their assessment and oversight costs. In the alternative, the demand may invite the responsible parties to advance a specified sum to the Trustees, representing all of their direct and indirect costs of assessment and restoration. The regulations require that the demand identify the incident, identify the trustees, describe the injuries, provide an index to the administrative record, and provide the Final Restoration Plan. The responsible parties then have 90 days to respond. They may respond "by paying or providing binding assurance that they will reimburse trustees' assessment costs and implement the plan or pay assessment costs and the trustees' estimate of the costs of implementation." If the responsible parties do not agree to the demand within 90 days, the trustees may either file a judicial action for damages or present the uncompensated claim for damages to the Oil Spill Liability Trust Fund. Pursuant to the regulations, judicial actions and claims must be filed within three years after the Final Restoration Plan is made publicly available. At least one court has held that the responsible parties could demand a jury for such a trial. The regulations further provide that sums recovered by the Trustees in satisfaction of a natural resource damage claim must be placed in a revolving trust account. Moreover, sums recovered for past assessment costs and emergency restoration costs may be used to reimburse the Trustees. All other sums must be used to implement the Final Restoration Plan. Lastly, the regulations state several measures the Trustees can take to facilitate the implementation of restoration. These include establishing a Trustee committee, developing more detailed workplans, monitoring and overseeing restoration, and evaluating the success of the restoration, as well as the need for corrective action. For the 2010 Deepwater Horizon oil spill, the responsible parties identified are BP Exploration and Production, Inc., Transocean Holdings Inc., Triton Asset Leasing GmbH, Transocean Offshore Deepwater Drilling Inc., Transocean Deepwater Inc., Anadarko Petroleum, Anadarko E&P Company LP, and MOEX Offshore 2007 LLC. As of April 2012, BP was the only responsible party participating in the cooperative NRDA process. The federal government Trustees include the following: U.S. Department of the Interior, as represented by the National Park Service, U.S. Fish and Wildlife Service, and the Bureau of Land Management; NOAA, on behalf of the U.S. Department of Commerce; U.S. Department of Agriculture; U.S. Department of Defense (DOD); EPA; various agencies of the state of Louisiana, including the Coastal Protection and Restoration Authority, Oil Spill Coordinator's Office, Department of Environmental Quality, Department of Wildlife and Fisheries, and Department of Natural Resources; state of Mississippi Department of Environmental Quality; state of Alabama Department of Conservation and Natural Resources, and Geological Survey of Alabama; state of Florida Department of Environmental Protection, and Fish and Wildlife Conservation Commission; and various agencies of the state of Texas, including the Texas Parks and Wildlife Department. The Federal Lead Administrative Trustee is the Department of the Interior. The state Trustees are the governors and various agencies of the states affected by the spill: Alabama, Florida, Louisiana, Mississippi, and Texas. Federally recognized Indian tribes may be Trustees for affected tribal lands; at least one state recognized Indian tribe has sued BP for alleged fishing losses and damages to ancestral lands. No foreign governments appear to have been affected, but Canada might have a claim if the habits of migratory birds are disrupted; damage to Mexican resources is also a possibility, but the search for potential harms in Mexican territory remains inconclusive. Past NRDA processes have occurred on a much smaller scale with fewer Trustees. Accordingly, the size of the 2010 spill and the diverse range of federal and state Trustees may make consensus more difficult. Because the range of natural resources do not conform to political boundaries, it is also possible that different Trustees may argue the same resources belong to them. OPA doesn't appear to prohibit separate NRDA processes resulting from one spill, and the implementing regulations allow Trustees to operate independently from one another. OPA does not explicitly state whether the Trustees are required to work together to develop a single plan, or whether multiple plans are permitted. It states only that the act will not provide double compensation for the same loss. At the same time, Section 2706(c) of OPA assigns each type of Trustee (federal, state, tribal, and foreign) the responsibility of developing its plan for the restoration of the resources it oversees, rather than requiring all the Trustees to develop just one plan for all damaged resources. In the legislative history of OPA, Congress identified these issues and recognized that separate plans may result, while indicating that cooperation was the preferred method. After acknowledging that in some cases more than one Trustee may share control over a natural resource, the House Conference Report on OPA states that "trustees should exercise joint management or control over the shared resources. The trustees should coordinate their assessments and the development of restoration plans, but [OPA] does not preclude different trustees from conducting parallel assessments and developing individual plans." However, the NOAA regulations state that "[i]f an incident affects the interests of multiple trustees, the trustees should act jointly" to ensure that full restoration is achieved without double recovery of damages. The regulations also provide that the Trustees may act independently where the resources can reasonably be divided. If separate NRDA processes conducted pursuant to these regulations were challenged, a court would likely defer to NOAA's interpretation of OPA to allow multiple damage assessments in some circumstances. For the Gulf oil spill NRDA process, the Trustees have formed a Trustee Council. It appears that a joint restoration plan may enhance the Trustees' negotiating position with responsible parties. However, as the NRDA process evolves, individual interests may diverge because of different restoration priorities and related individual interests. The natural resources under the jurisdiction of the federal and state Trustees have been and continue to be threatened as a result of discharged oil from the Deepwater Horizon spill and the subsequent removal efforts. While the full extent of the potential injuries is presently unknown, exposure to oil discharges has resulted in adverse effects on aquatic organisms, birds, wildlife, vegetation, and natural habitats. In particular, over 950 miles of shoreline habitats, including salt marshes, sandy beaches, and mangrove areas have been jeopardized. A variety of visibly oiled wildlife, including birds, sea turtles, and marine mammals has been captured or collected dead. Meanwhile, the human use associated with natural resources in the Gulf region has declined, including fishing, swimming, beach-going, and viewing birds and wildlife. The NRDA process in the Gulf is currently in the Restoration Planning Phase. On October 1, 2010, the Trustees announced its Intent to Conduct Restoration Planning regarding the discharge of oil from the Deepwater Horizon into the Gulf of Mexico. As discussed above, pursuant to OPA, federal and state Trustees are authorized to (1) assess natural resource injuries resulting from the discharge of oil, and (2) develop and implement a plan for the restoration of the injured resources. The Notice of Intent also includes the Trustees' determination of jurisdiction to pursue restoration under OPA, as well as their determination that the injuries to natural resources in the Gulf resulted from the incident. The Notice of Intent further lists the types of response actions already employed for this spill and indicates that feasible restoration actions exist to address the natural resource injuries and losses. Later, on February 17, 2011, NOAA announced its plans to develop a Programmatic Environmental Impact Statement (PEIS) in cooperation with its state co-trustees, as part of the ongoing NRDA process. The PEIS will assess the environmental, social, and economic attributes of the affected environment and the potential consequences of alternative actions to restore, rehabilitate, replace, or acquire the equivalent of natural resources potentially injured by the oil spill. The initial step in the PEIS process included public scoping meetings in each of the affected Gulf Coast states and the District of Columbia. The purpose of the scoping process was "to identify the concerns of the affected public and federal agencies, states, and Indian tribes, involve the public early in the decision making process, facilitate an efficient PEIS preparation process, define the issues and alternatives that will be examined in details, and save time by ensuring that draft documents adequately address relevant issues." The comments provided during scoping helped to define the parameters of a draft PEIS, on which the public will be allowed to comment. The scoping meetings also gave the public the opportunity to learn more about damage assessment and the environmental impacts of the spill. Early in the NRDA process, BP provided $45 million to state and federal trustees for NRDA preassessment and assessment activities. At that time, BP acknowledged that the Trustees retain the right to obtain additional payments for assessment costs that may exceed the initial payments. DOI Trustees have received an additional $12.4 million in reimbursement from BP for actual costs. DOI also has an Interagency Agreement with the U.S. Coast Guard for OS Trust Fund money totaling $47.8 million to support initial baseline data collection, and has used $5.9 million of DOI NRDA funding for assessment activities. DOI has presented a claim of $67.5 million to the responsible parties for estimated costs to implement selected assessment procedures. Trustees are required to submit claims to the responsible parties before funds can be advanced by the OS Trust Fund. On April 21, 2011, the Trustees for the Deepwater Horizon oil spill announced that BP agreed to provide $1 billion toward early restoration projects in the Gulf of Mexico to address injuries to natural resources caused by the spill. Under the agreement, DOI, NOAA, and the five Gulf states affected by the spill each will receive $100 million to implement projects. The remaining $300 million will be allocated by NOAA and DOI for projects proposed by state trustees. All projects must then conform to the requirements of the agreement and be approved by BP and the Trustee Council. NOAA has stated that the money: represents a first step toward fulfilling BP's obligation to fund the complete restoration of injured public resources, including the loss of use of those resources by the people living, working and visiting the area. The Trustees will use the money to fund projects such as the rebuilding of coastal marshes, replenishment of damaged beaches, conservation of sensitive areas for ocean habitat for injured wildlife, and restoration of barrier islands and wetlands that provide natural protection from storms. The Trustees have since selected and planned 10 early restoration projects costing nearly $71 million. BP's agreement, however, does not limit the authority of the Trustees to perform assessments, engage in other early restoration planning, or select and implement additional restoration projects. BP additionally established a $20 billion escrow fund known as the Gulf Coast Claims Facility, targeted toward individual and business losses from the oil spill. The Gulf Coast Claims Facility has since ceased operations, with a court-supervised claims settlement program having begun on June 4, 2012. During the 112 th Congress, President Obama signed the Moving Ahead for Progress in the 21 st Century Act (MAP-21). Included in MAP-21 is the Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States Act of 2012 (RESTORE Act). It would appear that the requirements under the new law would overlap with NRDA. Significantly, the RESTORE Act establishes in the Treasury the Gulf Coast Restoration Trust Fund, which is available to restore the Gulf Coast region. It requires the Secretary of the Treasury to deposit into this fund 80% of all administrative and civil penalties paid by responsible parties in connection with the Deepwater Horizon oil spill under the Clean Water Act. Amounts in the fund are available for expenditure without further appropriation for eligible activities and are to remain available until expended. The RESTORE Act specifies that 35% of the fund must be available to the states of Alabama, Florida, Louisiana, Mississippi, and Texas "in equal shares for expenditure for ecological and economic restoration of the Gulf Coast region." In particular, these funds may be used for a variety of enumerated activities, including restoration and protection of natural resources, mitigation of damages, implementation of certain federally approved plans, workforce development and job creation, infrastructure projects, coastal flood protection, and, in certain circumstances, activities to promote tourism and seafood. Meanwhile, with 30% of funds from the Gulf Coast Restoration Trust Fund, the RESTORE Act additionally established the Gulf Coast Ecosystem Restoration Council, consisting of members appointed by the President from federal agencies. The Council is required, among other things, to develop a comprehensive plan and identify certain projects with respect to the restoration of the ecosystem and natural resources of the Gulf Coast Region, as well as collect and consider related scientific research. Also of importance, the RESTORE Act requires an additional 30% of the Gulf Coast Restoration Trust Fund to be disbursed to the five Gulf Coast states using a formula that weighs the mileage of oiled shoreline, the distance from the affected shoreline to the Deepwater Horizon drilling unit, and the population of coastal counties. Lastly, the RESTORE Act requires 5% of funds to be distributed for a marine research program and for making certain research grants. The NRDA process has been successful in the past, but it has never been tested on such a large scale as the 2010 Deepwater Horizon oil spill. In this case, more oil was spilled; a greater geographic area is involved; and more Trustees are involved than in past spills. The Trustees may have difficulty agreeing on the assessment of damages, baseline conditions, the value of the damaged resources, and the proper method of restoring them. If a unified restoration plan is sought, the Trustees must make unanimous decisions on these issues, and then BP has the option not to accept the Final Restoration Plan. If BP rejects the Trustees' Plan, the Trustees may sue BP under NRDA to resolve these issues, extending the final conclusion, which could delay restoration of the natural resources.

The 2010 Deepwater Horizon oil spill leaked an estimated 4.1 million barrels of oil into the Gulf of Mexico, damaging the waters, shores, and marshes, and the fish and wildlife that live there. The Oil Pollution Act (OPA) allows state, federal, tribal, and federal governments to recover damages to natural resources in the public trust from the parties responsible for the oil spill. Under the public trust doctrine, natural resources are managed by the states for the benefit of all citizens, except where a statute vests such management in the federal government. In particular, OPA authorizes Trustees (representatives of federal, state, and local government entities with jurisdiction over the natural resources in question) to assess the damages to natural resources resulting from a spill, and to develop a plan for the restoration, rehabilitation, replacement or acquisition of the equivalent, of the natural resources. The types of damages that are recoverable include the cost of replacing or restoring the lost resource, the lost value of those resources if or until they are recovered, and any costs incurred in assessing the harm. OPA caps liability for offshore drilling units at $75 million for economic damages, but does not limit liability for the costs of containing and removing the oil. The process established by OPA for assessing the damages to natural resources is known as Natural Resources Damage Assessment (NRDA). In the three steps of the NRDA process, the Trustees are required to solicit the participation of the responsible parties and design a restoration plan. This plan is then paid for or implemented by the responsible parties. If the responsible parties refuse to pay or reach an agreement with the Trustees, the Trustees can sue the responsible party for those damages under OPA. In the alternative, the Trustees may seek compensation from the Oil Spill Liability Trust Fund, but there is a cap of $500 million from the Fund for natural resources damages. The federal government may then seek restitution from the responsible parties for the sums taken from that Fund. The Trustees are not required to adhere to the NRDA process set forth in the OPA regulations. However, they are accorded a rebuttable presumption in court for any determination or assessment of damages conducted pursuant to the regulations. Of course, the Trustees and the responsible parties are permitted to enter into settlement agreements at any point throughout the NRDA process. The NRDA process in the Gulf is in the Restoration Planning Phase. The caps on the Oil Spill Liability Trust Fund and on OPA liability have captured Congress's attention, as has Gulf restoration. In 2012, President Obama signed the RESTORE Act, which establishes from Clean Water Act penalties the Gulf Coast Restoration Trust Fund, which is available for restoration activities in the Gulf Coast region.

In 2003, the United States exported about 1.3 million metric tons (MMT) of beef, veal and beef variety meats, valued at $3.9 billion. This was equivalent to approximately 10% of the farm value of U.S. cattle and calves. U.S. beef exports had grown rapidly during the decade beginning in 1992, increasing by 85%, while domestic beef consumption grew by just 14%. After USDA's 2003 BSE ("mad cow") announcement, most countries banned or restricted some or all imports of U.S. beef and cattle products. These included Japan, South Korea, Mexico, and Canada, which together had purchased approximately 90% of U.S. beef exports. Canada and Mexico resumed importing some U.S. beef in 2004. Japan and Korea reopened their markets in July and November 2006, respectively. In 2003, the United States was the world's third largest beef/veal exporter, claiming 18% of the world beef/veal market. Australia and Brazil ranked one and two, with 1.3 MMT and 1.2 MMT in exports, respectively. U.S. market share plummeted to 3% in 2004 (209,000 MT). Meanwhile, Brazil became the top beef/veal exporter in 2007 with 32% of the world market share, followed by Australia with 19%. Imports have represented about 13% of total beef consumption in the United States, the largest world beef importer. Imports from Canada (and Mexico) reflected an integrated North American market. Prior to its own May 2003 BSE event, Canada was the United States' major source of beef and cattle imports. In 2002 Canada sent about 1.7 million cattle to the United States, where large feeding and slaughter capacity readily absorbed them. The World Animal Health Organization (known by its historical acronym, OIE) is the internationally recognized standard-setting agency for animal health. The OIE's International Committee unanimously adopted a resolution on May 22, 2007 recommending that the United States, along with Canada, Switzerland, Taipei-China, Chile and Brazil, be recognized as having "controlled risk" status for BSE. Controlled risk status recognizes that regulatory controls for BSE are in place and effective. The OIE classification is reviewed annually. The Administration argues that all beef importing countries should acknowledge this OIE determination and more fully reopen their markets to U.S. beef. U.S. exports continue to recover gradually. U.S. market share for beef climbed to almost 9% in 2007. USDA reported that beef, veal, and beef variety meat exports reached more than 771,000 MT and were valued at more than $2.7 billion in 2007. However, Mexico took nearly 360,000 MT, or 47%, of the 2007 total volume; Canada took 132,000 MT, or 17%. By contrast, Japan and Korea, combined, imported 72,000 MT, or 9%, of all U.S. beef, veal, and variety meat exports, behind Egypt, which took more than 86,000 MT, or 11%. (See sections on Korea, Japan, and Canada, below.) Korea has been the last of the four major foreign markets to accept U.S. beef. Korea's prohibition, which had been in place since December 2003, was first lifted on September 11, 2006, under a Korea-U.S. health protocol negotiated in January 2006. Under this protocol, only boneless beef from cattle under 30 months of age were to be accepted--even though OIE guidelines do not consider any type of bone from these younger animals to be specified risk materials (SRMs, a rule-defined list of cattle parts most likely to harbor the BSE agent). Even so, only about 25,000 MT of U.S. beef has been exported to Korea since then. Korea rejected renewed shipments of U.S. beef first because they found bone fragments, albeit very small ones typically acceptable in commercial trade, and, later, for what they said were unacceptable dioxin levels. No beef has entered since October 2007. On April 18, 2008, the United States and Korea announced a new agreement to fully reopen Korea's market consistent with OIE guidelines. Specifically, the agreement was to allow all U.S. beef and beef products from cattle of all ages, to include bone-in as well as boneless beef, along with offals, variety meats, and processed beef products. This was dependent upon the removal of the following SRMs: the tonsils and part of the small intestine of all cattle; and the brain, eyes, spinal cord, skull, dorsal root ganglia, and vertebral column from all cattle of 30 months and older, again consistent with OIE guidelines. In a two-stage reopening, Korea was to open first to beef from under-30-month old cattle. It next was to allow beef from all cattle, upon publication of final rules, promulgated by the U.S. Food and Drug Administration (FDA), expanding the restrictions on feeding SRMs to animals and pets. Because these feed rules were published in the April 25, 2008, Federal Register , the hope was that the Korean market would soon be opened fully rather than in stages. U.S. officials said Korea had promised not to close its entire market again due to violations by a single plant, among other assurances intended to open and then maintain beef trade. The United States agreed to permit Korea, during the first 90 days, to audit and/or reject U.S. decisions on which of its plants could export. Special labeling requirements applied to T-bone and Porterhouse steak exports for the first 180 days, and there are restrictions on beef from Canadian-sourced cattle. Although the protocol was expected to take effect on May 15, 2008, two days after a Korean public comment period on it ended, market reopening has been delayed as officials there reportedly cope with a furious backlash among many consumers and opposition politicians. The Korean President first promised them he would halt all U.S. imports if another BSE case is reported here (which could contradict OIE guidelines), and renegotiate the agreement. By June 3, 2008, the Korean government asked that beef from cattle older than 30 months not be shipped. Although several beef companies said they would begin providing age information on their shipments to Korea, U.S. government officials expressed disappointment in the Korean decision and indicated they did not want to renegotiate the April agreement--so the market remained closed in early June 2008. The U.S. meat industry has stressed the importance of fully implementing the agreement: the U.S. Meat Export Federation has estimated that the United States has lost $3.5 billion to $4 billion in sales to Korea since December 2003. A National Cattlemen's Beef Association (NCBA) economist estimated that the agreement could lead to a $1 billion annually in sales there. Still, the United States is a long way from attaining its historic annual share of Korean beef imports, which amounted to around 50% of the export market for beef prior to the 2003 BSE event. Last year, Australia, the main U.S. competitor for the Korean beef market, had a 72% share of beef imports there. In the 110 th Congress, U.S. access to Korea's beef market has become a key issue in the debate over implementation of the U.S.-Korea free trade agreement (FTA). The FTA phases out Korean tariffs on beef over 15 years, but does not address animal health related barriers; the U.S. International Trade Commission has estimated that FTA itself could increase U.S. beef exports by $600 million to $1.8 billion. Nonetheless, a number of lawmakers have signaled that their support for legislation to implement the FTA is contingent on Korea fully opening its market for U.S. beef. After months of negotiations, the United States and Japan announced on October 23, 2004, an interim U.S. marketing program to certify that only beef products from cattle of 20 months or younger are shipped. Also, the United States agreed to an expanded definition (for the Japanese only) of potentially higher-risk cattle parts. These SRMs include--for cattle of all ages --the entire head except tongues and cheek meat; tonsils; spinal cords; distal ileum; and part of the vertebral column. This is broader than the U.S. SRM definition, which applies mainly to cattle over 30 months old. The United States also agreed to permit Japanese beef, previously banned because of animal disease including BSE there, into the U.S. market following U.S. rule-making. USDA's Animal and Plant Health Inspection Service (APHIS) published a final rule on December 14, 2005, permitting such imports (whole boneless beef cuts under specified conditions). Japan finalized its decision to permit U.S. beef imports in December 2005, after its independent Food Safety Commission (FSC) certified the adequacy of U.S. safeguards, at which point shipments resumed. The Japanese abruptly halted imports from all U.S. importers again on January 20, 2006, after they found vertebral column bones in several boxes of veal from one U.S. processor. Following Japan's review of the eligibility of U.S. slaughter facilities to export to Japan, the market reopened on July 27, 2006. U.S. officials continue to press the Japanese to expand eligibility for more types of beef products, as acceptable under OIE guidelines. But U.S. exports have encountered continuing beef safety concerns among some consumers, strict port scrutiny of U.S. shipments, uncertainty about U.S. supplies of age-qualified animals, a shift in consumer choice of protein from beef to pork, and competition for the Japanese market from Australia, a BSE-free exporter. Australia currently provides about 88% of Japanese imports of chilled and frozen beef. FAS said another potential constraint to expanding U.S. beef exports to Japan is that country's possible imposition of a beef import safeguard (a 50% tariff) should imports in 2008 exceed trigger levels. The current beef import safeguard is set at a level that would not trigger imposition of the safeguard, but it is possible that the safeguard, established annually, could be set at a level in 2008 that could seriously curtail U.S. beef exports. Legislative initiatives in the 110 th Congress will depend in large part on the pace of resumption of U.S. beef imports by Japan. On July 18, 2005, the U.S. border reopened to imports from Canada of live cattle under 30 months old, under USDA's Initial Minimal Risk Rule. The reopening was the first time in more than two years, since Canada's BSE incident in May 2003, that live cattle from Canada were eligible to enter the United States. On September 14, 2007, USDA announced its Minimal Risk Rule 2 (MRR2), a final rule that allows for the importation of live cattle and other bovine species (e.g., bison) for any use (including breeding animals born on or after March 1, 1999, a date APHIS had determined to be the effective enforcement of Canada's ruminant-to-ruminant feed ban). The final rule became effective November 19, 2007. Also in effect as of November 19, 2007, is a measure allowing imports of meat from Canadian cattle older than 30 months; this was a suspended part of a USDA rule issued in January 2005. The Ranchers-Cattlemen Action Legal Fund United Stockworkers of America (R-CALF USA) did not succeed in court action to block the border opening, although the court has yet to rule on R-CALF's request for a temporary restraining order that could result in putting on hold the MRR2 cattle rule until the court rules on its legality. R-CALF's legal efforts to block issuance of earlier rules also did not meet with success. One major concern of some cattlemen has been that MRR2 would result in a flood of Canadian cull cattle exports to the United States. Analysis by USDA, however, suggests that, for a variety of reasons, this was unlikely to occur. FAS lists, among factors that will impede the flow of cull cattle from Canada to the United States, an increase in Canadian slaughter capacity for cull cattle that reduces the supply of culled animals available for export; a large number of Canadian cull cattle that are currently older than eight years and thus disqualified from export eligibility by the age requirements in MRR2; and a strengthening of Canadian cattle prices as the MRR2 rule goes into effect. U.S. imports of Canadian cattle had fallen to 512,000 head in 2003, and virtually none in 2004, but recovered to approximately 1.4 million in 2007, still somewhat below their pre-BSE annual level of 1.7 million, according to USDA data. Besides concerns about competition from increased Canadian live cattle imports, there were worries that opening the border to what some believe are potentially risky Canadian animals will undermine efforts to regain the Japanese and Korean markets. Others counter that moving forward with the Canada rules was necessary for the United States to convince other countries that North American beef is safe, and that all countries should, like the United States, base their import policies on international standards. In the 110 th Congress, resolutions of disapproval of MRR2 have been introduced in both chambers ( H.J.Res. 55 and S.J.Res. 20 ). If passed and signed by the President, MRR2 would have no force or effect. Another bill introduced in the 110 th Congress, S. 1308 , would prohibit imports of Canadian cattle over 30 months of age or of beef derived from such cattle, until mandatory retail country-of-origin labeling (COOL) is implemented. The current statutorily set deadline for COOL for fresh meats is September 30, 2008 (see CRS Report RS22955, Country-of-Origin Labeling for Foods , by [author name scrubbed]). Industry analysts believe that the BSE experience has been much less devastating economically in the United States than it has been in other countries. One reason is that the United States, learning from Europe, was able to put BSE safeguards into place prior to its own first case. Also, the U.S. beef industry is much less dependent on export demand than the Canadians, cushioning the price effects. Before the BSE events, Canada exported 37% of its beef production, whereas the United States exported 9%. In 2003, the U.S. ban on Canadian beef and cattle, coupled with already tight U.S. supplies and strong demand, had driven up U.S. beef and cattle prices substantially. After the December 2003 BSE case was announced, cattle prices fell but quickly stabilized. Continuing demand, plus lower U.S. cattle inventories due in part to widespread drought in cattle country, kept cattle and beef prices high during 2004, helping to offset the effects of the BSE-related foreign bans. USDA reported average U.S. fed steer (i.e., slaughter-ready cattle) prices at nearly $85 per cwt. for all of 2004, compared with average fed steer prices of $85 in 2003 and $67 in 2002. By 2007 they reached nearly $92. A study by Kansas State University of the impact that BSE has had on the U.S. beef industry found that average U.S. wholesale boxed beef prices during 2004 were 12 to 17 cents per pound lower than they would have been if all the export markets had been open. The loss of beef export markets also meant that by-product prices were lower than they would have been. The total estimated U.S. beef industry losses attributable to loss of beef and by-product exports in 2004 ranged from $3.2 to $4.7 billion, according to the study.

The 110 th Congress has been monitoring U.S. efforts to regain foreign markets that banned U.S. beef when a Canadian-born cow in Washington state tested positive for bovine spongiform encephalopathy (BSE) in December 2003. The four major U.S. beef export markets, Canada, Mexico, Japan, and Korea, are again open to U.S. products. However, resumption of beef trade with Japan and Korea has not gone smoothly. For example, Korea briefly readmitted but then suspended U.S. beef imports. Now, Korea's delays in implementing an April 2008 agreement to end its ban are a key issue in congressional consideration of the Korea-U.S. Free Trade Agreement.

The federal government has recognized the need to organize and coordinate the collection and management of geospatial data since at least 1990. In that year, the Office of Management and Budget (OMB) revised Circular A-16--which provides guidance regarding coordination of federal surveying, mapping, and related spatial data activities--to establish the Federal Geographic Data Committee (FGDC) and to promote the coordinated use, sharing, and dissemination of geospatial data nationwide. OMB Circular A-16 also called for the development of a national resource for digital spatial information to enable the sharing and transfer of spatial data between users and producers, linked by criteria and standards. Executive Order 12906, issued in 1994, strengthened and enhanced Circular A-16 and specified that the FGDC shall coordinate development of the National Spatial Data Infrastructure (NSDI). Historically, the federal government has been a primary provider of authoritative geospatial information; however, the federal government has shifted, with some important exceptions, to consuming rather than providing geospatial information from a variety of sources. As a result, the federal government's role also has shifted toward coordinating and managing geospatial data and facilitating partnerships among the producers and consumers of geospatial information in government, the private sector, and academia. There are long-standing challenges to coordinating how geospatial data are acquired and used at the local, state, and federal levels--avoiding duplicative data sets, for example--and in collaboration with the private sector. Past Congresses have recognized these challenges. For example, the 108 th Congress explored issues of cost, duplication of effort, and coordination of geospatial information in a series of hearings. Bills introduced in previous Congresses would have addressed aspects of the geospatial enterprise, but none were enacted. Until enactment of the Geospatial Data Act of 2018, the executive branch had led nearly all efforts to better coordinate and share geospatial data within the federal government. In the 114 th Congress, Senator Orrin Hatch introduced S. 740 , the Geospatial Data Act of 2015, a bill that essentially would have codified Circular A-16 and provided Congress with additional capabilities to oversee the federal geospatial enterprise, among other authorities. Representative Bruce Westerman subsequently introduced companion legislation, H.R. 6294 . Congress did not act on either bill. In the 115 th Congress, Senator Hatch introduced S. 1253 , the Geospatial Data Act of 2017, on May 25, 2017; Representative Westerman introduced companion legislation, H.R. 3522 , on July 27, 2017. Later that year, on November 15, Senator Hatch introduced a slightly different version of the bill, S. 2128 ; Representative Westerman introduced the House version, H.R. 4395 , on the same day. Several other versions of the bill were circulated without formal introduction in 2018. In September 2018, another version of the bill, the Geospatial Data Act of 2018 (GDA), was included in H.R. 302 , the FAA Reauthorization Act of 2018, as Subtitle F of Title VII. On October 3, 2018, Congress passed the bill. On October 5, 2018, President Trump signed it into law as P.L. 115-254 . This report provides a summary and analysis of each section of the GDA. It also discusses possible implications of the new law and issues for Congress. The GDA codifies aspects of Circular A-16, authorizing many of the circular's existing components and modifying or expanding upon other aspects. The GDA continues the Federal Geographic Data Committee and supports the goal of creating a National Spatial Data Infrastructure. It also adds several congressional oversight components; for example, it adds a requirement for annual performance reporting from each of the covered agencies to the FGDC, and it requires a summary and evaluation by the FGDC of each agency in fulfilling the responsibilities listed in the GDA. The annual summaries and evaluations must be made available to the National Geospatial Advisory Committee (NGAC), and the law directs the FGDC to respond to comments from the NGAC. Further, it requires the FGDC to make available to Congress, not less than every two years, a report summarizing and evaluating agency performance, comments from the NGAC, responses to those comments, and responses to comments from the covered agencies themselves. The following is a brief summary and analysis of each section of the GDA, referencing section numbers as enumerated in the enacted bill under Subtitle F-Geospatial Data, Title VII, of P.L. 115-254 , the FAA Reauthorization Act of 2018. The GDA provisions are in Sections 751-759 of Title VII of P.L. 115-254 . The short title of the subtitle is the Geospatial Data Act of 2018. Section 751 includes a Findings provision with three components: 1. Open and publicly available data is essential to the successful operation of the GeoPlatform (discussed below in " Section 758. GeoPlatform "). 2. The private sector is invaluable, for the purposes of acquiring and producing geospatial data and data services, to carrying out the missions of the federal departments and agencies, and in contributing to the U.S. economy. 3. Congress has for two decades passed legislation promoting greater access and use of federal information and data, which has had multiple positive effects on businesses, the economy, scientific research, and other aspects of the nation. Section 752 defines 14 terms used in the GDA. Many of these terms are included and explained or defined in Circular A-16, but some are not, such as the National Geospatial Advisory Committee (NGAC) , GeoPlatform , intelligence community , and covered agency . Under the GDA, a covered agency is an executive department, as defined in 5 U.S.C. 101, that collects, produces, acquires, maintains, distributes, uses, or preserves geospatial data on paper or in electronic form to fulfill the agency's mission, either directly or through a relationship with another organization, including a state, local government, Indian tribe, institution of higher education, business partner or contractor of the federal government, and the public. In addition to the executive departments included in 5 U.S.C. 101, the GDA also counts the National Aeronautics and Space Administration and the Environmental Protection Agency as covered agencies. Section 752 excludes the Department of Defense (including 30 components and agencies performing national missions) or any element of the intelligence community from its definition of the term covered agency . OMB Circular A-16 includes definitions for additional terms in its Appendix D and other locations; however, the GDA expands upon some of those terms, such as the definition for geospatial data . In OMB Circular A-16, geospatial data are "information that identifies the geographic location and characteristics of natural or constructed features and boundaries on the Earth." The GDA is more descriptive: [Geospatial data] (A) means information that is tied to a location on the Earth, including by identifying the geographic location and characteristics of natural or constructed features and boundaries on the Earth, and that is generally represented in vector datasets by points, lines, polygons, or other complex geographic features or phenomena; (B) may be derived from, among other things, remote sensing, mapping, and surveying technologies; (C) includes images and raster datasets, aerial photographs, and other forms of geospatial data or datasets in digitized or non-digitized form. Also, the GDA describes which types of data and activities are not included under the definition of geospatial data. For example, geospatial activities of an Indian tribe are not included under the definition if they are not, in whole or in part, carried out using federal funds, as determined by the tribal government. Classified national security-related geospatial data activities of the Department of Defense and the Department of Energy are not included. Intelligence geospatial data activities, as determined by the Director of National Intelligence, are excluded. The GDA also excludes geospatial data and activities under 10 U.S.C. 22, or Section 110 of the National Security Act of 1947 (50 U.S.C. 3045). Some of the other terms defined in Circular A-16 are changed or expanded in the GDA. For example, in the GDA, data theme is defined and explained as NGDA data theme . The shift reflects a name change under this section and points to a fuller description in Section 756 of the GDA (see " Section 756. NGDA Data Themes "). The GDA codifies the continuation of an existing federal interagency committee, the FGDC, established under Circular A-16. The FGDC is the primary entity for developing, implementing, and reviewing the policies, practices, and standards relating to geospatial data according to the guidelines and requirements under Circular A-16, including implementation of the NSDI (see " Section 755. National Spatial Data Infrastructure "). The GDA codifies duties and responsibilities of the FGDC that are described in Circular A-16. Those duties include FGDC being the lead entity for development and management of the NSDI, among others. The GDA mandates that the Secretary of the Interior and the Director of OMB shall serve as chairperson and vice chairperson of the committee, respectively. This provision codifies the roles for chairperson and vice chairperson under the current FGDC leadership. The GDA requires that the head of each covered agency and the Director of the National Geospatial-Intelligence Agency (NGA) designate a representative of their respective agencies to serve as a member of the FGDC. Also, the GDA requires the Director of OMB to update guidance regarding membership on the FGDC within a year of enactment (October 2019). In addition to codifying duties and responsibilities (13 total) mostly described in Circular A-16, the GDA requires the FGDC to make available online, and to update at least annually, a summary of the status for each National Geospatial Data Asset (NGDA) data theme, based on annual reports submitted by each covered agency. The summary must include a determination of the agency's progress toward its specific responsibilities for its NGDA data theme(s) under Section 756 of the GDA. The law also requires the FGDC to determine the progress achieved for other, more general agency responsibilities described in Section 759. In each of these cases, the GDA directs the FGDC to determine if each covered agency (1) met expectations, (2) made progress toward expectations, or (3) failed to meet expectations. The GDA requires the FGDC to make available the annual summaries and evaluations of covered agency performance, described above, to the NGAC (described in " Section 754. National Geospatial Advisory Committee ") and to respond to comments upon request from the NGAC about the annual summaries and evaluations. In addition, the law requires the FGDC, not less than once every two years, to submit to Congress a report that includes the summaries and evaluations of covered agency performance, comments from the NGAC, and FGDC responses to those comments. Further, it requires the FGDC to make available the annual summaries and evaluations to the covered agencies, to seek comments from them, and, not less than every two years, to submit to Congress a report that includes the comments and responses. The summaries, evaluations, responses, and reports are not currently required under OMB Circular A-16. Lastly, Section 753 of the GDA requires the FGDC to establish an Office of the Secretariat with the Department of the Interior (DOI) to provide administrative support, strategic planning, funding, and technical support to the FGDC. The GDA codifies an established advisory committee (the National Geospatial Advisory Committee, or NGAC). It specifies that DOI will administer the NGAC. The current NGAC was established under the discretionary authority of the Secretary of the Interior in accordance with the provisions of the Federal Advisory Committee Act, as amended. Similar to its current charge, the NGAC will continue to provide advice and recommendations to the FGDC chairperson relating to the management of federal and national geospatial programs, the development of the NSDI, and other activities relating to GDA implementation. The NGAC also will review and comment on geospatial policy and management issues, and it will ensure that the views of representatives of nonfederal interested parties involved in national geospatial activities are conveyed to the FGDC. The NGAC will meet and act "at such times and places as the Advisory Committee considers advisable to carry out this subtitle," and all meetings will be open to the public. The NGAC, with concurrence of the FGDC chairperson, may secure information from federal agencies to carry out its duties under the GDA. According to the GDA, the NGAC will be composed of not more than 30 members appointed by the FGDC chairperson. The members shall be selected to achieve a balanced representation of different viewpoints on national geospatial activities and the development of the NSDI and shall take into consideration the geographic balance of residence of its members. Members shall be selected from groups including states, local governments, regional governments, tribal governments, the private sector, geospatial information user industries, professional associations, scholarly associations, nonprofits, academia, licensed geospatial data acquisition professionals, and the federal government. The GDA requires that at least one member of the NGAC be from the NGA. Members will be allowed to serve no more than two consecutive three-year terms, with the exception of the member from the NGA, who is not subject to the two-consecutive-term limit (the GDA does not specify a term limit for the member from NGA). Also, the Office of the Secretariat established under the previous section shall provide administrative support to the NGAC as well as to the FGDC. The NSDI originally was conceived in Executive Order 12906 as "the technology, policies, standards, and human resources necessary to acquire, process, store, distribute, and improve utilization of geospatial data." The GDA appears to support this concept generally but not precisely. In Section 752, the GDA defines the term Natio nal Spatial Data Infrastructure to mean "the technology, policies, criteria, standards, and employees necessary to promote geospatial data sharing throughout the Federal Government, State, tribal, and local governments, and the private sector (including nonprofit organizations and institutions of higher education)." Section 755 states that the NSDI's purpose shall be to ensure that geospatial data from multiple sources (covered agencies, state, local, and tribal governments; private sector; institutions of higher education) are available and easily integrated to enhance the understanding of the physical and cultural world. The GDA establishes two goals for NSDI. Under the first goal, geospatial data are to be reviewed prior to disclosure to ensure privacy and security of personal data; geospatial data are designed to enhance the accuracy of statistical information, both in raw form and in derived products; the public has free and open access to geospatial data, information, and interpretive products, in accordance with OMB Circular A-130; proprietary interests related to licensed information and data are protected; and interoperability and sharing capabilities of federal information systems and data are ensured. The second goal is to support and advance the establishment of a global spatial data infrastructure, consistent with certain requirements, including that covered agencies develop international geospatial data in accordance with international voluntary consensus standards. The GDA requires that the FGDC prepare and maintain a strategic plan for the NSDI. It further requires that the FGDC advise federal and nonfederal users of geospatial data on their responsibilities relating to the implementation of the NSDI. Section 756 requires the FGDC to designate NGDA data themes, which are primary topics and subjects--such as elevation, federal land ownership, vegetation, or marine boundaries--for which the coordinated development, maintenance, and dissemination of geospatial data would benefit the federal government and people of the United States. The GDA requires that the data themes "be representations of conceptual topics describing digital spatial information for the Nation," and contain associated datasets "(A) that are documented, verifiable, and officially designated to meet recognized standards; (B) that may be used in common; and (C) from which other datasets may be derived." The GDA requires the FGDC to designate one or more covered agencies as the lead covered agency for each data theme. The lead covered agencies for each theme are responsible for coordinating management of the data theme, providing supporting resources for managing the data, and providing other services and products related to the data theme. Each lead covered agency is charged with five specific responsibilities for its data theme: 1. Provide leadership for developing and implementing geospatial data standards for the theme. 2. Provide leadership, develop, and implement a plan for nationwide population of the data theme. 3. Establish goals that support the strategic plan for the NSDI. 4. Collect and analyze information from geospatial data users regarding user needs and incorporate those needs into strategies for the data theme. 5. Designate a point of contact within the agency who will be responsible for developing, maintaining, coordinating, and disseminating data using the GeoPlatform (see " Section 758. GeoPlatform "). The lead covered agency also is required to submit a performance report at least annually to the FGDC. The performance report includes progress made toward fulfilling the specific responsibilities for each data theme and comments in response to the subsequent summary and evaluation of the performance report provided by the FGDC. The FGDC will summarize and evaluate these reports, as described above. The covered agencies will have the opportunity to comment on the summaries and evaluations provided by the FGDC. The GDA requires the FGDC to establish standards for each of the NGDA data themes discussed above, which include rules, conditions, guidelines, and characteristics. The GDA also requires the FGDC to establish content standards for metadata. The standards are to be consistent with international standards to the maximum extent practicable. They also are to include international data standards acceptable for the purposes of declassified intelligence community data, and they are to be reviewed and updated periodically. Further, the GDA requires the FGDC to develop and promulgate the standards according to OMB Circular A-119 or its successor and to consult with a broad range of data users and providers. To the maximum extent possible, the GDA requires the FGDC to use national and international standards adopted by voluntary consensus bodies and to establish new standards if they do not already exist. Section 757 also contains an exclusion from public disclosure of any information that reasonably could be expected to cause damage to the national interest, security, or defense of the nation, including information relating to geospatial intelligence data activities, as determined in consultation with the Director of National Intelligence. The GDA requires the FGDC to operate an electronic service providing access to geospatial data and metadata to the general public. This service is to be known as the GeoPlatform. The GDA requires the GeoPlatform to be made available through the internet; to be accessible through a common interface; to include metadata for all geospatial data collected, directly or indirectly, by covered agencies; and to include a set of programming instructions and standards that would provide an automated means of accessing geospatial data and could include data from sources other than covered agencies. The GDA forbids the GeoPlatform to store or serve proprietary information or data acquired under a license by the federal government, unless authorized by the data provider. The GDA also requires the FGDC chairperson to designate an agency to serve as the managing partner for developing and operating the GeoPlatform. Section 759 of the GDA has three main parts: (1) covered agency responsibilities, (2) reporting, and (3) audits. The GDA lists 13 responsibilities for each covered agency, paraphrased as follows: 1. Prepare and implement a strategy for advancing geospatial data activities appropriate to the agency's mission. 2. Collect, maintain, disseminate, and preserve geospatial data such that resulting data, information, or products can be shared. 3. Promote geospatial data integration. 4. Ensure that geospatial information is included on agency record schedules that have been approved by the National Archives and Records Administration. 5. Allocate resources to fulfill geospatial data responsibilities. 6. Use geospatial data standards. 7. Coordinate with other federal agencies, state, local, and tribal governments, institutions of higher education, and the private sector. 8. Make federal geospatial information more useful to the public, enhance operations, support decision making, and enhance reporting to the public and to Congress. 9. Protect personal privacy and maintain confidentiality in accordance with federal policy and law. 10. Participate in determining whether declassified data can become part of the NSDI. 11. Search all sources to determine if existing data meet the needs of the covered agency before expending funds to acquire geospatial data. 12. Ensure that those receiving federal funds for geospatial data collection provide high-quality data. 13. Appoint a contact to coordinate with other lead covered agencies. The GDA requires each covered agency to submit an annual report to the FGDC regarding the 13 responsibilities listed above. It also requires the covered agencies to include geospatial data as a capital asset for purposes of preparing the President's budget submission under 31 U.S.C. 1105(a) and 1108. Each covered agency is required to maintain an inventory of geospatial data assets in accordance with OMB Circular A-130 and is required to submit an annual report to Congress identifying federal-wide geospatial assets. In addition, the GDA requires each covered agency to disclose each contract, cooperative agreement, grant, or other transaction that deals with geospatial data. The GDA requires OMB to take into consideration the summary and evaluations of the covered agency annual reports provided by the FGDC in its evaluation of the budget justification from each covered agency. It also requires OMB to include a discussion of the summaries and evaluation of progress toward establishing the NSDI in each E-government status report submitted under 44 U.S.C. 3606. The GDA requires the inspector general of each covered agency (or some other senior ethics official of a covered agency without an inspector general) to submit to Congress an audit not less than once every two years of the collection, production, acquisition, maintenance, distribution, use, and preservation of geospatial data by the covered agency. The audit requires a review of the covered agency's compliance with the requirements established under Section 757, with the 13 responsibilities for each covered agency listed in Section 759, and with the limitation on the use of federal funds in Section 759A (discussed below). The GDA prohibits the use of federal funds by a covered agency for the collection, production, acquisition, maintenance, or dissemination of geospatial data that does not comply with applicable standards established under Section 757 (discussed above), as determined by the FGDC. The prohibition goes into effect after five years from the date on which the FGDC establishes standards for each NGDA theme (specified in this section as the implementation date ). The GDA provides an exemption--allowing the maintenance and dissemination of geospatial data--if those geospatial data are collected, produced, or acquired by the covered agency prior to the implementation date. Section 759A of the GDA provides the FGDC chairperson authority to grant a waiver to the limitation, upon request from a covered agency, subject to several requirements that the requesting covered agency would need to meet. Section 759B states "Nothing in this subtitle shall repeal, amend, or supersede any existing law unless specifically provided in this subtitle." Section 759C states "The [FGDC] and each covered agency may, to the maximum extent practical, rely upon and use the private sector in the United States for the provision of geospatial data and services." Stakeholders have long recognized the need to better organize and manage geospatial data among federal agencies and among the federal government, local and state authorities, the private sector, and academia. Some observers have commented that the GDA has the potential to improve the extent and efficiency of executive branch agency coordination of geospatial activities and thus to help minimize duplication of effort in acquiring and using geospatial data, saving taxpayers money. However, others have argued that some level of duplication of effort, and of inefficiency in the management and sharing of geospatial information, will always exist across a vast federal bureaucracy in which a large amount of government information has some geospatial component. It also could be argued that the size of the federal bureaucracy is only one factor contributing to the challenges of organizing and managing geospatial data. Surveying and mapping activities themselves are prone to duplication of effort among the executive branch's different missions and goals. The GDA largely codifies an executive branch structure for managing the federal geospatial enterprise under OMB Circular A-16, coordinated under the auspices of the FGDC. The law, however, adds budgeting and reporting requirements for executive branch agencies that provide Congress with a number of avenues for conducting oversight on how well the federal government manages its geospatial data assets. The GDA requires that covered agencies, for example, inventory and assess their geospatial data assets as part of their annual budget submissions. This requirement could address long-standing issues about the extent and valuation of geospatial data and associated infrastructure within each agency--namely, what it costs the federal government to acquire, manage, share, and use geospatial data. The GDA potentially could illuminate for Congress how each covered agency budgets for its geospatial activities and thus could allow Congress to better evaluate what portion of agency appropriations contributes toward the federal geospatial enterprise. This information may enable Congress to query the Director of OMB (a vice-chairperson of the FGDC), about the budgetary implications of agency expenditures on geospatial-related activities in each budget cycle. The GDA also contains a number of reporting requirements which may enable Congress to evaluate covered agencies' progress toward implementing requirements for data themes and other metrics under the new law. The GDA requires that agency evaluations, comments received from the NGAC, and responses to those comments be made available publicly. Thus, Congress would have the ability to evaluate in some detail individual agency performance, the progress made in coordinating the broader geospatial enterprise via the FGDC, and the views from outside stakeholders as represented by members of the NGAC. The requirement for biannual audits by agency inspectors general under Section 759 of the GDA provides Congress with another tool to evaluate covered agency performance. Another potentially useful provision within Section 756 of the GDA, for the purposes of coordination among agencies, is the requirement that each covered agency designate a point of contact "who shall be responsible for developing, maintaining, coordination relating to, and disseminating data" related to the geospatial data theme under that covered agency's responsibility. That requirement could enhance communication and coordination of geospatial activities within the executive branch, a theme raised by Congress in hearings during 2003 and 2004. A single point of responsibility and knowledge in each agency also may assist Congress in its oversight activities.

In the 114th and 115th Congresses, several bills entitled the Geospatial Data Act were introduced in the Senate and House of Representatives. Congress did not act on legislation introduced in the 114th Congress; however, in September 2018, a version of the bill, the Geospatial Data Act of 2018 (GDA), was included in H.R. 302, the FAA Reauthorization Act of 2018, as Subtitle F of Title VII. Congress passed H.R. 302 on October 3, 2018, and President Trump signed it into law on October 5 as P.L. 115-254. The federal government has recognized the need to organize and coordinate the collection and management of geospatial data since at least 1990. In that year, the Office of Management and Budget (OMB) revised Circular A-16--which provides guidance regarding coordination of federal surveying, mapping, and related spatial data activities--to establish the Federal Geographic Data Committee (FGDC) and to promote the coordinated use, sharing, and dissemination of geospatial data nationwide. Past Congresses have recognized the challenge of coordinating and sharing geospatial data from the local, county, and state level to the national level and vice versa. Until enactment of the GDA, however, the executive branch had led nearly all efforts to better coordinate and share geospatial data within the federal government. Stakeholders have long recognized the need to better organize and manage geospatial data among federal agencies and among the federal government, local and state authorities, the private sector, and academia. Some observers and stakeholders have commented that the GDA has the potential to improve the extent and efficiency of executive branch agency coordination of geospatial activities and thus to help minimize duplication of effort in acquiring and using geospatial data, saving taxpayers money. However, it could be argued that some level of duplication of effort, and of inefficiency in the management and sharing of geospatial information, will always exist across a vast federal bureaucracy in which a majority of government information has some geospatial component. It also could be argued that the size of the federal bureaucracy is only one factor contributing to the challenges of organizing and managing geospatial data; surveying and mapping activities themselves are prone to duplication of effort among the different missions and goals of the executive branch. The GDA codifies aspects of OMB Circular A-16, authorizing many of its existing components and modifying or expanding upon other aspects. The GDA continues the FGDC and supports the goal of creating a National Spatial Data Infrastructure (NSDI), defined in the new law as "the technology, policies, criteria, standards, and employees necessary to promote geospatial data sharing throughout the Federal Government, State, tribal, and local governments, and the private sector (including nonprofit organizations and institutions of higher education)." The GDA adds a number of congressional oversight components. For example, it adds a requirement for annual performance reporting from each of the federal agencies responsible for a specific geospatial topic (or theme), and it requires the FGDC to conduct a summary and evaluation of each agency in fulfilling the responsibilities listed in the GDA. The annual summaries and evaluations must be made available to the National Geospatial Advisory Committee (NGAC, charged with providing advice and recommendations to the FGDC). Further, the law requires the FGDC to make available to Congress, not less than every two years, a report summarizing and evaluating agency performance, comments from the NGAC, responses to those comments, and responses to comments from the responsible agencies themselves. One long-standing issue for Congress has been the cost of geospatial activities to the federal government--namely, what it costs to acquire, manage, share, and use geospatial data. To help address that concern, the GDA requires the responsible federal agencies to inventory and assess their geospatial data assets as part of their annual budget submissions. The GDA potentially could illuminate for Congress how each responsible agency budgets for its geospatial activities, which may allow Congress to better evaluate what portion of agency appropriations contributes to the federal geospatial enterprise. This information could enable Congress to query the Director of OMB (the vice-chairperson of the FGDC), about the budgetary implications of agency expenditures on geospatial-related activities in each budget cycle.

Congress uses an annual appropriations process to provide discretionary spending for federal government agencies. The responsibility for drafting legislation to provide for such spending is currently divided among 12 appropriations subcommittees in each chamber, each of which is tasked with reporting a regular appropriations bill to cover all programs under its jurisdiction. (The titles of these 12 bills, which correspond to their respective subcommittees, are listed in Table 1 at the end of this section.) The timetable associated with the annual appropriations process requires the enactment of all regular appropriations bills prior to the beginning of the fiscal year (October 1). If regular appropriations are not enacted by that deadline, one or more continuing resolutions (CRs) may be enacted to provide interim funding authority until all regular appropriations bills are completed or the fiscal year ends. During the fiscal year, supplemental appropriations may also be enacted to provide funds in addition to those in regular appropriations acts or CRs. Amounts provided in appropriations acts are subject to limits, both procedural and statutory, which are enforced through mechanisms such as points of order and sequestration. Disagreement over the appropriate level of discretionary spending--as well as its distribution between defense and nondefense activities--significantly affected the focus of the FY2016 appropriations process. While the Bipartisan Budget Act of 2013 ( P.L. 113-67 ) revised the statutory discretionary spending limits to allow higher spending in FY2014 and FY2015, that agreement did not alter the calculation for the FY2016 limits. As a consequence, the FY2016 limits were generally less than 1% higher than both the FY2014 and FY2015 limits. In the FY2016 budget submission, the President proposed raising both the defense and nondefense limits. The congressional budget resolution ( S.Con.Res. 11 ) took a different approach in that it assumed FY2016 discretionary spending at the level allowed by the limits at that time but also allowed additional spending (largely in the defense category) that was effectively not subject to the statutory spending limits. This additional spending was proposed at a higher level than the amount requested by the President. This disagreement as to the level of discretionary spending was ultimately resolved through the enactment of the Bipartisan Budget Act of 2015 on November 2, 2015 (BBA 2015; H.R. 1314 ; P.L. 114-74 ). The BBA 2015 raised both the defense and nondefense statutory discretionary spending limits for FY2016 and FY2017 and specified an expected level for the "Overseas Contingency Operations/Global War on Terrorism" (OCO/GWOT) spending adjustment for each of those fiscal years. The enactment of annual appropriations subject to those limits has yet to occur. Consideration of FY2016 regular appropriations bills in the House began on April 15, 2015, with subcommittee approval of the Energy-Water ( H.R. 2028 ) and Military Construction-VA ( H.R. 2029 ) appropriations bills. Since that time, all 12 regular appropriations bills have been reported from committee, and six of those have passed the House. About a month after committee action began in the House, the Senate began its consideration of FY2016 appropriations measures with the subcommittee approval of the Energy-Water and Military Construction-VA appropriations bills, on May 19. The Senate Appropriations Committee subsequently reported all 12 regular appropriations bills. On June 18, the Senate rejected a motion to invoke cloture on the motion to proceed to the Department of Defense appropriations bill ( H.R. 2685 ). Since that time, the Senate voted not to invoke cloture on motions to proceed to the Defense, Military Construction-VA, and Energy-Water appropriations bills. However, on November 5, the Senate agreed to proceed to consider the Military Construction-VA appropriations bill and passed that bill on November 10. The Senate proceeded to consider the Transportation-HUD appropriations bill ( H.R. 2577 ) on November 18 but has not completed that consideration as of the date of this report. Because none of the FY2016 regular appropriations bills became law by the start of the fiscal year, a CR was enacted to provide continuing appropriations until December 11 ( H.R. 719 ; P.L. 114-53 ). (Prior to the final consideration and enactment of H.R. 719 , Senate legislative action related to FY2016 continuing appropriations occurred on a different legislative vehicle, H.J.Res. 61 .) This report provides background and analysis of congressional action related to the FY2016 appropriations process. The first section discusses the status of discretionary budget enforcement for FY2016, including the statutory spending limits and allocations associated with the congressional budget resolution. The second section provides information on the consideration of regular appropriations bills. Further information with regard to the FY2016 regular appropriations bills is provided in the various CRS reports that analyze and compare the components of the President's budget submission and the relevant congressional appropriations proposals. This report will be updated periodically during the FY2016 appropriations process. For information on the current status of FY2016 appropriations measures, see the CRS Appropriations Status Table: FY2016, at http://www.crs.gov/Pages/AppropriationsStatusTable.aspx . The framework for budget enforcement of discretionary spending under the congressional budget process has both statutory and procedural elements. The statutory elements are the discretionary spending limits derived from the Budget Control Act of 2011 (BCA; P.L. 112-25 ). The procedural elements are primarily associated with the budget resolution. It limits both the total spending under the jurisdiction of the Appropriations Committee, as well as spending under the jurisdiction of each appropriations subcommittee. In addition, pursuant to Section 251(b) of the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), certain spending is effectively exempt from these statutory and procedural spending limits because the limits are adjusted upward to accommodate that spending. Such spending includes budget authority specifically designated as emergency requirements, OCO/GWOT, disaster relief, and particular amounts of budget authority for certain program integrity initiatives. Since the enactment of the BCA in 2011, the vast majority of adjustments pursuant to Section 251(b) have been for budget authority designated as OCO/GWOT. Such adjustments have allowed for additional budget authority (largely in the defense category) for expenses associated with overseas operations, such as those in Iraq and Afghanistan, as well as other related purposes. The FY2016 appropriations process, as noted earlier, has been affected by disagreement over the appropriate level of discretionary spending, as well as its distribution between defense and nondefense activities. The BCA established statutory spending limits for FY2016. However, the President proposed revisions to those limits in his FY2016 budget request. In addition, the FY2016 budget resolution establishes certain procedurally enforceable limits on discretionary spending that are related to the levels of the BCA limits. Table 2 displays the initial BCA limits, the revised BCA limits, and proposed limits for FY2016, compared to the limits that were in effect for FY2014 and FY2015. It also displays the current law defense and nondefense spending levels that were ultimately established through the enactment of the BBA 2015. The BCA imposes separate limits on defense and nondefense discretionary spending for each of the fiscal years from FY2012 through FY2021. The defense category includes all discretionary spending under budget function 050 (defense); the nondefense category includes discretionary spending in the other budget functions. In order to require additional budgetary savings, the BCA included procedures to lower the level of the initial spending limits for each fiscal year. The Office of Management and Budget (OMB) calculates the amount by which each initial limit for the upcoming fiscal year is to be lowered, and announces the amount of the lowered limits in a "preview report" at the same time that the President's budget is submitted. If discretionary spending is enacted in excess of a statutory limit, the BCA requires the level of spending to be brought into conformance through "sequestration," which involves largely across-the-board cuts to non-exempt spending in the category of the limit that was breached (i.e., defense or nondefense). Once discretionary spending is enacted, OMB evaluates that spending relative to the spending limits and determines whether sequestration is necessary. For FY2016 discretionary spending, the first such evaluation (and any necessary enforcement) is to occur within 15 calendar days after the 2015 congressional session adjourns sine die. For any FY2016 discretionary spending that becomes law after the session ends, the OMB evaluation and any enforcement of the limits would occur 15 days after enactment. The BBEDCA also provides specific preconditions for adjusting the statutory limits to accommodate OCO/GWOT-designated spending. Such spending must be designated by Congress on an account-by-account basis, and also be subsequently designated by the President, in order for the relevant statutory limit to be adjusted. If the President were not to designate such funds as OCO/GWOT, the limit would not be adjusted to accommodate that additional spending. This could cause enacted spending to be higher than the limit and trigger a sequestration to enforce it. In recent years, appropriations acts that carried OCO/GWOT spending have generally included a provision stipulating that each amount in that act designated by Congress for OCO/GWOT "shall be available only if the President subsequently so designates all such amounts.... " Table 2 displays the FY2014 and FY2015 limits and OCO/GWOT enacted spending, the FY2016 initial and revised levels for the limits, and various FY2016 proposed levels for the limits and OCO/GWOT spending. The total of the limits is also listed. Pursuant to Section 251A of the BBEDCA, the initial BCA limit on defense spending for FY2016 was reduced by $53.909 billion to the revised level of $523.091 billion. The initial limit on FY2016 nondefense spending was reduced by $36.509 billion to $493.491 billion. Recall that the reduced level of these limits was increase of less than 1% above both the FY2014 and FY2015 limits. The President's budget submission proposes that both the defense and nondefense limits for FY2016 be raised by similar amounts (as listed in Table 2 ). Under this proposal, the defense limit would be increased by $37.909 billion ($16 billion less than the initial BCA defense limit). The nondefense limit would be increased by $36.509 billion (equal to the level of the initial BCA nondefense limit). The budget submission also contains a number of other proposed changes to both spending and revenue that are intended to "offset" the proposed increases to the limits. The requested amount of OCO/GWOT spending is $57.996 billion--a decrease of $15.686 billion from the FY2015 enacted levels. The FY2016 congressional budget resolution ( S.Con.Res. 11 ) assumes different levels of discretionary spending than those proposed by the President's budget submission (as listed in Table 2 ). The levels of defense and nondefense discretionary spending subject to the limits that are identified in the joint explanatory statement accompanying the budget resolution are identical to the revised BCA levels. However, the budget resolution also includes certain procedural contingencies for the consideration of legislation that could alter the statutory discretionary spending limits. For example, Section 4302 would allow for Senate consideration of legislation "relating to enhanced funding for national security or domestic discretionary programs" provided it does not increase the deficit during the period covered by the budget resolution. The amount of OCO/GWOT spending assumed under the budget resolution is $96.287 billion--an increase of $22.595 billion over FY2015 enacted levels and an increase of $38.291 billion over the President's request. The BBA 2015 raised both the defense and nondefense discretionary spending limits for FY2016 (as listed in Table 2 ). The reduced limits were increased by a total of $50 billion, equally divided between the defense and nondefense limit. This law also specified an expected level for the FY2016 OCO/GWOT spending adjustment of $14.8 billion for function 150 (international affairs) and $58.7 billion for function 050 (defense), for a total of $73,693. The procedural elements of budget enforcement generally stem from requirements under the Congressional Budget Act of 1974 (CBA) that are associated with the adoption of an annual budget resolution. Through this CBA process, the Appropriations Committee in each chamber receives a procedural limit on the total amount of discretionary budget authority for the upcoming fiscal year, referred to as a "302(a) allocation." The House and Senate Appropriations Committees subsequently divide this allocation among their 12 subcommittees. These divisions to each subcommittee are referred to as "302(b) suballocations." The 302(b) suballocations restrict the amount of budget authority available to each subcommittee for the agencies, projects, and activities under their jurisdictions, and effectively act as caps on each of the 12 regular appropriations bills. The Appropriations Committee may revise the 302(b) suballocations at any time by issuing a new suballocation report. Both the 302(a) and 302(b) limits may be enforced on the floor through points of order. Final action of the FY2016 budget resolution occurred on May 5, 2015 ( S.Con.Res. 11 ). The joint explanatory statement associated with the budget resolution provides 302(a) allocations for the House and Senate Appropriations Committees that are consistent with the revised BCA levels for the statutory discretionary spending limits (see Table 2 ). Those 302(a) allocations also included a separate allocation for OCO/GWOT spending of $96.287 billion. The most recently reported 302(b) suballocations of discretionary spending for the House and Senate Appropriations subcommittees are listed in Table 3 . This table also includes a comparison of the distribution of OCO/GWOT-designated budget authority among those subcommittees, which is in addition to amounts that are subject to the limits. The initial House 302(b) suballocations were reported on April 29, 2015, and subsequently revised on May 18 and July 10. The initial Senate suballocations were reported about three weeks after the initial House allocations, on May 21, 2015. The Senate Appropriations Committee later revised these suballocations on June 10, June 24, July 8, and July 16. These Senate suballocations were further revised on November 5 and November 18 after the enactment of the BBA 2015. Additional revisions to both the House and Senate suballocations may occur to reflect the increases to the defense and nondefense limits established by the BBA 2015. The House and Senate provide annual appropriations in 12 regular appropriations bills. Each of these bills may be considered and enacted separately, but it is also possible for two or more of them to be combined into an omnibus vehicle for consideration and enactment. Alternatively, if some of these bills are not enacted, annual funding for the projects and activities therein may be provided through a full-year CR. As of the date of this report, the House Appropriations Committee has reported all 12 regular appropriations bills for FY2016 (see Table 4 ). Six of these bills have been passed by the House (see Table 5 ). The Senate Appropriations Committee has also reported all 12 of the FY2016 regular appropriations bills (see Table 6 ). The Senate passed one of these--Military Construction-VA (see Table 7 )--and also proceeded to consider the Transportation-HUD appropriations bill ( H.R. 2577 ). It has not completed that consideration as of the date of this report. (In addition, the Senate has voted not to invoke cloture on motions to proceed to consider two other regular bills--Defense and Energy-Water.) Table 4 lists the regular appropriations bills that have received subcommittee or full committee action, along with the associated date of subcommittee approval, date reported to the House (if applicable), and the report number. The first regular appropriations bills to be approved in subcommittee and reported by the full committee were Energy-Water ( H.R. 2028 ) and Military Construction-VA ( H.R. 2029 ). Both were reported to the House on April 24, 2015. Two other measures received some form of committee consideration during the month of April--Legislative Branch ( H.R. 2250 ) and Transportation-HUD ( H.R. 2577 ). Both of these measures, however, were not reported until the month of May. A fifth regular appropriations bill--Commerce-Justice-Science ( H.R. 2578 )--was reported by the committee at the end of May. Three appropriations measures were reported by the committee during the month of June--Department of Defense ( H.R. 2685 ), State-Foreign Operations ( H.R. 2772 ), and Interior ( H.R. 2822 ). Two additional bills--Financial Services ( H.R. 2995 ) and Labor-HHS-Education ( H.R. 3020 )--were ordered reported. (These two bills were reported to the House during the month of July.) Finally, the Agriculture appropriations bill was approved in subcommittee, bringing the total number of FY2016 bills that the House Appropriations Committee had acted on to 11. During the month of July, the House Appropriations Committee concluded its consideration of regular appropriations bills for FY2016 by reporting out the Agriculture ( H.R. 3049 ) and Homeland Security ( H.R. 3128 ) bills. Table 5 identifies the six regular appropriations bills that have been passed by the House on initial consideration, along with the date consideration was initiated, the date consideration was concluded, and the vote on final passage. The first FY2016 regular appropriations bills considered on the House floor were Military Construction-VA ( H.R. 2029 ) and Energy-Water ( H.R. 2028 ). The consideration of both of these measures was initiated on April 29, 2015, pursuant to modified open rules ( H.Res. 223 ), which generally limited debate of each amendment to 10 minutes. A total of 104 amendments were offered during the consideration of these two bills, of which 58 were adopted. The House passed the measures later that same week. The Legislative Branch appropriations bill ( H.R. 2250 ) was considered on the House floor on May 19. A structured rule, as is traditional for Legislative Branch bills, limited consideration to three specified amendments. Two of these amendments were subsequently adopted. The House passed the measure on the same day that consideration began. During the first two weeks in June, the House considered and passed three appropriations measures. All three of these were considered under the terms of modified open rules. Floor consideration of the Commerce-Justice-Science bill ( H.R. 2578 ) began on June 2, and the House passed the measure on June 3. Later that same day, the House began to consider the Transportation-HUD bill ( H.R. 2577 ) but did not pass it until the following week, on June 9. The House initiated consideration of the DOD bill on June 10 and passed it the next day. A total of 233 amendments were offered to those three measures during that two-week period, of which 124 were adopted. The House began considering the Interior bill ( H.R. 2822 ) on June 25 but did not finish amending the bill prior to the Fourth of July district work period. The House resumed consideration of the measure on July 7 but halted consideration the following day. Prior to when consideration was halted, the House had adopted 57 amendments of the 116 that had been offered. No further floor consideration of regular appropriations bills has occurred as of the date of this report. Table 6 lists the regular appropriations bills that have received subcommittee or full committee action along with the date of subcommittee approval, date reported to the Senate (if applicable), and the report number. The Senate Appropriations Committee began consideration of the FY2016 regular appropriations bills in the same order as the House, acting first on the Energy-Water ( H.R. 2028 ) and Military Construction-VA ( H.R. 2029 ) bills. Both were reported to the Senate on May 21, 2015. Seven additional bills were reported by the committee during the month of June--Department of Defense ( H.R. 2685 ), Legislative Branch ( H.R. 2250 ), Commerce-Justice-Science ( H.R. 2578 ), Homeland Security ( S. 1619 ), Interior ( S. 1645 ), Labor-HHS-Education ( S. 1695 ), and Transportation-HUD ( H.R. 2577 ). During the month of July, the committee completed its consideration of FY2016 regular appropriations by reporting the State-Foreign Operations ( S. 1725 ), Agriculture ( S. 1800 ), and Financial Services ( S. 1910 ) appropriations bills. Table 7 identifies the one regular appropriations bill that the Senate passed on initial consideration, along with the date consideration was initiated, the date consideration was concluded, and the vote on final passage. The Senate first attempted to initiate floor consideration of the Military Construction-VA appropriations bill ( H.R. 2029 ) on September 30. On that date, a motion to proceed to the measure was made in the Senate, and cloture was filed on that motion. The following day, the Senate voted not to invoke cloture on the motion to proceed by a vote of 50-44. After the BBA 2015 was enacted, the Senate agreed to proceed to consider the measure, by a vote of 93-0, on November 5, 2015. (An amendment in the nature of a substitute was offered and constituted the base text for consideration of the measure.) During the floor consideration, a total of 17 amendments were offered to that substitute amendment, of which 16 were adopted. The measure passed the Senate by a vote of 93-0 on November 10, 2015. In addition to the Military Construction-VA appropriations bill, the Senate has also considered the Transportation-HUD appropriations bill. On November 16, a motion to proceed to the measure was made in the Senate, and cloture was filed on that motion. The following day, that cloture motion was withdrawn. Instead, the measure was laid before the Senate by unanimous consent on November 18. (An amendment in the nature of a substitute was offered and constituted the base text for consideration of the measure.) As of the date of this report, of the four amendments that had been offered to that substitute amendment, three had been adopted and one had not yet been disposed of. Cloture was filed on the substitute amendment and the bill itself the same day that the Senate began consideration of the measure, but both of those motions were later withdrawn by unanimous consent on November 19. No further consideration has occurred as of the date of this report. The Senate has also addressed whether to proceed to consider two other FY2016 regular appropriations bills: 1. Department of Defense ( H.R. 2685 ). On June 16, a motion to proceed to the measure was made in the Senate, and cloture was filed on that motion. Two days later, on June 18, the Senate failed to invoke cloture on the motion to proceed by a vote of 50-45. On September 22, the Senate reconsidered the vote by which cloture on the motion to proceed was not invoked and again failed to invoke cloture by a vote of 54-42. About five weeks later, on November 3, the motion to proceed to the measure was made again the Senate, and cloture was filed on that motion. On November 5, cloture was not invoked on the motion to proceed by a vote of 51-44. 2. Energy-Water ( H.R. 2028 ). On October 6, a motion to proceed to the measure was made in the Senate, and cloture was filed on that motion. On October 8, the Senate failed to invoke cloture on the motion to proceed by a vote of 49-47. No further Senate floor action has occurred with regard to these or any other regular appropriations measures as of the date of this report. Because none of the FY2016 regular appropriations bills was expected to be enacted by the beginning of the fiscal year, a CR ( H.R. 719 ; P.L. 114-53 ) was enacted on September 30, 2015. This CR generally extended funding at last year's levels, with a small across-the-board reduction and certain enumerated exceptions, through December 11, 2015. For further information with regard to the funding and other authorities provided by the continuing appropriations in H.R. 719 , see CRS Report R44214, Overview of the FY2016 Continuing Resolution (H.R. 719) , by [author name scrubbed]. Prior to the consideration and enactment of H.R. 719 , Senate legislative action related to FY2016 continuing appropriations occurred on a different legislative vehicle, H.J.Res. 61 . Congressional action on both of these vehicles is summarized chronologically in this section of the report. On September 22, Senate Majority Leader Mitch McConnell offered an amendment in the nature of a substitute ( S.Amdt. 2669 ) to H.J.Res. 61 that would provide temporary FY2016 continuing appropriations through December 11, 2015, and also contained provisions that would limit the ability of Planned Parenthood to receive federal funds unless certain conditions were met. This amendment was offered to an unrelated measure that was pending before the Senate (Hire More Heroes Act of 2015; H.J.Res. 61 ). On September 24, the Senate failed to invoke cloture on that amendment to H.J.Res. 61 by a vote of 47-52. No further Senate action occurred with regard to that amendment. After the Senate rejected cloture on the Senate amendment to H.J.Res. 61 on September 24, Majority Leader McConnell made a motion that proposed a Senate amendment ( S.Amdt. 2689 ) to a different, unrelated measure pending before the Senate (TSA Office of Inspection Accountability Act of 2015, H.R. 719 ) and filed cloture on that motion. More formally, the majority leader offered a motion to concur with an amendment ( S.Amdt. 2689 ) to a House amendment to a Senate amendment to H.R. 719 . As was the case for the initial CR amendment he offered to H.J.Res. 61 , this new Senate amendment contained temporary FY2016 continuing appropriations through December 11. However, this amendment did not include the Planned Parenthood-related provisions that were carried in the initial CR amendment offered to H.J.Res. 61 . On September 28, the Senate invoked cloture on a motion to concur with S.Amdt. 2689 by a vote of 77-19. On September 30, the Senate adopted that motion to concur by a vote of 78-20. By a vote of 277-151, the House concurred in that Senate action later in the day, and H.R. 719 was signed into law that evening ( P.L. 114-53 ). The Congressional Budget Office (CBO) estimates the budgetary effects of interim CRs on an "annualized" basis, meaning that those effects are measured as if the CR were providing budget authority for an entire fiscal year. According to CBO, the total amount of annualized budget authority for regular appropriations in the CR that is subject to the BCA limits (including projects and activities funded at the rate for operations and anomalies) is $1,016.582 billion. Although the total spending in the CR that is subject to the FY2016 statutory limits is equal to the total of those limits, the CR is estimated to comply with the defense limit, but it exceeds the nondefense limit. CBO estimates defense spending in the CR to total $520.385 billion, which is about $2.7 billion below the defense limit. Nondefense spending, however, is estimated to total $496.197 billion, which is about $2.7 billion above the nondefense limit. As was previously mentioned, however, the earliest that the statutory discretionary spending limits could be enforced is 15 days after the end of the congressional session. This date is likely to occur after the expiration of the CR on December 11, 2015. When CBO estimated the budgetary effects of the CR and included spending that is effectively not subject to the statutory discretionary spending limits--because it was designated or otherwise provided as OCO/GWOT, continuing disability reviews and redeterminations, health care fraud and abuse control, disaster relief, and emergency requirements--the total amount of annualized budget authority in the CR is $1,099.962 billion.

This report provides information on the congressional consideration of the FY2016 regular appropriations bills and the FY2016 continuing resolution (CR). It also discusses the statutory and procedural budget enforcement framework for FY2016 appropriations. It will address the congressional consideration of FY2016 supplemental appropriations if any such consideration occurs. For all types of appropriations measures, discretionary spending budget enforcement under the congressional budget process has two primary sources. The first is the discretionary spending limits that are derived from the Budget Control Act of 2011 (P.L. 112-25). The second source of budget enforcement is associated with the budget resolution. It imposes limits on both the total spending under the jurisdiction of the Appropriations Committees (referred to as a "302(a) allocation") as well as spending under the jurisdiction of each of the Appropriations subcommittees (referred to as "302(b) suballocations"). Certain spending is effectively not subject to these statutory and procedural limits, such as spending which is designated as "Overseas Contingency Operations/Global War on Terrorism" (OCO/GWOT) and "disaster relief." Disagreement over the appropriate level of discretionary spending--as well as its distribution between defense and nondefense activities--has significantly affected the focus of the FY2016 appropriations process. The FY2016 budget resolution (S.Con.Res. 11) that was adopted by Congress provided a 302(a) allocation for the Appropriations Committees that was consistent with the statutory discretionary spending limits set in the Budget Control Act. However, the budget resolution also allowed for those funds to be supplemented by additional OCO/GWOT spending at a higher level than the amount requested by the President. On November 2, new levels for discretionary spending were established through the enactment of the Bipartisan Budget Act of 2015 (BBA 2015; H.R. 1314; P.L. 114-74). The BBA 2015 raises both the defense and nondefense statutory discretionary spending limits for FY2016 and FY2017 and specifies an expected level for the OCO/GWOT spending adjustment for each of those fiscal years. As of the date of this report, both the House and Senate Appropriations Committees have reported all 12 regular appropriations bills for FY2016. The House has passed six of these--Energy-Water (H.R. 2028); Military Construction-VA (H.R. 2029); Legislative Branch (H.R. 2250); Commerce-Justice-Science (H.R. 2578); Transportation-HUD (H.R. 2577); and Defense (H.R. 2685). The Senate has passed one regular appropriations bill--Military Construction-VA. Because none of the regular appropriations bills was expected to become law by the start of the fiscal year, a CR was enacted to provide temporary appropriations until December 11 (H.R. 719; P.L. 114-53). This report will be updated periodically during the FY2016 appropriations process. For information on the current status of FY2016 appropriations measures, see the CRS Appropriations Status Table: FY2016, at http://www.crs.gov/Pages/AppropriationsStatusTable.aspx.

The September 11, 2001 terrorist attacks called attention to the fact that the U.S. governmentis unaware of the addresses and whereabouts of many foreign nationals (1) in the United States. In theaftermath of the attacks, Congress sought to improve the tracking of one subgroup of foreignnationals: temporary legal residents. To better track these temporary residents, also known asnonimmigrants, the 107th Congress revived efforts to implement an entry-exit control system and asystem for monitoring foreign students. (2) In addition,the Department of Homeland Security (DHS)is using the registration provisions of the Immigration and Nationality Act to track foreign nationalsin the United States. (3) As detailed below, that actrequires that most aliens in the United States for30 days or longer be registered and provide notification of each change of address. The alienregistration issue has also been considered to a limited extent in the 107th and 108thCongresses. Alien registration requirements, which date to the Alien Registration Act of 1940, wereincorporated into the Immigration and Nationality Act (INA) of 1952. (4) They generally do not applyto, or can be waived in, the case of nonimmigrants entering under INA 101(a)(15)(A) (ambassadorsand diplomats) or INA 101(a)(15)(G) (representatives to, and officials and employees of,international organizations). In their current form, these requirements include the following: (5) No visa can be issued to an alien unless the alien has been registered in connection with the visa application. (6) Every alien who is age 14 or older, remains in the United States for 30 daysor longer, and has not been registered must apply for registration and be fingerprinted before day 30. The Attorney General may waive the fingerprinting requirement in the case of anynonimmigrant. (7) The Attorney General is authorized to prescribe special regulations and formsfor the registration and fingerprinting of certain enumerated groups, including aliens of any classwho are not legal permanent residents (LPRs) of the United States. (8) The Attorney General and the Secretary of State are authorized to prepareforms for the registration of aliens. These forms are to contain questions about the date and placeof the alien's entry into the United States; activities in which the alien has been and intends to beengaged; expected length of stay; any police or criminal record; and any additionalmatters. (9) Aliens required to be registered must notify the Attorney General in writingof each change of address within 10 days of the change and provide such additional information asthe Attorney General may require. Similarly, the Attorney General, upon 10 days notice, may requirethe natives of any foreign state who are required to be registered to provide notification of theircurrent addresses and such additional information as the Attorney General mayrequire. (10) An alien required to apply for registration and to be fingerprinted who willfullyfails to do so is guilty of a misdemeanor, and upon conviction, may be fined up to $1,000 orimprisoned for up to 6 months, or both. An alien who fails to notify the Attorney General of achange of address is guilty of a misdemeanor, and upon conviction, may be fined up to $200 orimprisoned for up to 30 days, or both. Regardless of whether such an alien is convicted or punishedfor failing to provide the address notification, the alien will be taken into custody and removed fromthe country unless the alien satisfies the Attorney General that "such failure was reasonablyexcusable or was not willful." (11) At various times in the past, the Attorney General used the authority granted by the INA toprescribe special regulations and forms for the registration and fingerprinting of certain groups ofaliens. Until its abolition in March 2003, the Immigration and Naturalization Service (INS)administered alien registration. In January 1991, on the eve of the Persian Gulf War, INSpromulgated a rule requiring all nonimmigrants carrying Iraqi or Kuwaiti travel documents whoapplied for admission to the United States, except for those entering as diplomats or officials ofinternational organizations, to be registered, photographed, and fingerprinted at the port of entry. According to the summary of the rule in the Federal Register : "This action is necessary to protectand safeguard the interests and security of the United States as a precaution against reprisals ..." (12) In December 1993, INS published an interim rule that removed these special registration requirements for Iraqis and Kuwaitis. The rule also added a new provision to the INS regulationson registration. (13) That provision stated that theAttorney General may require, by public notice inthe Federal Register , that certain nonimmigrants of specific countries be registered and fingerprintedupon arrival in the United States. The supplementary information accompanying the rule describedthe provision as "a procedural change which affords the Attorney General more flexibility inresponding to specific political situations than was formerly available [when changes in regulationwere required]." (14) Under the authority of theprovision, INS published a separate notice in the sameissue of the Federal Register requiring all nonimmigrants bearing Iraqi or Sudanese traveldocuments who applied for admission to the United States, except for those entering as diplomatsor officials of international organizations, to be registered, photographed, and fingerprinted at theport of entry. The notice indicated that such measures were necessary in light of "recent terroristactivities perpetrated on United States soil and the discovery of terrorist plots." (15) In September 1996,INS published a Federal Register notice similarly providing for the registration, photographing, andfingerprinting of nonimmigrants holding Iranian or Libyan travel documents. (16) In July 1998, INSpublished a notice consolidating and replacing these two notices covering nonimmigrants holdingIranian, Iraqi, Libyan, or Sudanese travel documents. (17) According to the Department of Justice (DOJ), the September 11, 2001 terrorist attackshighlighted weaknesses in the U.S. immigration system. Under the system in place at that time, DOJmaintained, it was difficult to know whether nonimmigrants in the country were following theirstated plans, whether they remained beyond their authorized period of stay, and how to locate them,if necessary. To address these and other concerns, INS proposed two rules in 2002 that drew on theINA's registration provisions and other authority. On June 5, 2002, DOJ outlined a proposal for a "National Security Entry-Exit Registration System" (NSEERS). In prepared remarks on the proposal, Attorney General John Ashcroft said: This system will expand substantially America's scrutiny of those foreign visitors who may pose a national security concern and enter our country. And it will provide a vital line of defense in the war againstterrorism. The Attorney General described NSEERS as the first step toward developing a congressionally mandated entry-exit data system to track virtually all foreign visitors. (18) INS proposed a rule to implement NSEERS on June 13, 2002, and issued the final rule on August 12, 2002. (19) The rule took effect onSeptember 11, 2002. Under the rule, expanded specialregistration requirements apply to nonimmigrant aliens from designated countries. Theserequirements also apply to individual nonimmigrants from any country who a consular officer abroador an inspection officer at the port of entry determines meet undisclosed criteria indicating that thealien's presence in the United States warrants monitoring in the interests of national security or lawenforcement. These requirements do not apply to nonimmigrants applying for admission asdiplomats or officials of international organizations. According to the supplementary informationaccompanying the rule, the covered individuals constitute "only a small percentage of the more than35 million nonimmigrant aliens who enter the United States each year." DOJ estimated thatNSEERS would track about 100,000 visitors in the first year. (20) Upon arrival in the United States, aliens subject to special registration under the rule are fingerprinted, photographed, and checked against databases of known criminals and terrorists. Theyalso are required to register by providing "routine and readily available information," such aspersonal information and information about their plans in the country. The original rule, which hassince been amended as described below, required aliens registered at a port of entry to satisfysubsequent 30-day and annual registration requirements. Under the original rule, if these aliensremained in the country for 30 days or longer, they had to report to an immigration office betweenday 30 and day 40 to complete their registration by providing additional documentation ofcompliance with their visas, including proof of residence, employment, and school enrollment asapplicable. Those aliens remaining for more than 1 year had to reaffirm their registrationinformation annually. Aliens subject to special registration who remain in the United States for 30 days or longer also have to provide notification of any change in their residential address, employment, or educationalinstitution within 10 days. Upon leaving the United States, special registrants are required to reporttheir exit at the port of departure. (21) On September 11, 2002, NSEERS was implemented at selected ports of entry. On October 1, 2002, the system went into effect at all remaining land, air, and sea ports of entry. It coversnonimmigrants who are citizens or nationals of Iran, Iraq, Libya, Sudan, and Syria, as well as othernonimmigrants determined to pose an elevated national security risk as explained above. (22) Aninternal INS memorandum dated September 5, 2002, which has been reported on by various mediaoutlets, stated that the Attorney General had determined that nonimmigrant males applying foradmission who are citizens or nationals of Pakistan, Saudi Arabia, or Yemen and are between theages of 16 and 45 warranted special registration. According to the memorandum, these individualswere to be subject to special registration as of October 1, 2002. The memorandum also enumeratedthe seven criteria to be used by immigration inspectors to determine whether to require the specialregistration of arriving nonimmigrants from any country. Among these criteria were the following: The alien has made unexplained trips to Iran, Iraq, Libya, Sudan, Syria, Saudi Arabia, or one of nineother specified countries; and "The nonimmigrant alien's behavior, demeanor, or answers indicatethat the alien should be monitored in the interest of national security." Neither DOJ nor INS wouldcomment on this memorandum. (23) Aliens in the United States. In addition to requiring the special registration of certain newly arriving nonimmigrants, INS published a noticein the Federal Register on November 6, 2002, similarly requiring the registration of certainnonimmigrants already residing in the United States. (24) The notice required nonimmigrant males whowere citizens or nationals of Iran, Iraq, Libya, Sudan, and Syria, were at least 16 years old, and werelast admitted to the United States on or before September 10, 2002, to report to an immigrationoffice by December 16, 2002, to be registered, fingerprinted, and photographed. (A Federal Register notice published on January 16, 2003, reopened the registration period for individuals covered bythe November 6, 2002 notice. It stated that those individuals who had not registered as requiredcould do so between January 27, 2003, and February 7, 2003, and would be considered to be incompliance. (25) ) Following this initial registration,these individuals were required to registerannually. A December 2, 2003 DHS rule, described below, suspended this annual re-registrationrequirement. Subsequent Federal Register notices, published on November 22, 2002, December 18, 2002, and January 16, 2003, made nonimmigrant males from additional countries who were at least 16years old and were last admitted to the United States on or before September 30, 2002, subject tospecial registration. (26) The November 22 noticecovered citizens or nationals of Afghanistan, Algeria,Bahrain, Eritrea, Lebanon, Morocco, North Korea, Oman, Qatar, Somalia, Tunisia, United ArabEmirates, or Yemen. They were required to report to an immigration office by January 10, 2003, tobe registered, fingerprinted, and photographed. (Like those covered by the November 6, 2002 notice,individuals covered by this notice who had not registered by the deadline were given the opportunityto do so between January 27, 2003, and February 7, 2003, under the terms of the January 16 noticecited above.) The December 18 notice required citizens or nationals of Pakistan or Saudi Arabia (27) to report to an immigration office by February 21, 2003, to be registered, fingerprinted, andphotographed, and the January 16 notice required citizens or nationals of Bangladesh, Egypt,Indonesia, Jordan, or Kuwait to report by March 28, 2003. A February 19, 2003 Federal Register notice extended these registration deadlines to March 21, 2003, and April 25, 2003, respectively. (28) Following their initial registration, as set forth in the notices, these individuals were required toregister annually. As described below, this annual re-registration requirement was suspended inDecember 2003. During an April 2003 speech, Secretary of Homeland Security Tom Ridge signaled the end of NSEERS registrations for aliens within the country. He announced a new entry-exit system calledthe U.S. Visitor and Immigration Status Indication Technology (US-VISIT) System, (29) which, he said,was scheduled to begin operations by the end of the year. Secretary Ridge stated: I want to stress that the phase-in of the new VISIT system will provide us with the crucial biometric information needed to end the domestic registrationof people from certain countries, which has been conducted for the past several months under asystem known as NSEERS. (30) Number of Registrants. Through September 30, 2003, 177,260 individuals had been registered under NSEERS Of this total, 93,741 were registeredat a port of entry, and 83,519 were registered when they reported to an immigration office. (31) As ofDecember 1, 2003, individuals from more than 150 countries had been registered in the NSEERSprogram. (32) As noted in the earlier discussion of current registration requirements, aliens required to be registered under the INA must notify the U.S. government in writing of each change of addresswithin 10 days. This reporting requirement applies to virtually all aliens who remain in the UnitedStates for 30 days or longer, including LPRs. These individuals number in the millions. (33) Formerprovisions of the INA required nonimmigrants to submit address notices every 3 months andrequired other aliens, including LPRs, to submit such notices every year, regardless of whether theiraddresses had changed. (34) Both of these reportingrequirements were repealed by the Immigrationand Nationality Act Amendments of 1981 in the stated interest of improving the efficiency of INS. (35) Under current law, aliens who fail to submit change-of-address notices can be fined and/or imprisoned, and are subject to being taken into custody and removed from the country. Accordingto a July 2002 DOJ fact sheet, however, both compliance with and enforcement of this requirementhave been lacking. (36) As a result, the governmentdoes not have the current addresses of manynoncitizens required to be registered. A rule proposed by INS on July 26, 2002, would provide notice to aliens of their obligation to submit address notices and the consequences of failing to do so. (37) The rule would amend variousimmigration forms to require aliens applying for immigration benefits to acknowledge havingreceived notice of the following: the alien must provide a valid current address, including any change of address within 10 days of the change; the most recent address provided by the alien will be used for all purposes,including the service of a written notice informing the alien of the initiation of removal proceedings(referred to as a "notice to appear"); and if the alien has changed addresses and failed to provide notification, the alienwill be held responsible for any communications sent to the prior address. According to the July 2002 DOJ fact sheet cited above, this rule will help track noncitizens, will enhance the ability to initiate and complete removal proceedings, (38) and will facilitate contactingaliens in a timely fashion about their applications for immigration benefits. The comment period onthe rule ended on August 26, 2002. These registration and address reporting rules have been controversial. Supporters portray the entry-exit registration system as a needed means of reducing the nation's vulnerability to futureterrorist attacks. In addition, they view it as a reasonable way to begin addressing the problem ofillegal immigration by identifying individuals who remain in the country beyond their authorizedperiod of stay. Critics take issue with the system's purported national security benefits,characterizing it as an inefficient and counterproductive approach that will create resentment of theUnited States in the Muslim and Arab world and will undermine international support for the U.S.war on terrorism. They describe it as a blatant example of racial and ethnic profiling, which, theymaintain, runs counter to core democratic values. Critics, as well as some supporters, also havequestioned whether such a system would be effectively implemented. The proposed address reporting rule has likewise elicited strong reactions. Some support the underlying idea, agreeing that it is important for the government to have the current addresses offoreign nationals in the United States. As with the entry-exit registration proposal, however, someof these supporters, as well as opponents, have raised doubts about whether the information wouldbe processed in a timely fashion. In 2002, when INS had responsibility for processing immigrationforms, it was reported in July that the agency had not filed 2 million documents submitted byimmigrants, including 200,000 change-of-address cards. (39) It was further reported in early September2002 that INS had received 870,000 change-of-address forms since publication of the proposedaddress reporting rule in July and had processed some 100,000. (40) Moreover, some supporters havequestioned whether processing updated address information would be the best use of immigration-related resources. In addition to questioning the feasibility of implementing large-scale addressreporting, opponents have voiced substantive objections to the proposal. They argue that strictlyenforcing the change-of-address reporting requirement could subject some otherwise law-abidingaliens to severe punishment, possibly including removal. Critics also fear selective enforcement ofthe reporting requirement on the basis of race, ethnicity, or other characteristics. On December 2, 2003, DHS published an interim rule in the Federal Register to amend the NSEERS regulations. (41) The rule became effectiveon December 2 and provided for a 2-monthcomment period, ending on February 2, 2004. The interim rule suspends the requirements that: (1)individuals registered under NSEERS at a port of entry report after 30 days to complete theirregistration; and (2) all NSEERS registrants re-register annually. Instead, according to the summaryof the rule, "DHS will utilize a more tailored system in which it will notify individual aliens of futureregistration requirements." Under the new rule, DHS will decide on a case-by-case basis whichregistrants must appear at a DHS office (specifically, a U.S. Immigration and Customs Enforcementoffice) for one or more additional registration interviews to determine whether they are incompliance with the conditions of their nonimmigrant visa status and admission. For some aliens,these interviews may be more frequent than the prior 30-day and annual re-registration requirements. Among the other changes made by the rule are conforming amendments to the regulations to reflectthe transfer of immigration-related functions from DOJ to DHS under the Homeland Security Actof 2002 ( P.L. 107-296 ). In the supplementary information accompanying the rule, DHS offered several reasons why the suspension of the automatic re-registration requirements is appropriate and advantageous. Itindicated that there are other tracking systems, including US-VISIT and the Student and ExchangeVisitor Information System (SEVIS), (42) that canhelp ensure that NSEERS registrants remain incompliance with the terms of their visas and admission. In addition, DHS stated that suspending the30-day and annual re-registration requirements "will reduce the burden on those required to registerunder the current regulations, as well as to DHS." With respect to the latter, it further stated thatDHS resources not needed for re-registrations can be used for other purposes, including "to craft atargeted registration process that meets the national security needs of the country." The rule does not amend existing NSEERS registration procedures at ports of entry, including the fingerprinting, photographing, and registering of covered aliens. According to DHS: Special registration of aliens at [ports of entry] has, consistent with the program's intent, provided important law enforcement benefits, which haveincluded the identification of a number of alien terrorists andcriminals. The rule also does not change the general requirement that NSEERS registrants report their departure upon leaving the United States. Alien registration and reporting provisions were included in legislation in the 107th Congress. The Enhanced Border Security and Visa Entry Reform Act of 2002, as enacted by the 107thCongress, directs the General Accounting Office to conduct a study of the feasibility and utility ofrequiring nonimmigrants in the United States to submit a current address and, where applicable, thename and address of an employer every year. The study is due by May 2003. (43) As discussed above,a similar address reporting requirement existed until 1981. An immigration reform measure, the "Securing America's Future through Enforcement Reform Act of 2002" ( H.R. 5013 ), would have amended the INA to expand existing registrationrequirements. (44) In addition to the currentrequirement that aliens who are in the United States for30 days or longer and are unregistered apply for registration and be fingerprinted by day 30, it wouldhave required subsequent registrations on the part of LPRs every year and on the part of other aliensevery 3 months. With respect to address reporting, the bill would have retained the currentrequirement that aliens notify the Attorney General of a change of address within 10 days and wouldhave preserved the Attorney General's authority to require, upon 10 days notice, that the natives ofany foreign state report their current addresses. Among its other registration-related provisions, H.R. 5013 would have directed the Attorney General to establish an informationtechnology system for the collection, compilation, and maintenance of registration information. H.R. 5013 was referred to the House Judiciary Committee and its Subcommittee onImmigration, Border Security, and Claims, but saw no further action. In the 108th Congress, the Senate agreed to an alien registration-related amendment( S.Amdt. 54 ) by unanimous consent during its consideration of the FY2003Consolidated Appropriations Resolution ( H.J.Res. 2 ). S.Amdt. 54 , whichwas sponsored by Senator Jon Kyl with bipartisan cosponsorship, sought to make funding availablefor an entry-exit system. It also provided that no funds appropriated by the act would be availablefor any expenses related to NSEERS and directed the Attorney General to provide theAppropriations Committees with NSEERS-related documents and materials. The Senate passed anamended version of H.J.Res. 2 , which included S.Amdt. 54 , on January23, 2003. (45) The version of H.J.Res. 2 passed by the House on January 8, 2003, did notinclude language on NSEERS. The final version of H.J.Res. 2 , signed into law onFebruary 20, 2003 as P.L. 108-7 , did not eliminate funding for NSEERS. It did, however, includelanguage requiring the Attorney General, in consultation with the Secretary of DHS, to provide theAppropriations Committees by March 1, 2003, with the NSEERS-related documents and materialsdescribed in the Senate amendment.

Since the September 11, 2001 terrorist attacks, many U.S. officials and others have expressed concerns that the U.S. government is unaware of the addresses and whereabouts of many foreignnationals in the country. The Immigration and Nationality Act (INA) contains provisions for theregistration of aliens, including the requirement that aliens provide notification of any change ofaddress within 10 days. For many years, however, this address reporting requirement was generallynot enforced. The INA also authorizes the Attorney General to prescribe special regulations for the registration and fingerprinting of any class of aliens who are not U.S. legal permanent residents(LPRs). The Attorney General has exercised this authority at various times by requiring thatnonimmigrant aliens (legal temporary residents) from designated countries be registered,photographed, and fingerprinted at the port of entry. A rule, which took effect on September 11, 2002, applies expanded special registration requirements to certain newly arriving nonimmigrants as part of the National Security Entry-ExitRegistration System (NSEERS). NSEERS covers arriving nonimmigrants from designatedcountries, as well as other arriving nonimmigrants who are determined to pose an elevated nationalsecurity risk. Among other requirements, aliens subject to special registration under this rule areregistered, fingerprinted, photographed, and checked against databases of known criminals andterrorists at the port of entry. Under the original rule, which has since been amended, those whoremained for at least 30 days had to report to an immigration office to complete their registration andthose remaining for more than 1 year had to reaffirm their registration information annually. A seriesof Federal Register notices published in late 2002 and early 2003 similarly required certainnonimmigrant males in the United States from designated countries to report to an immigrationoffice to be registered, fingerprinted, and photographed. A subsequent rule, which became effectiveon December 2, 2003, amended the NSEERS regulations. Among other changes, it suspended theautomatic 30-day and annual re-registration requirements. A proposed rule, published in July 2002, would give notice to aliens, including LPRs, of their obligation to provide the government with a current address, including any change of address within10 days, and the consequences of failing to do so. Congress has acted on alien registration-related measures in recent years. The 107th Congress enacted the Enhanced Border Security and Visa Entry Reform Act of 2002 ( P.L. 107-173 ), whichdirects the General Accounting Office to study the feasibility and utility of requiring nonimmigrantsto submit a current address and, where applicable, the name and address of an employer every year. In the 108th Congress, the FY2003 Consolidated Appropriations Resolution ( P.L. 108-7 ) containslanguage requiring the Attorney General, in consultation with the Secretary of Homeland Security,to provide Congress with NSEERS-related documents and materials. This report will be updatedas related developments occur.

The United States Congress is served by a group of young adults known as pages. Pages have been employed since the early Congresses, and some Members of Congress have served as pages. Today, congressional pages include students who are juniors in high school and who may come from all areas of the United States and its territories. The page system is formally provided for in law, although the rationale for the page service or for using high school students is not. Since the earliest accounts of pages, it has been widely noted in debates and writings within Congress that pages provide needed messenger services: From the origin of the present government, in 1789, to the present time, they [messengers] have been under the orders and resolutions of the House, and experience has attested to the necessity of their services. The use of boys or pages, was introduced at a later period; but from the first session of Congress held at the city of Washington [1800], they have continued to be employed by the House, with the approbation of the House. Being a page provides a unique educational opportunity, affording young adults an opportunity to learn about Congress, the legislative process, and to develop workplace and leadership skills. Over the years, there has been concern about having young pages serve Congress. In the 1800s and early 1900s, some House pages were as young as 10 and Senate pages as young as 13. Later, they were as old as 18. At various times, congressional actions related to employing pages have addressed the lack of supervised housing as well as pages' ages, tenure, selection, education, and management. Far-reaching reforms in the page system were implemented in 1982 and 1983, following press reports of insufficient supervision, alleged sexual misconduct, and involvement in the trafficking of drugs on Capitol Hill. Most reports of misbehavior were later found to be unsubstantiated. As a consequence of the allegations, however, both the House and Senate for the first time provided supervised housing for their pages; established separate page schools and took over the education of the pages, which had been provided under contract by the District of Columbia school system; and developed more educational and recreational opportunities for their pages. In the 110 th Congress (2007-2008), at the request of then House Speaker Nancy Pelosi and Republican Leader John Boehner, the House inspector general (IG) conducted an inquiry into the supervision and operation of the House Page Residence Hall, and subsequently issued a confidential report recommending changes. In 2008, an independent study, conducted by consultants to the House, was conducted. In response to the findings of those efforts, the House implemented new policies to enhance the safety and supervision of the pages and oversight of the page program. These changes followed investigations of allegations related to the page program participants, including the exchange of inappropriate communications between a Member of the House and former pages, and of misbehavior by a few pages in the 109 th and 110 th Congresses. A follow up review of the page program was carried out in the summer of 2010 by the same independent consultants. According to House leaders, concerns raised in 2008, including costs and the need for the program, remained. In August 2011, Speaker John Boehner and Democratic Leader Nancy Pelosi announced the termination of the House page program effective August 31. In a Dear Colleague Letter, the leaders cited both changes in technology obviating the need for most page services, and the program's costs as reasons to discontinue the program. In the 112 th Congress, (2011-2012), H.Res. 397 , entitled Reestablishing the House of Representatives Page Program, was introduced by Representative Dan Boren. The resolution would have created an advisory panel to make recommendations for the operation of a reestablished page program. The House page program would have been reestablished in the first school semester after the advisory panel submitted its recommendations to the Committee on House Administration. Membership of the nine-person advisory body would have been composed of three Members of the House from the majority party of the House, three Members of the House from the minority party, and three individuals who were not Members and who had served as House pages. The measure was referred to the Committee on House Administration, and no further action was taken. Pages serve principally as messengers. They carry documents between the House and Senate, Members' offices, committees, and the Library of Congress. They prepare the Senate chamber for each day's business by distributing the Congressional Record and other documents related to the day's agenda, assist in the cloakrooms and chambers; and when Congress is in session, they sit near the dais where they may be summoned by Members for assistance. In the House, pages also previously raised and lowered the flag on the roof of the Capitol. There are 30 Senate page positions, 16 for the majority party and 14 for the minority party. The office of the Sergeant at Arms supervises the Senate page program. The Senate page program consists of four quarters, two academic year sessions and two shorter summer sessions. It is administered by the Senate Sergeant at Arms, the Senate page program director, and the principal of the Senate page school. Senate pages are paid a stipend, and deductions are taken for taxes and residence hall fee, which includes a meal plan. Pages must pay their transportation costs to Washington, DC, but their uniforms are supplied. The uniforms consist of navy blue suits, white shirts, red and blue striped tie, dark socks, and black shoes. The Senate provides its pages education and supervised housing in the Daniel Webster Page Residence near the Hart Senate Office Building. The Senate Page School is located in the lower level of Webster Hall. Pages who serve during the academic year are educated in this school, which is also accredited by the Middle States Association of Colleges and Schools. The junior-year curriculum is geared toward college preparation and emphasis is given to the unique learning opportunities available in Washington, DC. Early morning classes are held prior to the convening of the Senate. The House page program was administered by the Office of the Clerk, under the supervision of the House Page Board. The board, established in statute, is composed of two Members from each party, including the chair, as well as the Clerk and the Sergeant at Arms of the House, a former House page, and the parent of a House page. Participants in the House page program typically served for one academic semester during the school year, or during a summer session. House pages received a stipend for their services, and deductions were taken from their salaries for federal and state taxes, Social Security, and a residence hall fee, which included a meal plan. The pages were required to live in the supervised House Page Dormitory near the Capitol. They were responsible for the cost of their uniforms--navy jackets, dark grey slacks or skirts, long sleeve white shirt, red and blue striped tie, and black shoes--and transportation to and from Washington, DC. During the school year, pages were educated in the House Page School located in the Thomas Jefferson Building of the Library of Congress. The page school, which is accredited by the Middle States Association of Colleges and Schools, offered a junior-year high-school curriculum, college preparatory courses, and extracurricular and weekend activities. Classes were usually held five days a week, commencing at 6:45 a.m., prior to the convening of the House.

For more than 180 years, messengers known as pages have served the United States Congress. Pages must be high school juniors and at least 16 years of age. Several incumbent and former Members of Congress as well as other prominent Americans have served as congressional pages. Senator Daniel Webster appointed the first Senate page in 1829. The first House pages began their service in 1842. Women were first appointed as pages in 1971. In August 2011, House leaders announced the termination of that chamber's page program. Senate pages are appointed and sponsored by Senators for one academic semester of the school year, or for a summer session. The right to appoint pages rotates among Senators pursuant to criteria set by the Senate's leadership. Academic standing is one of the most important criteria used in the final selection of pages. Selection criteria for House pages was similar when the page program operated in that chamber. Prospective Senate pages are advised to contact their Senators to request consideration for a page appointment.

Nearly all of the outstanding debt of the federal government is subject to a statutory limit. For years, the public debt limit has been codified in Section 3101(b) of Title 31 of the United States Code . Periodic adjustments to the debt limit typically have taken the form of amendments to 31 U.S.C. 3101(b), usually by striking the current dollar limitation and inserting a new one. In recent years, such legislation has taken the form of suspending the debt limit through a date certain, with an increase to the dollar limit made administratively at the end of the suspension period. The congressional budget process provides for the annual adoption of a concurrent resolution on the budget, which sets forth appropriate levels of the public debt--along with levels of revenues, spending, and the deficit or surplus--for the upcoming fiscal year and at least four additional years. The budget resolution, however, does not become law. Therefore, subsequent legislation is necessary in order to implement budget resolution policies, including changes to the statutory limit on the public debt. In addition, Congress may consider adjustments to the public debt limit outside the context of the budget resolution, such as when the House and Senate are unable to agree on a budget resolution or when the current debt limit is not sufficient to meet existing financial obligations. Under current legislative procedures, the House and Senate may originate and consider legislation adjusting the debt limit in several different ways. They may consider such legislation under regular legislative procedures, either as freestanding legislation or as a part of a measure dealing with other topics. Alternatively, they may change the debt limit as part of the budget reconciliation process provided for under the Congressional Budget Act of 1974. In addition, Congress has twice established special procedures for congressional disapproval of adjustments to the debt limit authorized by certain statutes. Finally, the House has originated debt limit legislation under its former House Rule XXVIII (the so-called Gephardt rule); the House repealed the rule at the beginning of the 112 th Congress (2011-2012). Although the Constitution requires that revenue measures originate in the House, this requirement is not considered to apply to debt limit measures. Over the years, however, most debt limit legislation has originated in the House. The House Ways and Means Committee and the Senate Finance Committee exercise jurisdiction over debt limit legislation. It is extremely difficult for Congress to effectively influence fiscal and budgetary policy through action on legislation adjusting the debt limit. The need to raise (or lower) the limit during a session is driven by many previous decisions regarding revenues and spending stemming from legislation enacted earlier in the session or in prior years. Nevertheless, the consideration of debt limit legislation often is viewed as an opportunity to reexamine fiscal and budgetary policy and is marked by controversy. Consequently, House and Senate action on legislation adjusting the debt limit often is complicated, hindered by political difficulties, and subject to delay. The three ways the House and Senate have originated and considered debt limit legislation, as well as the congressional disapproval procedures first established under the Budget Control Act of 2011, are discussed briefly below. The House and Senate may develop and consider legislation adjusting the debt limit under regular legislative procedures in both chambers, either as freestanding legislation or as a part of a measure dealing with other topics. The House Ways and Means Committee and the Senate Finance Committee may originate measures adjusting the debt limit at any time. The Senate usually acts on legislation originated by the House. However, in 2002 and 2004, for example, the Senate originated debt limit legislation ( S. 2578 and S. 2986 , respectively), which became P.L. 107-199 and P.L. 108-415 , respectively. Consideration of a debt limit measure in the House usually is subject to a special rule, reported by the House Rules Committee, that may include debate limitations, restrictions on the offering of amendments, and other expediting features. In the Senate, consideration of debt limit measures is generally not subject to expedited procedures; nongermane amendments may be offered and the measures may be debated at length unless cloture is invoked or other limitations are agreed to by unanimous consent. In 2009, for instance, an adjustment to the public debt limit (Section 1604, Div. B, P.L. 111-5 ) was considered under the regular legislative process as part of the economic stimulus legislation in the early part of 2009. The House passed (on January 28) its version of the economic stimulus legislation ( H.R. 1 , the American Recovery and Reinvestment Act of 2009) without any provision increasing the public debt limit. The Senate, however, included an increase to the public debt limit in its version passed on February 10. The House and Senate subsequently agreed to the conference report to accompany H.R. 1 , which included the Senate's provision to increase the public debt limit, on February 13. President Barack Obama signed the legislation on February 17, 2009 ( P.L. 111-5 ). The budget reconciliation process is an optional procedure associated with the congressional budget resolution; the budget reconciliation process may be used only if the House and Senate agree to a budget resolution that contains reconciliation directives. The budget reconciliation process, as provided for by the Congressional Budget Act, is intended to facilitate the timely consideration and enactment of legislation that implements, in whole or in part, the budget policies reflected in the budget resolution, including changes to the debt limit. Reconciliation legislation is subject to expedited consideration in both chambers. In the Senate, where the expedited procedures have the most impact, debate on reconciliation legislation is limited, amendments must be germane, and extraneous matter is prohibited. Although the predominant focus of reconciliation legislation has been to change revenue and spending levels, four such measures also were used to adjust the debt limit: the Omnibus Budget Reconciliation Act of 1986 ( P.L. 99-509 ; October 21, 1986), Section 8201 (100 Stat. 1968); the Omnibus Budget Reconciliation Act of 1990 ( P.L. 101-508 ; November 5, 1990), Section 11901 (104 Stat. 1388-560); the Omnibus Budget Reconciliation Act of 1993 ( P.L. 103-66 ; August 10, 1993), Section 13411 (107 Stat. 565); and the Balanced Budget Act of 1997 ( P.L. 105-33 ; August 5, 1997), Section 5701 (111 Stat. 648). The Senate adopted a rule prohibiting the consideration of a budget reconciliation bill pursuant to the FY2016 budget resolution that "would increase the public debt limit" (see Section 2001(b) of S.Con.Res. 11 , 114 th Congress). The House also has originated debt limit legislation pursuant to its former House Rule XXVIII, commonly referred to as the "Gephardt rule" (named after its author, Representative Richard Gephardt). The House, as noted above, repealed this rule at the beginning of the 112 th Congress (2011-2012). The rule provided for the automatic engrossment of a House joint resolution changing the statutory limit on the public debt when Congress had completed action on the congressional budget resolution. The joint resolution was deemed to have passed the House by the same vote as the conference report on the budget resolution. The Senate has never had a comparable procedure. If the Senate chose to consider a House joint resolution originated pursuant to the Gephardt rule, it did so under the regular legislative process. Under the regular legislative process, as noted above, consideration of debt limit measures, even those originated by the Gephardt rule, generally is not subject to expedited procedures; nongermane amendments may be offered, and the measures may be debated at length, unless cloture is invoked or other limitations are agreed to by unanimous consent. The Senate sometimes has considered such debt limit measures for days and amended them. In 1985, for example, the Senate added extensive budget enforcement procedures (the Balanced Budget and Emergency Deficit Control Act of 1985, also known as "Gramm-Rudman-Hollings") to H.J.Res 372 , a measure that the House had originated under the Gephardt rule. More recently, in 2010, the Senate added statutory "pay-as-you-go" enforcement procedures (often referred to as PAYGO) to H.J.Res 45 , a measure that the House had originated under the Gephardt rule pursuant to the adoption of the FY2010 budget resolution ( S.Con.Res. 13 , 111 th Congress). The Senate passed the measure, as amended, on January 28, 2010, and the House subsequently passed the measure without further amendment on February 4, 2010. In such cases that the Senate amended the rule-initiated debt limit legislation, the House was required to vote on the Senate-amended legislation before it was sent to the President. Overall, from the time the rule was established in 1980 to the end of the 111 th Congress (2010), the House had originated 20 joint resolutions under this procedure. The Senate had passed 16 of these joint resolutions, passing 10 without amendment and six with amendments. Of the 20 joint resolutions originated by the House under the Gephardt rule, 15 have been enacted into law. In 11 of the 31 years between 1980 and 2010, the rule was either suspended (1988, 1990-1991, 1994-1997, and 1999-2000) or repealed (2001-2002) by the House. In most cases, the House suspended the rule because legislation changing the statutory limit was not necessary at the time. In addition, in four years, the House and Senate did not complete action on a budget resolution for that year (1998, 2004, 2006, and 2010). In the past six years, legislation adjusting the debt limit twice has included congressional disapproval procedures, effectively providing Congress with a second opportunity to consider the adjustment to the debt limit. In the first instance, enacted as part of the Budget Control Act of 2011 ( P.L. 112-25 ), signed into law on August 2, 2011, special procedures allowed for congressional disapproval of the increases to the debt limit authorized by the act. The act authorized increases to the debt limit by at least $2.1 trillion (and up to $2.4 trillion) in three installments. First, upon the certification by the President that the debt subject to limit was within $100 billion of the debt limit, the debt limit was increased by $400 billion immediately. Second, if Congress did not enact into law a joint resolution of disapproval within 50 calendar days of receipt of the certification, the debt limit was to be increased by an additional $500 billion. The House passed a disapproval resolution ( H.J.Res. 77 ), but the Senate did not. If Congress had enacted a joint resolution of disapproval (presumably over a presidential veto), the debt limit would not have been increased by the additional $500 billion, and the Office of Management and Budget would have been required to sequester budgetary resources on a "pro rata" basis, subject to sequestration procedures and exemptions provided in Sections 253, 255, and 256 of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended. Third, after the debt limit had been increased by the first $900 billion and upon another certification that the debt subject to limit was again within $100 billion of the debt limit, Congress had 15 calendar days to enact into law a joint resolution of disapproval to prevent the third automatic increase in the debt limit (again over a presumed presidential veto). If Congress did not enact such resolution, the debt limit was to be increased by one of three amounts: (1) $1.2 trillion; (2) an amount between $1.2 trillion and $1.5 trillion if Congress passed and the President signed into law legislation introduced by the Joint Select Committee on Deficit Reduction; or (3) $1.5 trillion, if a constitutional amendment requiring a balanced budget was submitted to the states for ratification. The House again adopted another disapproval resolution ( H.J.Res 98 ), but the Senate subsequently rejected a motion to proceed to the resolution. Therefore, the debt limit was increased by $1.2 trillion, because other criteria that would have allowed for a larger amount were not met. In summary, while an initial increase in the debt limit of $400 billion was effective immediately and not subject to congressional disapproval, subsequent additional increases of $500 billion and $1.2 trillion were subject to congressional disapproval. That is, for either of the two subsequent additional increases in the debt limit, if Congress had enacted a joint resolution of disapproval, the debt limit would not have been increased. Expedited procedures that limited debate and prevented amendments were established for the joint resolution of disapproval to ensure timely consideration. Although only a majority of each chamber would have been necessary to agree to a resolution of disapproval, to prevent an increase, supermajority support would have been necessary. This is because if the Treasury had advised the President that further borrowing was required to meet existing commitments, the President might normally be expected to veto the congressional resolution of disapproval. Congress can override a presidential veto, but to do so would require the support of two-thirds of each chamber. In 2013, similar congressional disapproval procedures were included in legislation suspending the debt limit through February 7, 2014 ( H.R. 2775 , 113 th Congress). In this instance, Congress had 22 calendar days to enact, presumably over the President's veto, legislation disapproving the suspension and subsequent adjustment to the debt limit authorized by the Default Prevention Act of 2013 (Section 1002 of P.L. 113-46 , Continuing Appropriations Act, 2014, enacted on October 17, 2013). On October 30, pursuant to the act and H.Res. 391 , the House passed a joint resolution disapproving the suspension of the debt limit by a vote of 222-191. On October 29, 2013, however, the Senate rejected a motion to proceed to its own disapproval resolution ( S.J.Res. 26 ) by a vote of 45-54, effectively precluding any further congressional action. A total of 96 debt limit measures have been enacted into law since 1940 (see Figure 1 ). The number of laws rose steadily from the 1950s through the 1980s, from six to 24, but dropped to 13 in the 1990s. Six of the 13 laws enacted in the 1990s were temporary extensions over a three-month period in 1990, enacted largely to accommodate lengthy negotiations during a budget summit between Congress and the President. Nine debt limit laws were enacted in the 2000s, and six debt limit laws have been enacted so far in this decade. As mentioned previously, debt limit legislation has been developed and considered under regular legislative procedures in both chambers, pursuant to the House's so-called Gephardt rule, or as part of the budget reconciliation process. Of the total 96 debt limit measures enacted into law since 1940, 77 were considered under regular legislative procedures, 15 were initiated pursuant to the Gephardt rule, and four were considered as part of omnibus budget reconciliation legislation. Compared with regular legislative procedures, the Gephardt rule accelerates action in the House (but not the Senate), and the budget reconciliation process expedites consideration in both chambers. Table 1 provides information on the 28 measures adjusting the public debt limit enacted since 1990. Of these 28 measures, 21 were considered under regular legislative procedures in both chambers either as stand-alone legislation (9 measures) or as part of legislation involving other matters (12 measures), 4 were initiated pursuant to the Gephardt rule, and 3 were considered as part of omnibus budget reconciliation legislation. In two instances, the debt limit legislation also included procedures to provide for a congressional disapproval process.

Nearly all of the outstanding debt of the federal government is subject to a statutory limit, which is set forth as a dollar limitation in 31 U.S.C. 3101(b). From time to time, Congress considers and passes legislation to adjust or suspend this limit. The annual budget resolution is required to include appropriate levels of the public debt for each fiscal year covered by the resolution. The budget resolution, however, does not become law. Therefore, the enactment of subsequent legislation is necessary in order to implement budget resolution policies, including changes to the statutory limit on the public debt. In addition, Congress may consider adjustments to the public debt limit outside the context of the budget resolution, such as when the House and Senate are unable to agree on a budget resolution or when the current debt limit is not sufficient to meet existing financial obligations. Under current legislative procedures, the House and Senate may originate and consider legislation adjusting the debt limit in several different ways. They may consider such legislation under regular legislative procedures, either as freestanding legislation or as a part of a measure dealing with other topics. Alternatively, they may change the debt limit as part of the budget reconciliation process provided for under the Congressional Budget Act of 1974. The House also has originated debt limit legislation under its former House Rule XXVIII (the so-called "Gephardt rule"); the House repealed the rule at the beginning of the 112th Congress (2011-2012). In addition, Congress has twice established special procedures for congressional disapproval of adjustments to the debt limit authorized by certain statutes. During the period from 1940 to the present, Congress and the President have enacted a total of 96 measures adjusting the public debt limit--77 under regular legislative procedures in both chambers, 15 under the Gephardt rule, and 4 under reconciliation procedures. This report will be updated as developments warrant.

I n Pom Wonderful v. Coca-Cola , Pom first brought a suit in 2008 against Coca-Cola, claiming that Coca-Cola's Pomegranate Blueberry beverage name and label violates the Lanham Act and California's unfair competition laws because it misleads consumers to believe that the beverage consists of primarily pomegranate and blueberry juices when it actually contains mostly apple and grape juices. The district court in California and the Ninth Circuit held that the Food, Drug, and Cosmetic Act (FDCA) precludes Pom's Lanham Act claim due to the Food and Drug Administration's (FDA's) exclusive authority to regulate food labels and the absence of any FDA action against Coca-Cola for this label. The U.S. Supreme Court granted certiorari and in an 8-0 decision held that Pom Wonderful may bring a Lanham Act claim alleging unfair competition from false or misleading product descriptions on food and beverage labels regulated by the FDCA. Pom Wonderful v. Coca-Cola presents several significant legal issues, including the enforcement of the statutory requirements for food and beverage labeling and the complex relationship among the FDCA, the Lanham Act, and the state laws involved in this regulatory scheme. When such an overlap among various statutes occurs, questions regarding the relationship among federal statutes and state laws arise among the different actors involved, such as the federal government, beverage manufacturers, and consumers. This report explores these various legal issues in the context of Pom Wonderful v. Coca-Cola and beverage labeling. The two legal issues before the courts in Pom Wonderful focused on the interaction of federal statutes with both state and federal laws. On remand, the lower courts will have to consider again the issues of preemption, specifically whether the FDCA preempts Pom's California state law claims when the state law provisions are not identical to the federal law. Additionally, the Supreme Court's preclusion analysis in Pom Wonderful adds to the current case law addressing preclusion of Lanham Act claims by the FDCA. However, further litigation may be needed to clarify how the Supreme Court's holding in Pom Wonderful applies to Lanham Act food and beverage claims that are dissimilar to Pom's Lanham Act claim as well as other FDA-regulated products like cosmetics. The report begins with an overview of the statutory and regulatory background of beverage labeling, including affirmative requirements for beverage labels, the FDCA and Lanham Act provisions for misbranding, and the enforcement of these two federal statutes. Next, the report discusses the procedural history of Pom Wonderful v. Coca-Cola and the legal arguments made by both parties. The report then concludes by analyzing legal issues presented in the Pom Wonderful case concerning preemption and preclusion in the context of the U.S. Supreme Court's analysis in its Pom Wonderful decision. Both the FDCA and the Lanham Act impact the content of juice labels, including Coca-Cola's Pomegranate and Blueberry beverage. The following section examines the provisions in these two federal statutes on which the parties and the courts in Pom Wonderful relied for their legal analysis. The section begins with an overview of the FDA requirements for the content of beverage labels. Next, the section discusses the misbranding provisions in both the FDCA and the Lanham Act. The section then concludes by highlighting the different enforcement mechanisms for these two federal statutes. FDA regulations outline several affirmative requirements for juice labels, such as Coca-Cola's Pomegranate Blueberry, reflecting the ingredients, flavors, and production of the beverage. The FDA promulgated these rules to implement the Nutrition Labeling and Education Act of 1990. During the notice and comment period of the rulemaking, FDA noted that a multiple-juice beverage named for a represented flavor would not necessarily be misleading if "consumers [are] given enough accurate information to easily ascertain the nature of the juices represented to be present in a multiple-juice beverage." Unlike other types of labels, such as those for drugs, the FDA does not preapprove juice labels under these regulations. The regulations first distinguish between "juices" and other beverages. Only beverages that are 100% juice may be called juice. Beverages diluted to less than 100% juice must have the word "juice" qualified with another term such as "beverage," "drink," or "cocktail." For example, a beverage containing less than 100% cranberry juice may be labeled "Cranberry Juice Cocktail." If the beverage contains a mixed combination of fruit or vegetable juices, then the name of the beverage must be the name of the juices in descending order of predominance by volume unless the label indicates that the named juice is used as a flavor. For example, "Apple, Pear and Raspberry Juice Drink" or "Raspberry-Flavored Apple and Pear Juice Drink" addresses the differences in volume of the various juices. If the label presents one or more but not all of the juices, then the name must indicate that more juices are present. For example, "Apple Juice Blend" signifies that the beverage contains other juices than the predominant apple. If one or more juices are named (but not all) and the named juice(s) is not the predominant juice, the name of the beverage must either state that the beverage is flavored with the named juice or state the amount of the named juice in a 5% range. If the juice has been modified, then the common name shall include a description of the modification, such as "Acid-reduced Cranberry Juice." If juices in the beverage are made from concentrate, the name must indicate that fact using terms such as "from concentrate" or "reconstituted." Both the FDCA and the Lanham Act prohibit the "misbranding" of food and beverage labels. Under the FDCA, a food is misbranded if the "labeling is false or misleading in any particular." As Congress enacted the FDCA to protect the health and safety of the public, FDCA's misbranding provision protects the consumer from negligent or false labeling that may cause physical harm, by, for example, not disclosing the correct information and preventing the consumer from making the right health choices. At its most basic meaning, courts have interpreted FDCA's misbranding provision to target a label that characterizes the food or beverage to be something other than it is. In the seminal case U.S. v. Ninety-Five Barrels (More or Less) Alleged Apple Cider Vinegar, the Court found the vinegar labeled "Excelsior Brand Apple Cider Vinegar Made from Selected Apples" to be something other than indicated. The vinegar at issue was made from dehydrated apples and not from apple cider "as [is] generally known" for this type of beverage. Therefore, the Court found the product was misbranded due to this misrepresentation of the beverage's production and content. Courts have noted the significance of "or" in the FDCA's misbranding provision ("false or misleading"), signaling that a label of misbranded food may be misleading without it being false and vice versa. Deception from a misbranded food label may arise due to the use of statements that are not technically false or may be literally true. Similarly, statements may be technically accurate, but can still mislead the consumer. To determine whether a label is false or misleading, courts generally look at the ordinary meaning of words and not necessarily the trade or commercial meaning. A misleading label could potentially deceive the "unthinking and credulous" consumer, not necessarily a "reasonable" consumer. However, it is not necessary to show that a consumer was actually misled or deceived or that the intent to deceive was present. The entire label does not need to be deceptive in order to violate FDCA's misbranding prohibition. Food is "misbranded" if it appears that any single representation on the label is false or misleading. In U.S. v. An Article of Food ... "Manischewitz ... Diet Thins," the court found that a label for matzo crackers was misleading as the use of the phrase "Diet-Thins" encourages consumers to assume, incorrectly, that the food would lead to weight loss. The court held that the government did not need to prove that the entire label was misleading, just one section. Moreover, a court may also consider certain segments of the label within the context of the entire label. The court in U.S. v. An Article of Food Consisting of 432 Cartons, More or Less, each Containing 6 Individually Wrapped Candy Lollipops of Various Flavors concluded that although the labeling on the inside of the candy box may be misleading, a jury may find the label not to be misleading when read together with the description of the contents listed on the outside of the carton. While the FDCA focuses on public health, the Lanham Act, also known as the Trademark Act of 1946, seeks to "protect persons engaged in ... commerce against unfair competition." Congress intended the act to protect a business's reputation whose goodwill may be diverted by deceptive advertisements or labels and to encourage consumers to purchase products in confidence by reassuring consumers that a specific mark designates the product that they expect and wish to buy. The Lanham Act's false and misleading advertising provision, Section 43(a), enables those who claim to be damaged by another's false or misleading advertisement to bring suit against this entity and seek civil damages. Courts have broken down Section 43(a) into five main elements. For a successful Lanham Act claim, the plaintiff must prove that (1) the defendant made false or misleading statements about the product; (2) there is actual deception or at least the tendency to deceive a substantial portion of an intended audience; (3) the deception was material to the consumer's purchasing decisions; (4) the product traveled in interstate commerce; and (5) there is a likelihood of injury to the plaintiff (such as declining sales or loss of goodwill). To demonstrate that a statement is false under the Lanham Act, the plaintiff must show that it is literally false, or that it is literally true but likely to mislead or confuse consumers. Generally, puffery in advertising is not actionable under Section 43(a) as "no one would rely on its exaggerated claims" and, therefore, it is not deceptive. Similarly, unsupported or unsubstantiated claims are not per se violations of Section 43(a). For literally true but misleading statements, a plaintiff must produce evidence that the target audience, rather than the general public, was or is likely to be misled. The Lanham Act and the FDCA have different enforcement mechanisms. Only the federal government may enforce the provisions under the FDCA. The FDCA prohibits private litigants from suing to enforce compliance with the FDCA and its implementing regulations. To remedy alleged mislabeling violations, the FDA may send out warning letters to firms and facilities that the agency believes are violating the FDCA. The agency also has seizure authority to remove misbranded products from the marketplace. Immediately after the seizure, a hearing occurs where the owner of the misbranded food has the right to object to the seizure as an exercise of his due process rights. However, due process principles are generally applied narrowly during post-seizure hearings because of the public health and safety concern. At the hearing, the court will decide whether to condemn the product or whether to release the goods if the government has failed to provide sufficient evidence to justify the seizure. The court may allow the owner to correct the defects of the product, such as through relabeling, after condemnation. Unlike the FDCA, the Lanham Act offers private enforcement remedies. While the Lanham Act states that "any person who believes that he or she is or is likely to be damaged by" a false or misleading representation may seek civil damages, courts have not found standing for consumers under this provision of the Lanham Act, but instead require some commercial injury for standing. The circuit courts are split as to whether a plaintiff must be a competitor of the defendant in order to have standing. The Third Circuit has stated that a non-competitor may have sufficient standing under Section 43(a). The Ninth Circuit has held, however, that the plaintiff must allege a commercial injury that limits the plaintiff's ability to compete with the defendant in order to qualify for standing. The Lanham Act provides for injunctive and monetary relief. For injunctive relief, a plaintiff must show that the defendant's representations about its product "have a tendency to deceive consumers." While this standard requires less proof than actual deception, a plaintiff must show that at least some consumers were misled by the advertisement. Once a violation of Section 43(a) has been established, a district court may exercise broad discretion in awarding monetary relief to the plaintiff. The plaintiff may recover lost profits, the defendant's profits gained as the result of the false advertising, and attorney's fees at the discretion of the court in exceptional cases. While the Lanham Act permits courts to increase the damages, the statute does not permit courts to award punitive damages for violations of Section 43(a). Pom Wonderful LLC produces, markets, and sells bottled pomegranate juice and pomegranate juice blends. The Coca-Cola Company produces, markets, and sells bottled juices and juice blends under the Minute Maid brand. In September 2007, Coca-Cola began promoting its new juice blend, "Pomegranate Blueberry." This juice blend contains approximately 99.4% apple and grape juices, 0.3% pomegranate juice, 0.2% blueberry juice, and 0.1% raspberry juice. The label of Pomegranate Blueberry depicts a fruit vignette of the five fruit ingredients in the juice. Below the fruit vignette reads "Pomegranate Blueberry" and "Flavored Blend of 5 Juices." The back of the bottle reads "Minute Maid Enhanced Pomegranate Blueberry Is Made With A Blend of Apple, Grape, Pomegranate, Blueberry, and Raspberry Juices From Concentrate and Other Ingredients." In 2008, Pom sued Coca-Cola, alleging that Coca-Cola misled consumers to believe that the Pomegranate Blueberry beverage contains mostly pomegranate and blueberry juices when it actually contains mostly apple and grape juices. Specifically, Pom claimed that Coca-Cola violated the false-advertising provision of the Lanham Act (SS43(a)), in addition to California's Unfair Competition Law and False Advertising Law, which prohibit misleading advertising, and California's Sherman Law, which includes language materially identical to FDCA's misbranding provision, Section 343(a)(1). Coca-Cola responded that the beverage's name and label complied with FDA regulations, which, therefore, precludes Pom's Lanham Act challenge. Coca-Cola also moved to dismiss Pom's state law claims on the basis that the FDCA preempts state law obligations not identical to the federal law. The District Court for the Central District of California partially granted summary judgment to Coca-Cola, holding that the FDCA's regulations barred Pom's Lanham Act challenge of the Pomegranate Blueberry name and labeling. The court reasoned that the FDA had already spoken directly on the issue of identifying beverages with non-primary juices through its regulations. The court also emphasized that the beverage name complies with these regulations. Additionally, the court held that Pom lacked statutory standing to pursue the state law claims. Pom's interest in the expectancy of consumer profits did not qualify, for the court, as injury under the doctrine of standing. Pom appealed the district court decision to the Ninth Circuit, which affirmed the district court's holding that the FDCA and its regulations bar Pom's Lanham Act claim for both the Pomegranate Blueberry name and label. While the Ninth Circuit refrained from stating that compliance with the FDCA or FDA regulations will always insulate a defendant from Lanham Act liability, the court deferred to Congress's decision to delegate beverage juice labeling to the FDA and to FDA's expertise in the area. The Ninth Circuit remanded the case to the district court to reconsider issues of standing in connection with Pom's state law claims. The U.S. Supreme Court granted petition for a writ of certiorari in January 2014. The issue before the Court was whether a private party may bring a Lanham Act claim challenging a food label that is regulated by the FDCA. In its brief before the Court, Pom argued that neither the FDCA nor the Lanham Act contains a provision limiting the application of the Lanham Act in the context of misleading food labels. If Congress had intended to preclude Lanham Act claims in this instance, according to Pom, Congress could have added an express preclusion provision, when it added the state law preemption provision to the FDCA in 1990. Moreover, Pom further argued that Coca-Cola's label could have complied with both the FDCA and the Lanham Act, but the company chose not to label its product in such a manner. Pom also stated that the Ninth Circuit's holding would leave the entire regulation of misleading food labels with the FDA, an agency that does not have the necessary resources to fulfill this task. In response, Coca-Cola argued that Congress has demonstrated its intent to preclude Lanham Act claims and thus to create a uniform national scheme for food labeling regulation through the FDCA and the act's bar against a private cause of action. The specificity of the FDCA and the Nutritional Labeling and Education Act (NLEA) compared to the broad language in the Lanham Act, according to Coca-Cola, demonstrates Congress's intent to preclude a Lanham Act claim in these circumstances. Coca-Cola continued that a "specific" federal law (one with multiple, precise requirements), such as the FDCA, can narrow the scope of a general federal law even if the specific law does not expressly indicate this intention. In Coca-Cola's view, the FDCA's exclusive delegation of enforcement authority to the federal government and NLEA's express preemption clause signal Congress's intent to do so. In an 8-0 decision, the Supreme Court held that the Ninth Circuit's ruling that Pom's Lanham Act claim is precluded by the FDCA was incorrect, as the text, legislative history, and structure of the two acts do not support preclusion for this type of claim. Congress, according to the Court, did not intend the FDCA to preclude Lanham Act claims, such as Pom's. Further analysis of the Supreme Court's decision is provided in the following discussion on select legal issues. The primary issue before the Supreme Court in Pom Wonderful v. Coca-Cola was whether the FDCA precludes Pom's Lanham Act claim. Additionally, the lower court on remand is likely to consider the issue of preemption (the displacement of state law requirements for federal law) for Pom's state law claims. The following section provides an overview of these two legal issues, preemption and preclusion, in the context of Pom Wonderful v. Coca-Cola and juice labeling. Preemption occurs when federal law displaces state law requirements. As the legal basis for preemption, the Supremacy Clause of the Constitution states that the "Laws of the United States" made in pursuance of the Constitution are by definition "the supreme Law of the Land" "notwithstanding" "the Constitution or the Laws of any State to the Contrary." Federal preemption occurs when: "(1) Congress enacts a statute that explicitly pre-empts state law; (2) state law actually conflicts with federal law; or (3) federal law occupies a legislative field to such an extent that it is reasonable to conclude that Congress left no room for state regulation in that field." When first considering a preemption case, the Supreme Court has instructed courts to "start with the assumption that the historic police powers of the States were not to be superseded by [a] Federal Act unless that was the clear and manifest purpose of Congress." The Court regards this presumption against preemption as heightened when "federal law is said to bar state action in fields of traditional state regulation." For over a century, the Court has found food labeling, as part of the effort to protect consumers from fraud and to ensure food safety, to be an area of traditional state regulation. For lower courts in recent cases, this presumption does not necessarily bar further analysis of a preemption claim as they explore the various types of preemption discussed below. Courts generally consider express preemption first, specifically whether Congress has enacted an express preemption provision indicating its intent to preempt some state law. In 1990, Congress passed the Nutrition Labeling and Education Act (NLEA) amending the FDCA to prescribe national uniform nutrition labeling for foods. NLEA included an express preemption provision, Section 343-1(a), which states that "... no State or political subdivision of a State may directly or indirectly establish under any authority or continue in effect as to any food in interstate commerce" certain misbranding labeling requirements already established by the FDCA such as food identity, imitation food, and prominence of information on the label. The express preemption provision does not address the false or misleading label provision (SS343(a)(1)). One California district court has remarked that the absence of the false or misleading provision (SS343(a)(1)) from the express preemption provision means that the FDCA does not preempt any state law claims arising from false or misleading labels. NLEA's Section 6(c) also states that the act "shall not be construed to preempt any provision of State law, unless such provision is expressly preempted under [21 U.S.C. SS343-1]." In addition to an express provision, preemption may also occur when state law conflicts with federal law, such as when it is impossible for a party to comply with both state and federal requirements. Such conflict occurs when compliance with both federal and state regulations is a "physical impossibility." The Supreme Court rarely invokes this doctrine, but provides a hypothetical example in Florida Lime & Avocado Growers, Inc. v. Paul. In this case, the Supreme Court referred to a situation in which federal law prohibited the marketing of any avocado with more than seven percent oil, while California law excluded from the state any avocados measuring less than eight percent oil. An implied field preemption may occur when state law regulates conduct in a field that Congress intended to occupy exclusively. A court may infer field preemption unless the field includes areas traditionally occupied by the states. In these cases, the court must find "clear and manifest" congressional intent to supersede state laws. For preemption cases regarding state misbranding laws similar to FDCA's false and misleading provision, defendants claiming preemption have pointed to the FDCA's enforcement provision as congressional intent that FDCA should supersede state laws. In Chavez v. Blue Sky Natural Beverage Co., the defendant argued that the FDCA's bar against private litigants bringing suits for noncompliance with the FDCA signals congressional intent that the FDCA serves as the only authority in food labeling cases. However, the court found that this did not demonstrate "clear and manifest" intent to occupy the entire field of food labeling. Defendants also claim preemption is warranted when state law requirements are not identical to federal requirements or when Congress has so broadly regulated the field that there is no room left for state regulation in that particular issue area. The defendant in Holk v. Snapple Beverage Corp. argued that as the FDCA so extensively regulates food beverage labeling, the federal statute should preempt similar state laws. However, the Third Circuit disagreed, stating that the mere existence of a federal regulatory scheme, even such an extensive one as FDCA's, does not imply preemption of state laws by itself. While the Supreme Court did not consider Pom's state law claims, the district court on remand will likely consider these claims and the issue of preemption. Pom initially brought several state law claims against Coca-Cola under California's Unfair Competition Law and California's False Advertising Law, which prohibit deceptive practices and misleading advertising. The district court initially ruled that the FDCA preempted Pom's state law claims, according to Section 343-1(a) of the FDCA, to the extent that the California laws imposed obligations that are not identical to those imposed by the FDCA and its implementing regulations. The court specifically pointed to the FDA regulations outlining the affirmative requirements for beverage labels, which the California Unfair Competition and False Advertising Laws do not address. However, the district court did not find preemption on implied field preemption grounds, emphasizing the lack of evidence signaling congressional intent that the FDCA should occupy exclusively the food labeling and advertising field. Pom later amended its initial complaint to include claims under California's Sherman Law, which includes language that is materially identical to FDCA's misbranding provision. Ultimately, the district court found that Pom did not have standing to assert the state law claims as Pom did not lose money or property as a result of the unfair competition. Pom's "lost business opportunity" in the pomegranate juice market was not sufficient to give it standing, according to the court, as it did not show that Pom was entitled to restitution from the defendant. The Ninth Circuit disagreed with the district court's standing analysis insofar as it based its decision on Pom's eligibility of restitution. The circuit court remanded the case to the district court to rule on the state law claims. While the Supreme Court did not address the merits of Pom's state law claims, the Supreme Court did note that it is significant that the FDCA's preemption provision distinguishes among different FDCA requirements. For example, the preemption provision forbids state law requirements that are of the type but not identical to specific food and beverage labeling provisions. If the district court finds that Pom has standing to bring the state law claims, it is likely that the district court will consider this preemption provision when reviewing the case on remand. When two federal statutes regulate a similar area, the courts, "absent a clearly expressed congressional intention to the contrary, [should] regard each as effective." The alternative approach of giving maximum effect to each statute is to preclude one statute for the other, when the court finds that the statutes conflict and otherwise cannot effectively operate together. Such an interpretation can occur on a broad scale or more narrowly in a specific instance. In either context, courts generally examine whether such a conflict exists and whether one statute has impliedly repealed the other. Repeals by implication are generally not favored and tend not to be based on perceived conflict alone. "When there are two acts upon the same subject, the rule is to give effect to both if possible.... The intention of the legislature to repeal 'must be clear and manifest.'" Congressional intent to repeal a statute or part of a statute should be clear and present in the text. Repeal by implication generally is allowed only where "(1) provisions in the two acts are in irreconcilable conflict, the later act to the extent of the conflict constitutes an implied repeal of the earlier one; and (2) if the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it will operate similarly as a repeal of the earlier act." Creating a corollary to the second part of this rule, the Supreme Court has stated that absent a clear intention otherwise, "a specific statute will not be controlled or nullified by a general one, regardless of the priority of enactment." Prior to Pom Wonderful , courts have both permitted and denied a plaintiff to pursue a food or beverage Lanham Act claim in particular circumstances. Generally, courts allow a Lanham Act claim if the claim does not depend on the direct or indirect interpretation of the FDCA or FDA regulations. The court in Grove Fresh Distributors, Inc. v. Flavor Fresh Foods, Inc. permitted the plaintiff's Lanham Act claim, which turned on the definition of orange juice from concentrate. The plaintiff alleged that the defendant's representation that the product was 100% orange juice from concentrate was false because the product contained additives and adulterants. Even though the plaintiff referred to the FDA regulation's definition of orange juice in its claim, the court still permitted the Lanham Act claim to continue because the plaintiff did not have to rely on the FDA regulations to meet the elements of the Lanham Act. According to the court, the plaintiff could have used other alternatives, such as the market definition of orange juice, in order to show that the defendant's representation was "false" under the Lanham Act. Before Pom Wonderful, courts generally did not permit a Lanham Act claim if the claim required an original interpretation of FDA regulations and the FDA had not yet ruled or acted upon that particular product. Permitting such a claim would, according to the courts, usurp FDA's interpretive authority and undermine Congress's decision to limit FDCA enforcement to the federal government. The court in Summit Technology, Inc. v. High Line Medical Instruments extended deference to the FDA for the same reason. In this case, the plaintiff's Lanham Act claim alleged that the defendant falsely implied that the importation of the defendant's laser system was legal. The FDA had not yet determined whether to take action against the defendant for its importation of the product. In order to assess the validity of the plaintiff's falsity claim, the court would have had to perform an "original interpretation" of the FDA regulations before the FDA had a chance to interpret and act upon its own regulations. The court refused to perform such an interpretation, which would have preempted the FDA before it had acted. Similarly, courts tend not to permit a Lanham Act claim related to whether a defendant's conduct violates the FDCA. In PhotoMedex, Inc. v. Irwin, the plaintiff claimed that the defendant made false representations under the Lanham Act about FDA clearance to market the defendant's device. For this particular device, the manufacturer can obtain FDA clearance, according to the FDA regulations, if the product is sufficiently similar to a device that has already received clearance. The court did not permit the Lanham Act claim in this case, as it required the court to interpret whether the defendant qualified for FDA clearance and not whether the FDA had or had not granted the clearance. Courts generally do not permit Lanham Act claims concerning false or misleading use of terms defined by FDA regulations. The plaintiff in Eli Lilly & Co. v. Roussel Corp. alleged that the defendant's use of "generic" and "safe and effective" in an FDA application was false. Because the claim required the court to interpret the FDA regulations' definition of these terms to determine their falsity, the court denied the Lanham claim. Similarly, in Healthpoint v. Ethex Corp., the plaintiff claimed that the defendant's advertising of the safety and effectiveness of its drugs violated the Lanham Act, specifically the inappropriate use of FDA terms "equivalent to" and "alternative to." The court dismissed the Lanham Act claim because it determined that the correct use of these terms in the context of drug marketing required the interpretation and application of the FDCA and FDA regulations. In Pom Wonderful v. Coca-Cola, the Supreme Court held that "[c]ompetitors, in their own interest, may bring Lanham Act claims like Pom's that challenge food and beverage labels that are regulated by the FDCA." In reaching that conclusion, the Supreme Court first looked at the text of both statutes and noted the absence of any provision in either statute that forbids or limits Lanham Act claims. This absence, according to the Court, is "'powerful evidence that Congress did not intend FDA oversight to be the exclusive means of ensuring' proper food and beverage labeling." For the Court, even FDCA's preemption provision supported finding no preclusion in this case. Instead, the provision indicated that Congress intended the FDCA to preempt state law in particular contexts only, according to their interpretation of Section 343-1(a). The Supreme Court further commented on the relationship between the Lanham Act and the FDCA. According to the Court, these two federal statutes complement each other in food and beverage labeling, with the Lanham Act protecting commercial interests and the FDCA protecting health and safety. Similarly, the Court pointed to the opportunity, offered by the Lanham Act, for private companies that have market expertise to enforce the Lanham Act, which in turn provides incentives for manufacturers to "behave well" in the context of food and beverage labeling. Because the FDA does not preapprove food and beverage labels under its regulations, precluding Lanham Act claims in this context, according to the Court, would leave commercial interests with less effective protection regarding enforcement. The Court reasoned that it is unlikely that Congress intended this result. As of the date of this report, the scope of Pom Wonderful's holding as applied to all food/beverage Lanham Act claims is unclear. The Supreme Court, in its decision, emphasized that the FDCA does not preclude Lanham Act claims like Pom's. However, the case history, as discussed in the previous section, reveals that the courts have distinguished between Lanham Act claims that require courts to interpret FDA regulations and those, like Pom's, that permit a court to consider the Lanham Act "independently" from the FDA regulations. Further litigation requiring the courts to apply the Pom Wonderful holding is necessary to determine whether "like Pom's" is read broadly (to all food/beverage Lanham Act claims) or more narrowly. Similarly, it is also unclear whether the Pom Wonderful holding applies to other FDA-regulated products such as drugs and cosmetics. A legislative response may also clarify this relationship between the Lanham Act and the FDCA in other cases. However, the Supreme Court's opinion in Pom Wonderful does elucidate how two federal statutes may interact with each other, not only in the context of food labeling, but also in the greater federal regulatory framework.

This report discusses two different federal statutes that regulate beverage labels. The Food, Drug, and Cosmetic Act (FDCA) and its implementing regulations outline requirements for beverage labels reflecting the different ingredients of the juice. The FDCA also prohibits misbranded food and beverages when labels are false and misleading. The Lanham Act, the federal trademark statute that regulates unfair competition, also prohibits misleading labels and advertisements that may hurt a competitor's business and/or goodwill. While these two statutes both impact juice labels, the overall purpose and enforcement of these two statutes differ. Only the federal government can enforce the FDCA, while the Lanham Act allows competitors to enforce the act's principles in the courts. The Lanham Act prohibits unfair competition, while the FDCA seeks to ensure public health and safety. These similarities and differences raise questions regarding the legal options for businesses claiming harm from a misleading or misbranded beverage label, such as the negative impact on the market for their products. Such questions include whether a business can seek relief against a competitor's misleading juice label in court. The courts and parties in Pom Wonderful v. Coca-Cola encountered this issue, specifically regarding Coca-Cola's allegedly misleading juice label. In 2008, Pom brought suit against Coca-Cola alleging that Coca-Cola's Pomegranate Blueberry beverage name and label violates the Lanham Act and California's unfair competition laws because it misleads consumers to believe that the beverage consists of primarily pomegranate and blueberry juices when it actually contains mostly apple and grape juices. The district court in California and the Ninth Circuit held that the FDCA precludes Pom's Lanham Act claim because of the Food and Drug Administration's (FDA's) exclusive authority to regulate food labels and the absence of any FDA action against Coca-Cola for this label. The U.S. Supreme Court held that Pom may bring a Lanham Act claim alleging unfair competition from misleading beverage labels regulated by the FDCA because of the absence of anything in the text, legislative history, or structure of the FDCA or the Lanham Act that shows congressional intent to preclude such Lanham Act claims. The two legal issues before the courts in Pom Wonderful focused on the interaction of federal statutes with both state and federal laws. On remand, the lower courts will have to consider again the issues of preemption, specifically whether the FDCA preempts Pom's California state law claims when the state law provisions are not identical to the federal law. Additionally, the Supreme Court's preclusion analysis in Pom Wonderful adds to the case history addressing the preclusion of Lanham Act claims by the FDCA. However, as consumers appear increasingly concerned about how food products are labeled, further litigation may be needed to clarify how the Supreme Court's holding in Pom Wonderful applies to Lanham Act food and beverage claims that are dissimilar to Pom's Lanham Act claim. Similarly, it is unclear how Pom Wonderful may apply to other FDA-regulated products such as drugs and cosmetics. Despite the possibility for further litigation, Pom Wonderful provides a useful opportunity to observe and understand the interplay between two federal statutes that can be applied to the wider federal regulatory context.

As part of the Patient Protection and Affordable Care Act (ACA), as amended, Congress enacted the "individual mandate," which requires certain individuals to have a minimum level of health insurance. Individuals who fail to do so may be subject to a monetary penalty, administered through the tax code. Prior to ACA, Congress had never required individuals to buy health insurance, and there had been significant debate over whether the individual mandate was within the scope of Congress's legislative powers. Shortly after ACA was enacted, several lawsuits were filed that challenged the individual mandate on constitutional grounds. While some of these cases were dismissed for procedural reasons, others moved forward. These challenges culminated in a case recently decided by the Supreme Court, National Federation of Independent Business v. Sebelius (NFIB) , one of the most controversial and highly publicized cases in recent years. This case received a great deal of attention, not just because of its potential implications for federal regulation of the health care system, but also for the scope of legislative power and the relationship between the federal government, states, and individuals. The NFIB case began when attorneys general in several states brought an action in the District Court of the Northern District of Florida against the Secretaries of Health and Human Services (HHS), Treasury, and Labor, seeking declaratory and injunctive relief from various requirements of ACA, including the individual mandate. Certain individuals, the National Federation of Independent Business, and several other states later joined the lawsuit. The district court in NFIB held that the individual mandate exceeded the powers of Congress under the Commerce Clause and the Necessary and Proper Clause, and struck down ACA in its entirety. In a 2-1 ruling, the Court of Appeals for the Eleventh Circuit affirmed the district court's decision that the individual mandate exceeded Congress's enumerated powers. However, unlike the lower court, the appellate court allowed the remaining provisions of ACA to stand. The parties to the litigation subsequently petitioned the Supreme Court for review of the Eleventh Circuit's decision, and the Supreme Court agreed to hear the case. In June 2012, the Supreme Court largely affirmed the constitutionality of ACA. With respect to the individual mandate, Chief Justice Roberts wrote the controlling opinion and found that while the Commerce Clause did not provide Congress with the authority to enact the individual mandate, the mandate could be upheld as an appropriate exercise of the taxing power. The result came as a surprise to many commentators, as the lower courts in NFIB and other cases had primarily focused on the Commerce Clause in their decisions. This report provides an overview of the Court's holding with respect to the individual mandate under the Commerce Clause and the Taxing Power. It also addresses possible implications of the decision on existing federal law and future legislation. It should be noted that the Supreme Court also rendered a decision on the constitutionality of the ACA's expansion of the Medicaid program, which required that states provide coverage to adults under the age of 65 with incomes up to 133% of the federal poverty level. In a complex, fractured opinion, the Supreme Court upheld the Medicaid expansion, but limited the ability of the federal government to withhold all federal Medicaid funding unless the states accept and comply with the Medicaid expansion requirements. For a discussion of the Supreme Court's decision on the Medicaid expansion, see CRS Report R42367, Medicaid and Federal Grant Conditions After NFIB v. Sebelius: Constitutional Issues and Analysis , by [author name scrubbed]. The Commerce Clause of the U.S. Constitution empowers Congress "[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." This power has been cited as the constitutional basis for a significant portion of the laws passed by Congress over the last 50 years, and it currently represents one of the broadest bases for the exercise of congressional powers. Congress has relied on the commerce power not only to regulate health insurance and other aspects of the health care system, but also to enact a diverse array of other legislation, including environmental laws, labor laws, and civil rights laws. Despite the breadth of the Commerce Clause, prior to the NFIB case, it was unclear whether the Commerce Clause provided Congress with the authority to enact the individual mandate, as whether Congress could use the clause to require an individual to purchase a good or a service was a novel issue. As the litigation over the individual mandate made its way through the lower courts, the Commerce Clause had been the focus of the constitutional analysis, and courts came to varying conclusions. Nine federal courts, including three courts of appeals and six district courts, rendered a decision on the constitutionality of the individual mandate on Commerce Clause grounds. The three appellate courts evaluating the issue reached contrasting conclusions. While three district courts upheld the individual mandate, three struck it down. Six petitions for Supreme Court review were filed in response to appellate decisions in the Eleventh, Sixth, and Fourth Circuits, and in November 2011, the Court agreed to hear only the appeals in the NFIB case. Oral arguments in this case took place during the last week of March. Chief Justice Roberts, in a controlling opinion, found that the Commerce Clause does not provide Congress with the authority to enact the individual mandate. While the Chief Justice acknowledged that Congress's authority to regulate interstate commerce is quite broad, he also pointed out that Congress had never attempted to use this power to make individuals buy an undesired product. The Chief Justice further noted that the language of the Clause (i.e., the power to regulate interstate commerce) reflects the idea that there must be something to regulate in the first place (i.e., some type of "activity"). The problem with the individual mandate, as indicated by the Chief Justice, is that it "does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product on the ground that their failure to do so affects interstate commerce." The Chief Justice concluded that such a construction of the Commerce Clause would greatly expand the reach of the Commerce Clause beyond permissible bounds. He further explained that regulating individuals based on what they fail to do would fundamentally change the relationship between the citizen and the federal government in a way that was not intended by the Framers of the Constitution. The Administration had argued that virtually all individuals are active in the health care market because they will need health care at some point. However, the Chief Justice declined to accept this line of reasoning, opining that the Court's Commerce Clause precedent does not support the idea that Congress can dictate the conduct of an individual today based on predicted future activity. Another argument made against the constitutionality of the individual mandate was the lack of a limiting principle--the idea that if Congress could require the purchase of health insurance, it could require Americans to purchase anything. The Administration had claimed, among other things, that the requirement to purchase health insurance was different from other products because, for example, individuals receive health care services even though they cannot pay for them, and the costs of those services can be passed on to others in various ways such as higher insurance premiums. The Chief Justice disagreed with the Administration, noting that if the Court followed its reasoning, a mandatory purchase could be permitted to solve almost any problem. While no other Justice joined the opinion of Chief Justice Roberts with respect to the Commerce Clause analysis, four Justices (Scalia, Thomas, Kennedy, and Alito) issued a dissenting opinion that reached the same conclusion based on somewhat similar reasoning. Accordingly, the fact that a majority of Justices found that Congress did not have the power to enact the individual mandate under the Commerce Clause is notable. The four remaining Justices (Ginsburg, Breyer, Sotomayor, and Kagan), in a concurring opinion written by Justice Ginsburg, indicated that they would have upheld the individual mandate on Commerce Clause grounds. In addition, while the Court's decision on the constitutionality of the individual mandate did not hinge on its Commerce Clause analysis, it should be noted that lower courts may still look to and rely upon this analysis in evaluating future cases. It has been questioned what impact the NFIB case has on Congress's ability to legislate under the Commerce Clause. As discussed above, the Court's decision creates a new limitation on Congress's authority to act under the Commerce Clause--that Congress can only regulate commercial activity, not compel an individual to engage in it. Some have claimed this limitation is significant, as it reinforces the idea that Congress's Commerce Clause authority has boundaries. It has also been suggested that these new boundaries could potentially affect certain existing laws, making them susceptible to a legal challenge. Conversely, it may be argued that this new limitation may not have much of an impact on existing laws or on Congress's ability to enact future legislation under the Commerce Clause. Chief Justice Roberts, as well as the four dissenting Justices, acknowledged that the individual mandate is a novel requirement, as individuals were being forced to participate in commerce. Further, the fact that the Court did not find any other application of the Commerce Clause to be invalid arguably suggests that while future mandatory purchases could violate the Commerce Clause, other types of federal laws may not be affected. In addition, with the exception of Justice Thomas, no other Justice indicated that prior Commerce Clause precedent should be struck down. Accordingly, a reasonable argument can be made that with respect to the Commerce Clause, the NFIB case did not significantly alter the constitutional environment and that the status quo prior to ACA is largely preserved. The Constitution grants Congress the "Power to lay and collect Taxes, Duties, Imposts and Excises ... and provide for the common Defence and general Welfare of the United States." Congress's taxing power has always been recognized as broad. The question confronting the Court in NFIB v. Sebelius was whether the enforcement mechanism for the individual mandate was a "tax," which would then be permissible for Congress to enact under its taxing power. The Chief Justice's opinion answered affirmatively, upholding the provision as a valid exercise of Congress's authority. For this portion of the opinion, Chief Justice Roberts was joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan. The first issue faced by the Court was determining whether the individual mandate's enforcement mechanism was a tax or a penalty for constitutional purposes. The relevant statutory provision, Section 5000A of the Internal Revenue Code, uses the term "penalty" to describe the provision. The Court, however, placed no significance on this fact, noting that prior cases had held that the choice by Congress to label a payment as penalty or tax was not controlling when assessing the provision's constitutionality. Rather than looking at labels, the Court used a functional approach under which it looked at the provision's "substance and application." The Court began by finding that the mandate provision "looks like a tax in many respects." The provision is codified in the tax code and enforced by the IRS, with the agency directed to assess and collect it in the same manner as other taxes; it applies to "taxpayers" and any amount owed is paid when people file their regular income tax returns and pay into the general Treasury; it does not apply to individuals who do not owe federal income tax because their income is less than the filing threshold; its exaction is based on "such familiar factors" as taxable income, filing status, and number of dependents; and it "yields the essential factor of any tax: it produces at least some revenue for the government." Using this functional approach, the Court then found that the individual mandate was distinguishable from prior precedent that had found some purported taxes were actually penalties that could not be justified under the taxing power. The most prominent of these, and the case primarily discussed in the majority opinion, is a 1922 decision, Bailey v. Drexel Furniture Co., which is known as the Child Labor Tax Case. There, the Court relied on a number of factors to find that the principal intent of the provision at issue was impermissibly regulatory: (1) it set forth a specific and detailed course of conduct regarding the use of child labor; (2) it was not imposed proportionately to the degree of the infraction; (3) the tax required the employer to know that the child was below age; and (4) businesses were made subject to inspection by officers of the Secretary of Labor, positions not traditionally charged with the enforcement and collection of taxes. In NFIB , the Court found that the latter three factors identified in the Child Labor Tax Case were not present with respect to the individual mandate. First, the individual mandate was not "prohibitory," as evidenced by the fact that the tax, for many people, would be "far less" than the cost of insurance. Because of this, it could be a "reasonable financial decision" to pay the tax rather than buy insurance. Second, the mandate provision clearly included no scienter requirement. Third, any exaction would be collected just like any other tax by the IRS, except, as the Court emphasized, the agency was prohibited from using "those means most suggestive of a punitive sanction, such as criminal prosecution." The Court did not expressly address the remaining factor from the Child Labor Tax Case, which was that the provision at issue in that case set forth a specific and detailed course of conduct regarding the use of child labor. The Court did, nonetheless, acknowledge the obvious regulatory purpose of the mandate provision. However, the fact the mandate provision was intended to encourage the purchase of health insurance was insignificant, with the Court noting tax provisions intended to influence behavior are common and pointing to taxes imposed on tobacco, selling marijuana, and selling firearms as examples. The Court then explained that, in distinguishing the differences between penalties and taxes, "'if the concept of the penalty means anything, it means punishment for an unlawful act or omission.'" Applied here, the Court found that Section 5000A, while clearly intended to encourage the purchasing of health insurance, did not have to be read as making the failure to do so unlawful. For evidence of this, the Court emphasized that the only consequence for the failure is owing payment to the IRS--no other "negative legal consequences" arise. Further support for its conclusion was Congress's seeming nonchalance about creating "four million outlaws"--the number of people expected to choose to pay the tax rather than buy health insurance--which the Court interpreted to indicate that the mandate is nothing more than a tax that people "may lawfully choose to pay in lieu of buying health insurance." Thus, for the majority, the fact that Congress did not provide for additional consequences after paying the initial tax was important. Finally, the Court rejected the argument that the statutory language, which states individuals "shall" buy health insurance or pay a "penalty," meant Section 5000A had to be read as punishing unlawful conduct, noting it had rejected a similar argument in a prior case in order to avoid reading a statute in a way that would have violated the Constitution. Once the Court determined that the individual mandate was a tax for constitutional purposes, it turned to look at whether the mandate violates the Constitution's limitations on Congress's taxing powers. Even where Congress has the general authority to levy a tax, the Constitution imposes additional requirements on the form of such taxes. For constitutional purposes, taxes are understood to be either direct taxes, which must be apportioned among the states based on population, or indirect taxes (i.e., duties, imposts, and excises), which must be "uniform throughout the United States." The Sixteenth Amendment then removes the requirement of apportionment for any "taxes on income," without classifying such taxes as direct or indirect. Here, the specific question was whether the individual mandate is a direct tax. If so, it would be unconstitutional since it is not apportioned among the states based on population, unless it were a "tax on income." No constitutional issue would arise if the mandate is an indirect tax (specifically, an excise tax) since it appears to satisfy the requirement of uniformity as it is geographically neutral on its face. The exact scope of the term "direct taxes" has never been determined. The Constitution does not define the term other than specifying that it includes capitations, which are a fixed tax imposed on each person in a jurisdiction. The Framers' debates provide little clarity. From its earliest days, the Supreme Court has interpreted the term relatively narrowly. The Court has found that direct taxes include capitations and real property taxes at a minimum. The Court has also suggested that other types of taxes might be direct, although it did not find any such examples until the Pollock case in 1895. In Pollock , the Court struck down the unapportioned Income Tax Act of 1894 after finding parts of it--the taxes on income from real and personal property--were direct taxes. The Pollock decision was subject to substantial criticism and led to the adoption of the Sixteenth Amendment in 1913. While Pollock has not been expressly overruled, the Court moved away from its analysis in subsequent cases, upholding a variety of unapportioned taxes on the basis they were excise taxes. In NFIB v. Sebelius , the Court easily dismissed this issue, finding that the individual mandate is not a "direct tax" since that term has only been recognized to include capitations (taxes imposed on each person in a jurisdiction) and real and personal property taxes. The Court explained that "[a] tax on going without health insurance does not fall within any recognized category of direct tax." The Court defined capitations as "taxes paid by every person, 'without regard to property, profession, or any other circumstance ,'" and emphasized that the mandate provision's "whole point" is "it is triggered by specific circumstances," specifically "earning a certain amount of income but not obtaining health insurance." The Court concluded by noting the provision is clearly not a tax on ownership of land or personal property. What does NFIB mean for Congress's taxing power? At the outset, it must be emphasized that the taxing power has always been recognized as being broad. Further, the Court has approved tax provisions even when they have a regulatory (i.e., non-revenue raising) purpose. As the Court has explained, "[i]t is beyond serious question that a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed." For those approaching the case from this perspective, the Court's opinion with respect to the scope of the taxing power may be unremarkable. On the other hand, the Court has, on occasion, found that a tax was functionally a regulatory penalty and therefore not supported by the taxing power. Key to the Court's analysis in some of these cases was the tax played a significant enforcement role to force compliance within a regulatory scheme. In light of this, it might be notable the majority opinion did not appear to have addressed one of the Child Labor Tax Case factors: whether ACA set forth a specific and detailed course of conduct and imposed an exaction on those who transgress its standard. This was arguably the greatest similarity between the Child Labor Tax Case and the individual mandate, and the reason why some thought the mandate might be struck down under that taxing power for being "too regulatory." Going forward, one question may be whether the omission of this factor from the majority's discussion suggests that, for constitutional purposes, the prominence of these of types of regulatory motivations may be of minimal significance, with the focus instead on the nature of the exactions imposed and the manner in which they are administered. Notably, the Court in NFIB stated that because the mandate provision was a tax "under our narrowest interpretations of the taxing power," it declined to "decide the precise point at which an exaction becomes so punitive that the taxing power does not authorize it." Thus, until the Court speaks to this issue, it is not clear where that line is. Looking at those factors identified in the case as supporting the characterization of the mandate provision as a tax, some might be relatively easy to fulfill if the intent is to establish a required payment as a tax. From a practical perspective, perhaps one of the more substantive indicia is that a tax must be a relatively modest amount (i.e., it cannot be prohibitory), with the majority opinion emphasizing that it could be a "reasonable financial decision" for some people to pay the tax rather than buy insurance. The limiting principles articulated in the Court's decision might be of particular interest to those who had expressed concern about taxing inactivity, fearing that if the Court approved the mandate, this could grant Congress an almost unlimited authority under the taxing power. The majority opinion clearly states that taxing inactivity can be a valid exercise of Congress's taxing power. It identified three factors that it felt allayed any concerns about such taxation. First, the Court was comfortable with its conclusion since it was "abundantly clear" that there is no constitutional guarantee that people can "avoid taxation through inactivity." Second, the Court emphasized that Congress's taxing power is not unlimited since it would not support punitive regulatory measures. Third, the Court explained that the taxing power, while greater than the commerce power, "does not give Congress the same degree of control over individual behavior" since it only involves "requiring an individual to pay money into the Federal Treasury." Some might take issue with the first point, particularly since the one example the majority cited was capitations, an arguably unique type of tax. Further, those who are opposed to a broad interpretation of Congress's taxing power may find little comfort in the limiting principles found in the majority's opinion. On the other hand, as noted, the Court expressly left unanswered the question of when exactly a tax crosses the line to become a regulatory penalty no longer supported by the taxing power, while emphasizing that "[i]t remains true ... that the 'power to tax is not the power to destroy while this Court sits.'" Thus, because the Court analyzed the mandate under its "narrowest interpretation of the taxing power," how the Court might interpret the outer limits on that power is unresolved.

In one of the most highly anticipated decisions in recent years, the Supreme Court released its ruling regarding the constitutionality of the Affordable Care Act (ACA) in June 2012. In NFIB v. Sebelius, the Court largely affirmed the constitutionality of ACA, including its individual mandate provision. In a move that was unexpected to many, the Court upheld the mandate as a valid exercise of Congress's taxing power, but not its Commerce Clause power. First, Chief Justice Roberts, in a controlling opinion, found that the Commerce Clause does not provide Congress with the authority to enact the individual mandate. While the Chief Justice acknowledged that Congress's authority to regulate interstate commerce is quite broad, he also pointed out that Congress had never attempted to use this power to make individuals buy an undesired product. The Chief Justice further noted that the language of the Clause (i.e., the power to regulate interstate commerce) reflects the idea that there must be something to regulate in the first place (i.e., some type of "activity"). The problem with the individual mandate, as indicated by the Chief Justice, is that it "does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product on the ground that their failure to do so affects interstate commerce." The Chief Justice also noted that if the mandate were permissible under the Commerce Clause, a mandatory purchase could be permitted to solve almost any problem, thus agreeing with those who had raised concerns about a lack of a limiting principle--the idea that if Congress could require the purchase of health insurance, it could require Americans to purchase anything. While no other Justice joined the opinion of Chief Justice Roberts with respect to the Commerce Clause analysis, four Justices issued a dissenting opinion that reached the same conclusion based on somewhat similar reasoning. The Chief Justice then found the mandate provision to be a valid exercise of Congress's taxing power. For this portion of the opinion, Chief Justice Roberts was joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan. The key question here was whether the mandate provision was a tax or penalty. The Court used a functional approach to find the provision was in fact a tax, looking at its substance and application, rather than any statutory labels (which used the term "penalty"). The Court rejected the argument that the provision was actually a regulatory penalty, and therefore outside the scope of the taxing power, because it was not prohibitory, had no scienter requirement, and would be collected just like any other tax by the IRS. The provision's obvious regulatory purpose was not a significant factor, with the Court noting that it is common for taxes to be intended to influence behavior. Further, the Court found the provision did not have to be read as making the failure to buy health insurance unlawful. Finally, the Court found the mandate provision, while a tax, was not a "direct tax" and therefore was not subject to the Constitution's requirement that direct taxes be apportioned among the states based on population. It should be noted that the Supreme Court also rendered a decision on the constitutionality of the ACA's expansion of the Medicaid program. For a discussion of the Supreme Court's decision on the Medicaid expansion, see CRS Report R42367, Medicaid and Federal Grant Conditions After NFIB v. Sebelius: Constitutional Issues and Analysis, by [author name scrubbed].

As the debate surrounding health care reform continues, there has been considerable discussion about creating a new, independent entity to determine Medicare policy. Currently, Medicare policy is made largely by Congress and, to varying degrees, the Centers for Medicare and Medicaid Services (CMS). CMS, housed within the Department of Health and Human Services (DHHS), is the federal agency responsible for administering the Medicare, Medicaid, and Children's Health Insurance (CHIP) programs. The proposals being debated would essentially create an independent body of health care experts with the power to make fundamental decisions affecting Medicare. Advocates of these types of proposals argue that creating an independent, policymaking entity in Medicare is necessary if we hope to achieve any real health care reform. Supporters claim that members of Congress are easily influenced by special interests and lobbyists when making Medicare policy decisions, particularly those related to provider reimbursement. As a result, some of the decisions that are made may not be fiscally sustainable or in the best interest of beneficiaries. Advocates also contend that lawmakers do not have the necessary technical or operational expertise required to govern a program as complex as Medicare. Every year lawmakers, many of whom have limited experience in health care financing or delivery, make detailed operational decisions related to Medicare's provider payment systems. The perception, at least by some, is that an independent body of experts, insulated from politics, would produce more fiscally responsible and efficient policy decisions. Opponents of these proposals express concern about reducing Congress's role in the policymaking and oversight process. The proposals being discussed would establish a new policymaking body with the authority to make changes in the program without congressional approval. By delegating certain lawmaking functions to an independent entity, Congress would be ceding some of its oversight responsibilities. For example, today, when it examines the merits of a particular policy, Congress can hold hearings and debates, both of which are open to the public. Although these proposals include certain oversight mechanisms, such as annual reports and studies, the day-to-day deliberations of the new entity or council would not necessarily be available to the public. On June 25, 2009, Senator Jay Rockefeller introduced S. 1380 , the Medicare Payment Advisory Commission (MedPAC) Reform Act of 2009, which would elevate MedPAC, a congressional advisory commission, to an executive branch agency with the authority to determine Medicare payment and coverage policies. The Obama administration submitted a similar proposal to Congress, titled the Independent Medicare Advisory Council Act (IMAC) of 2009, on July 17, 2009. The Administration's proposal would create an independent five-member executive council charged with issuing recommendations on Medicare payment policy to the President. Finally, the Senate Finance Committee included a provision to establish an independent Medicare advisory board in its health reform legislation, the Patient Protection and Affordable Care Act ( H.R. 3590 ), which passed the Senate on December 24, 2009. Although different in structure and scope, all of these proposals would alter the role Congress has traditionally played in the Medicare policymaking process. This report introduces readers to the concept of creating an independent, policymaking entity in Medicare. The report begins with a discussion of the types of policymaking entities that have been proposed in the current health care reform debate, as well as in Medicare. The report then provides an overview of the role that Congress and CMS play in determining Medicare policy. The report concludes with a comparison of some of the key features of S. 1380 , the Administration's draft IMAC proposal, and H.R. 3590 . The current health care reform debate has included discussions about creating new independent entities to conduct certain administrative and policymaking functions in the health care system. In addition to proposals to establish this type of entity in Medicare, the concept has been offered as a tool for performing research on comparative effectiveness, managing the private health insurance market, making payment and coverage decisions, and proposing broader reforms to the health care system. At least one of the rationales for creating independent entities with policymaking authority is the assumption that, because these organizations are insulated from both the congressional and executive decision-making processes, they can make better policy decisions. Independent entities typically share certain characteristics. First, they are usually governed by boards or commissions composed of members who are appointed by the President and confirmed by the Senate. Representatives are usually appointed for long, fixed terms to reduce the likelihood that they will be influenced by either the White House or congressional politics. Additionally, terms are usually staggered to ensure that not all of the members are appointed during one presidential administration. Other features associated with independence include requiring the President to consider political orientation when appointing members and mandating that the membership represent a diverse mix of professional experience or expertise. One prominent model of an independent health care entity discussed throughout the current reform debate is the Federal Health Board. Endorsed by former Senator Tom Daschle, a Federal Health Board would be modeled after the Federal Reserve Board and have broad authority over private and public health care programs. The Federal Reserve, which establishes the nation's monetary policy, is composed of a national Board of Governors consisting of seven members and 12 regional banks. The Board of Governors has significant authority to oversee and regulate the banking system. As envisioned by Daschle and others, a Federal Health Board would play a substantial role in making benefit and coverage recommendations, regulating the private health insurance market, conducting research, and improving the quality of care. Some of the other models that have been discussed are more modest in scope. For example, in addition to including a provision establishing a Medicare advisory board, H.R. 3590 would establish a private, non-profit corporation titled the Patient-Centered Outcomes Research Institute to conduct comparative clinical effectiveness research. The corporation, which would be overseen by a Board of Governors composed of 17 members appointed by the Comptroller General, would be charged with identifying national priorities for performing comparative effectiveness research and contracting with public and private organizations to conduct such research. Another proposal would create an organization or entity to oversee the market for private health insurance. These entities, which are referred to as health insurance exchanges, would be responsible for establishing and enforcing standards for private health plans related to benefits, coverage, enrollment, and beneficiary cost-sharing. Proposals to establish an independent entity in Medicare also vary in scope and structure. Some measures would create an independent commission, board, or entity with the authority to determine specific Medicare policies, particularly those related to provider reimbursement and benefit coverage. Others would create a governance structure with a broader scope of authority. For example, in a recent paper for the New America Foundation on reforming Medicare's governance, certain health experts advocate creating a new independent board called the Medicare Guardians. Under this proposal, the Medicare Guardians would function like a board of directors for Medicare with broad authority to enact policies directed at restructuring how the program pays for and delivers health care. Congress has debated the merits of creating a new administrative entity in Medicare several times throughout the program's history, most recently in the Medicare reform discussions of 2000 and 2001. At that time, Congress was considering adding a new prescription drug benefit to the program and exploring options to foster competition among private Medicare plans. However, there were concerns that CMS (at that time the Health Care Financing Administration, or HCFA), already overwhelmed with new responsibilities, would not be able to manage an increase in its workload. Various reform proposals recommended a number of solutions to rectify the agency's management problems, including expanding its authority to perform its responsibilities, increasing the agency's annual budget, creating separate agencies to administer parts of the program, and establishing a Medicare Board to manage competition among private plans and traditional Medicare. Currently, Medicare policy is determined largely by Congress and the three congressional committees that have jurisdiction over the program: the House Committee on Ways and Means, the House Committee on Energy and Commerce, and the Senate Committee on Finance. These committees regularly propose and draft legislation to modify all aspects of the Medicare program, including payment policy, benefits, coverage, and program administration. In some areas, Congress has created legislative language that is very detailed and prescriptive. For example, policymakers have established sophisticated payment systems and methodologies for reimbursing providers participating in Medicare Parts A and B. Congress has also mandated specific criteria for benefit coverage (i.e., beneficiary co-insurance and cost sharing amounts, day limits on coverage, and patient eligibility requirements). In other areas, congressional involvement in Medicare policy is less developed. For example, although Congress has outlined broad benefit categories for Medicare coverage in Title XVIII of the Social Security Act (SSA), it has given CMS substantial discretion and flexibility to make individual coverage determinations. CMS executes this authority by implementing both national and local coverage determinations, otherwise known as NCDs and LCDs. NCDs and LCDs grant, limit, or exclude Medicare coverage for a specific medical service, procedure, or device. To date, CMS has issued approximately 308 NCDs. The vast majority of Medicare coverage decisions, however, are LCDs, which are made at the local level by private contractors. To assist with its policymaking efforts, Congress relies on the analytic and research support of its legislative branch agencies: the Congressional Budget Office (CBO), the Congressional Research Service (CRS), the Government Accountability Office (GAO), and the 17-member Medicare Payment Advisory Commission, otherwise known as MedPAC. Congress established MedPAC with the Balanced Budget Act of 1997 ( P.L. 105-33 ). Specifically, Congress charged the commission with reviewing and making recommendations to Congress regarding Medicare payment policies, including payments to private Medicare+Choice health plans (now called Medicare Advantage plans). The statute also requires the commission to examine other issues affecting the Medicare program, such as changes in the health care delivery system, changes in the market for health care services, Medicare payment policies and their relationship to quality and access, and factors affecting the efficient delivery of health care services in different sectors (e.g., hospitals, skilled nursing facilities). The commission issues the majority of its policy recommendations through two annual reports to Congress: a March report on Medicare payment policy and a June report on other policy issues affecting the Medicare program. The types of recommendations range from broad, long-term policies such as implementing pay for performance and quality measurement programs to detailed payment update recommendations for Medicare's fee-for-service (FFS) providers. When formulating its recommendations, the commission takes into account the adequacy of current provider payments and the efficiency of providers. For example, in its March 2009 report, the commission recommended eliminating or reducing payment updates for skilled nursing facilities, home health services, and inpatient rehabilitation facilities in FY2010. The commission also testifies regularly for various congressional committees on its findings and recommendations. In establishing MedPAC, Congress merged two previous Medicare advisory commissions: the Prospective Payment Assessment Commission (ProPAC) and the Physician Payment Review Commission (PPRC). Congress created ProPAC in 1983 to provide guidance on implementing the hospital prospective payment system and the PPRC in 1985 to make recommendations to Congress on reforming Medicare's physician payment system. ProPAC and PPRC were established, at least in part, because Congress had become increasingly distrustful of the executive branch and HCFA. By creating an independent advisory body to assist lawmakers in their policymaking efforts, Congress was able to obtain its own source of objective expertise on Medicare payment policy and buffer members of Congress from pressures from interest groups. MedPAC, like its predecessor agencies, does not have the authority to actually implement its recommendations without congressional approval or regulatory action by CMS. Although the actual number of MedPAC recommendations implemented by Congress is difficult to measure, the perception is that the commission has been relatively influential in shaping Medicare policy. According to the commission's FY2010 budget request, MedPAC assesses its impact on the policymaking process by publicly reporting its outputs (e.g., number of requests for information from Congress, number of policy briefs published, and number of testimonies) and qualitatively describing the outcomes of its recommendations. On June 25, 2009, Senator Rockefeller introduced S. 1380 , the Medicare Payment Advisory Commission (MedPAC) Reform Act of 2009. S. 1380 would establish the MedPAC as an executive branch agency with broad policymaking authority in the areas of Medicare payment and coverage. July 17, 2009, the President submitted a draft proposal to Congress titled the Independent Medicare Advisory Council Act of 2009, otherwise known as the IMAC proposal. The IMAC proposal would establish a five-member council to advise the President on Medicare payment rates for certain providers. Although the proposal provides the council with the authority to recommend broader policy reforms, its authority outside of Medicare payment policy would be limited. Finally, the Senate Finance Committee included a provision (Sec. 3403) to establish an independent Medicare advisory board in its health reform legislation, the Patient Protection and Affordable Care Act ( H.R. 3590 ). Under this option, an independent board would be required to develop and submit detailed proposals to Congress and the President to reduce Medicare spending. In the sections that follow, more detailed information comparing these proposals across key categories such as membership, scope of authority, presidential and congressional review procedures, cost control mechanisms, and funding are presented. See Table 1 for highlights from these sections. All three proposals would create an independent entity composed of members appointed by the President, with the advice and consent of the Senate. S. 1380 , however, would replace the current 17-member MedPAC advisory commission with an 11-member executive commission, essentially elevating MedPAC to an executive branch agency. This is in contrast to the Administration's proposal that would create a new five-member executive council, and H.R. 3590 , which would establish a new 15-member independent Medicare advisory board. Members would serve staggered six-year terms in S. 1380 and H.R. 3590 , and five-year terms under the Administration's proposal. Under all three options, the President, with the advice and consent of the Senate, would appoint a Chair for the entity from among its members. H.R. 3590 includes an additional requirement that the Senate Majority Leader, Speaker of the House, Senate Minority Leader, and House Minority Leader each present three recommendations for appointees to the President for his consideration. The Secretary, the Administrator of CMS, and the Administrator of the Health Resources and Services Administration (HRSA) would serve as ex-officio, non-voting members of the Board. For the entities that would be established by S. 1380 and H.R. 3590 , qualifications for membership would be the same or similar to those currently authorized for MedPAC. The only qualifications for membership stipulated in the Administration's proposal are that appointees be physicians or have specialized expertise in medicine or health care policy. All three proposals would provide a new independent entity with the explicit authority to make decisions related to provider payment. S. 1380 , however, is the only proposal to provide the Commission with the authority to make Medicare coverage decisions. Under all three proposals, CMS would retain its responsibility for issuing regulations to implement the entity's recommendations. S. 1380 would elevate MedPAC from a legislative advisory body to an executive branch agency and provide the new commission with broad authority in the areas of Medicare payment and coverage. The Commission would be responsible for developing payment policies, methodologies, and reimbursement rates (including payment updates) for all Medicare providers and suppliers. The Commission would also be responsible for developing Medicare coverage policy, a function currently executed by CMS and its private contractors. To assist in its policymaking functions, S. 1380 requires that the Commission establish three advisory councils: a Council of Health and Economic Advisors, a Consumer Advisory Council, and a Federal Health Advisory Council. The Administration's proposal would establish a separate independent entity with a narrower scope of authority. The IMAC's primary responsibility would be recommending annual payment updates for certain Medicare providers. Although the proposal provides the Council with the authority to recommend broader Medicare reforms, the legislation specifies many exceptions to this authority. Among these are recommendations relating to Medicare financing, capital payments to inpatient hospitals, certain Medicare administrative activities such as claims processing and fraud control, conditions of participation, and physician and hospital quality reporting. The proposal does not explicitly exclude Medicare coverage policy from the Council's jurisdiction. The Independent Medicare Advisory Board established by H.R. 3590 would have the authority to develop and submit recommendations, in certain years, to Congress and the President to reduce Medicare spending. The provision lays out specific criteria for the Board to meet when making its recommendations. For example, when developing and submitting proposals, the Board would be required to develop recommendations that would reduce spending in Medicare Parts C and D; prioritize recommendations that would extend Medicare solvency; improve the health care delivery system and health outcomes by promoting integrated care, care coordination, prevention, wellness, and quality improvement; protect beneficiary access to care (including in rural and frontier areas); and consider the effects of changes in provider and supplier payments on beneficiaries. H.R. 3590 also clearly exempts certain areas from the Board's authority. Specifically, the Board would be prohibited from making recommendations that would ration care, raise revenues, increase beneficiary premiums, increase beneficiary cost-sharing, restrict benefits, or modify eligibility. Additionally, prior to 2020, the Board could not make any recommendation that would reduce payments to providers and suppliers scheduled to receive a reduction in their payment updates in excess of a reduction due to productivity (i.e., hospitals and physicians). The Administration's proposal is the only proposal of the three that requires explicit presidential approval or disapproval of the Council's recommendations. Specifically, the Administration's proposal would require that the Council submit two annual reports to the President containing its recommendations for payment updates to Medicare providers. The President would have 30 days to approve or disapprove of the Council's report in its entirety. The President would not have the authority to disapprove individual recommendations. H.R. 3590 requires the transmission of the Independent Medicare Advisory Board's proposals to the President but does not stipulate specific procedures for the President to review and comment on the Board's recommendations. However, the Board would be required to submit a copy of the proposal to the Secretary for the Secretary's review and comment. Further, if the Board fails to submit a proposal to the President and Congress by January 15, the Secretary would be required to submit a contingent proposal, meeting the same fiscal policy requirements. Under all three options, the Commission or Board's recommendations would automatically go into effect without congressional action. Congress would need to pass legislation that would either supersede the entity's recommendations or block their implementation. Each proposal specifies different procedures for Congress to follow to initiate this process. For example, under S. 1380 , Congress would need a three-fifths majority in the House or Senate (67 in the Senate or 290 in the House) to consider a measure that would overrule a payment or coverage determination made by the Commission. To prevent the implementation of recommendations proposed by the IMAC, the Administration's proposal would require that Congress enact a joint resolution of disapproval within 30 days from the date the President approves the Council's recommendations. All joint resolutions of disapproval are required to be approved and signed by the President. Given that the IMAC proposal would require presidential approval of the Council's recommendations, it is unlikely that the President would then approve a congressional resolution to nullify those recommendations. To prevent the proposal from becoming law, Congress would then need two-thirds majorities in both Houses of Congress to override the President's veto of the resolution. H.R. 3590 is the only proposal that includes expedited or "fast track" procedures for congressional consideration of the Board's recommendations. Expedited procedures help ensure that Congress take action on particular legislation that might otherwise never make it out of committee. Under this option, the Board would be required to submit its annual recommendations to Congress and the President by January 15. By April 1, the Senate Finance Committee, the Committee on Ways and Means, and the Committee on Energy and Commerce would be required to report out either the Board's proposal or an amended version of the proposal or be discharged from further consideration of the proposal. If Congress does not enact legislation that supersedes the Board's proposal by August 15, the Secretary would be required to automatically implement the Board's proposal, subject to certain conditions. To discontinue the automatic implementation of the Board's recommendations beyond 2019, Congress would have to pass a joint resolution of disapproval no later than August 15, 2017. S. 1380 would require that the Commission propose its first set of payment recommendations by December 1, 2012, for implementation beginning in 2013. Under the Administration's proposal and H.R. 3590 , the first set of recommendations would be required in 2014 for implementation in 2015. All proposals contain mechanisms designed to control spending in the Medicare program. Under S. 1380 , the new MedPAC Commission would be required to reduce Medicare expenditures by at least 1.5% annually. If the Chief Actuary of CMS concludes that the Commission's policies would not reduce expenditures by this amount, the Secretary would be required to implement an automatic reduction in payment to Medicare providers and suppliers to achieve the 1.5% savings, subject to certain requirements. H.R. 3590 specifies annual savings targets that the Board would be required to meet. Specifically, the Board would be required to develop recommendations that would reduce projected Medicare spending by the lesser of 0.5 percentage points in 2015, 1.0 percentage points in 2016, 1.25 percentage points in 2017, and 1.5 percentage points in years 2018 and beyond, and the amount by which the rate of growth in Medicare spending exceeds a rate of inflation (as defined in statute). The bill also includes a budget neutrality provision. The Board's recommendations could not increase Medicare expenditures, over the next 10-year period, over and above what they would have been without the recommendations. In its estimate of the Patient Protection and Affordable Care Act released on December 19, the Congressional Budget Office (CBO) predicted that the provision would reduce Medicare spending by $28.2 billion between years 2015-2019, taking into account reductions anticipated for other provisions in the legislation. The Administration's proposal also includes a 10-year budget neutrality provision. Proposals that did not meet this budget neutrality requirement could not be implemented. The CBO analysis of the President's IMAC proposal estimated minor savings from the proposal, $2 billion in savings over 2010-2019 with all of the savings realized in fiscal years 2016 through 2019. To achieve larger savings, the agency recommended including explicit targets for reductions in spending, similar to S. 1380 and H.R. 3590 , as well as providing the Council with broader authority to make other changes in the program. Both S. 1380 and the Administration's proposal would authorize funding, in such sums as necessary, for the Commission or Council's activities. Sixty percent of the appropriation would be payable from the Medicare Part A Trust Fund and 40% from the Part B Trust Fund. H.R. 3590 would appropriate $15 million for the Board's activities beginning in 2012. This amount would increase by the rate of inflation annually thereafter. In the current health care reform debate, the idea of creating an independent, policymaking entity in Medicare has gained prominence. This report illustrates some of the key characteristics for three of the legislative options that have been proposed. Although not a new concept, the idea of creating an independent commission or governing entity in Medicare has garnered attention in recent months because it is perceived as a viable approach for containing health care spending. However, as this comparison demonstrates, determining the appropriate size, scope of authority, cost control mechanisms, and level of independence for a new policymaking body presents challenges for lawmakers and health care experts. As policymakers continue to debate options for health reform, examining and assessing the various approaches for creating these types of entities will become increasingly important.

Current health care reform discussions have included debates about the merits of creating an independent entity in Medicare to make changes in the program. Currently, Medicare policy is made largely by Congress and, to varying degrees, the Centers for Medicare and Medicaid Services (CMS), the federal agency responsible for administering the program. The proposals being debated would essentially create an independent body of experts with the power to set provider payment rates and make other Medicare policy decisions. Advocates of these types of proposals argue that creating a new independent entity or governance structure in Medicare is necessary if we hope to achieve any real health care reform, particularly reductions in overall spending. According to supporters, members of Congress are easily influenced by special interests and lobbyists when developing Medicare policies, particularly those related to provider reimbursement. As a result, some of the decisions that are made may not be fiscally sustainable or in the best interest of beneficiaries. Additionally, proponents argue that members do not have the technical expertise or professional experience required to manage a health insurance program as complex as Medicare. They contend that the public would be better served by having independent experts, insulated from political pressures, responsible for making Medicare policy. Opponents of these proposals express concern about reducing Congress's role in the Medicare policymaking and oversight process. Under the proposals being discussed, recommendations made by the new commission or decision-making entity would automatically become law without congressional action. Critics contend that giving too much power to an entity composed of unelected officials would reduce its accountability to Congress and the public. Over the past year, several proposals have been introduced by Congress to create a new administrative or governing structure in Medicare. On June 25, 2009, Senator Jay Rockefeller introduced S. 1380, the Medicare Payment Advisory Commission (MedPAC) Reform Act of 2009, which would elevate MedPAC, a congressional advisory commission, to an executive branch agency. The Obama Administration submitted a similar proposal to Congress titled the Independent Medicare Advisory Council Act (IMAC) on July 17, 2009. The Administration's draft proposal would create an independent five-member executive council to make recommendations to the President. Finally, the Senate Finance Committee included a provision establishing an independent Medicare advisory board in its health reform legislation, the Patient Protection and Affordable Care Act (H.R. 3590), which passed the Senate on December 24, 2009. All proposals would transfer certain Medicare oversight and decision-making responsibilities to an independent, policymaking entity. This report introduces readers to the concept of creating an independent, policymaking entity in Medicare. The report begins with a discussion of the types of policymaking entities that have been proposed in the current health care reform debate, as well as in Medicare. The report then provides an overview of the role that Congress and CMS play in determining Medicare policy. The report concludes with a comparison of some of the key features of S. 1380, the Administration's draft IMAC proposal, and H.R. 3590.

RS21772 -- AGOA III: Amendment to the African Growth and Opportunity Act Updated January 19, 2005 After two decades of economic stagnation and decline, some African countries began to show signs of renewed economic growth in the early 1990s. Thisgrowth was generally due to better global economic conditions and improved economic management. However,growth in Africa was also threatened by newfactors, such as HIV/AIDS and high foreign debt levels. The African Growth and Opportunity Act (AGOA) ( P.L.106-200 - Title I) was enacted to encouragetrade as a way to further economic growth in Sub-Saharan Africa and to help integrate the region into the worldeconomy. AGOA provided trade preferencesand other benefits to countries that were making progress in economic, legal, and human rights reforms. Currently,37 of the 48 Sub-Saharan African countriesare eligible for benefits under AGOA. AGOA expands duty-free and quota-free access to the United States as provided under the U.S. Generalized System of Preferences (GSP). (1) GSP grantspreferential access into the United States for approximately 4,600 products. AGOA extends preferential access toabout 2,000 additional products by removingcertain product eligibility restrictions of GSP and extends the expiration date of the preferences for beneficiaryAfrican countries from 2006 to 2015. Otherthan articles expressly stipulated, only articles that are determined by the United States as not import-sensitive (inthe context of imports from AGOAbeneficiaries) are eligible for duty-free access under AGOA. Beyond trade preferences, AGOA directs the President to provide technical assistance and trade capacity support to AGOA beneficiary countries. Various U.S.government agencies carry out trade-related technical assistance in Sub-Saharan Africa. The U.S. Agency forInternational Development funds three regionaltrade hubs, located in Ghana, Kenya, and Botswana, that provide trade technical assistance. Such assistance includes support for improving Africangovernments' trade policy and business development strategies; capacity to participate in trade agreementnegotiations; compliance with WTO policies and withU.S. phytosanitary regulations; and strategies for further benefiting from AGOA. AGOA also provides for duty- and quota-free entry into the United States of certain apparel articles, a benefit not extended to other GSP countries. This hasstimulated job growth and investment in certain countries, such as Lesotho and Kenya, and has the potential tosimilarly boost the economies of other countries,such as Namibia and Ghana. In order to qualify for this provision of AGOA, however, beneficiary countries mustdevelop a U.S.-approved visa system toprevent illegal transshipments. Of the 37 AGOA-eligible countries, 24 are qualified for duty-freeapparel trade (wearing-apparel qualified). These countriesmay also benefit from Lesser Developed Country (LDC) status. Countries that have LDC status for the purpose ofAGOA, and are wearing-apparel qualified,may obtain fabric and yarn for apparel production from outside the AGOA region. As long as the apparel isassembled within the LDC country, they mayexport it duty-free to the United States. Some LDC AGOA beneficiaries have used this provision to jump-start theirapparel industries. This provision was dueto expire on September 30, 2004. The AGOA Acceleration Act extends the LDC provision to September 30, 2007,with a reduction in the cap on the allowablepercentage of total U.S. apparel imports beginning in October 2006. Countries that are not designated as LDCs butare wearing apparel qualified must use onlyfabric and yarn from AGOA-eligible countries or from the United States. The only wearing apparel qualifiednon-LDC countries is South Africa, althoughMauritius only qualifies for LDC status under AGOA for one year ending September 30, 2005, per theMiscellaneous Trade and Technical Corrections Act of2003 ( P.L. 108-429 ). AGOA was first amended in the Trade Act of 2002 ( P.L. 107-210 ), which doubled a pre-existing cap set on allowable duty-free apparel imports. The cap wasonly doubled for apparel imports that meet non-LDC rules of origin; apparel imports produced with foreign fabricwere still subject to the original cap. Theamendment also clarified certain apparel rules of origin, granted LDC status to Namibia and Botswana for thepurposes of AGOA, and provided that U.S.workers displaced by production shifts due to AGOA could be eligible for trade adjustment assistance. U.S. duty-free imports under AGOA (excluding GSP) increased dramatically in 2003 -- by about 58%, from $8.36 billion in 2002 to $13.19 billion in 2003-- after a more modest increase of about 10% in 2002. (2) However, 70% of these imports consisted of energy-related products from Nigeria. ExcludingNigeria, U.S. imports under AGOA increased 30% in 2003, to $3.84 billion, up from $2.95 billion in 2002. Theincrease in AGOA imports since the law'senactment is impressive, but it must be viewed in the broader context of Africa's declining share of U.S. trade overmany years. AGOA has done little to slowor reverse this trend -- the growth in AGOA trade can be explained by a greater number of already-traded goodsreceiving duty free treatment under AGOA. One industry has grown substantially under AGOA: the textile and apparel industry. Much of the growth in textileand apparel imports has come from thenewly emerging apparel industries in Lesotho, Kenya, and Swaziland. Apart from the apparent success of the emergent apparel industries in some African countries, the potential benefits from AGOA have been slowly realized. There has been little export diversification, with the exception of a few countries whose governments have activelypromoted diversification. Agriculturalproducts are a promising area for African export growth, but African producers have faced difficulties in meetingU.S. regulatory and market standards. Manycountries have been slow to utilize AGOA at all. Others, such as Mali, Rwanda, and Senegal, have implementedAGOA-related projects, but have madeinsignificant gains thus far. In addition to lack of market access, there are substantial obstacles to increased exportgrowth in Africa. Key impediments includeinsufficient domestic markets, lack of investment capital, and poor transportation and power infrastructures. Othersignificant challenges include low levels ofhealth and education, protectionist trade policies in Africa, and the high cost of doing business in Africa due tocorruption and inefficient governmentregulation. Furthermore, the apparel industry in Africa now faces a challenge in the dismantled MultifibreArrangement quota regime, which ended as ofJanuary 1, 2005. As a result, Africa must now compete more directly with Asian apparel producers for the U.S.market. AGOA beneficiaries retain theirduty-free advantage, but they have lost their more significant quota-free advantage. Apparel producers havereportedly already left Lesotho, with a loss of 7,000jobs. (3) This makes export diversification in Africaall the more vital. AGOA III extends the preference program to 2015 from its previous 2008 deadline. AGOA III supporters claimed that many AGOA beneficiaries had onlyrecently begun to realize gains as a result of AGOA, and that extending AGOA benefits would improve the stabilityof the investment climate in Africa. AGOA III also provides for apparel rules of origin and product eligibility benefits; it extends the third-country fabricrule for LDCs, and encourages foreigninvestment and the development of agriculture and physical infrastructures. Extension of Lesser Developed Country Provision. One of the more controversial aspects of AGOA III wasthe extension of the LDC provision. If the LDC provision had not been extended, LDCs would no longer haveduty-free access to the United States for apparelmade from third-country fabric after September 30, 2004. Supporters of the extension claimed that if the LDCprovision was not extended, the apparel industrymay have contracted significantly, causing a loss of many of the gains from AGOA, as apparel assembly plants wereshut down. This might have occurredbecause all AGOA beneficiaries would need to source their fabric and yarn from within the AGOA region or fromthe United States in order to get duty-freeaccess under AGOA, and the regional supply of fabric and yarn would likely be insufficient to meet the demand. (4) Sourcing materials from the United Stateswould not be a viable option because it would entail greater costs. Some analysts argued for the LDC provision tobe extended to allow more time to develop atextile milling industry to support the needs of the apparel industry in Africa, and to prevent the collapse of theemerging apparel industry. Opponents of extending the LDC provision claimed that the expiration of the LDC provision would provide an incentive for further textile milling investmentsin Africa. They argued that the LDC provision has slowed fabric and yarn production investment in Africa, becausethese materials could be imported cheaplyfrom Asia for use in AGOA-eligible apparel with no need for costly investments. They feared that an extension ofthe LDC provision would provide adisincentive to textile milling investment in Africa, because the deadline would lose its credibility as investorsanticipated further extensions. However,supporters of the extension argued that investment in the textile industry would continue because of its inherentprofitability, despite the availability ofthird-country fabric. Others worried that looser rules of origin under the LDC provision might allow companies touse Africa as a transshipment point betweenAsia and the United States. The outlook for the development of a textile industry in Sub-Saharan Africa is clouded by the phase-out of the Multifibre Arrangement (MFA) quota regime inJanuary 2005. (5) Now that quotas have beeneliminated, Africa will be competing more directly with Asia for the U.S. apparel and textile market, though theyremain eligible for tariff preferences. Apparel plants are particularly sensitive to price conditions as they do notrequire large capital investments and can easilyand rapidly be shifted to areas outside Africa. Textile plants are more capital-intensive and more costly to move,and are therefore likely to remain in Africa inthe long-term. Thus, it is argued that the promotion of vertical integration between apparel, textile, and cottonproducers is necessary to keep apparel plants inAfrica, along with the jobs they provide. Vertical integration is a challenging prospect regardless of the LDCprovision extension. Some investment in textilemilling has occurred in Africa, but investors have found it difficult to consistently source high quality cotton in largevolumes. While there is agreement thatvertical integration is the key to a thriving African textile and apparel industry, the question is how to facilitate thisprocess. (6) Agricultural Products. The growth of agricultural trade holds potential for improved economic growth inAfrica. Most Africans rely on agricultural production for their income. It is estimated that 62% of the labor forcein Africa works in agriculture, and in thepoorer countries, that portion is as high as 92%. (7) By exporting to the U.S. market, African agricultural producers could receive higher prices for their goods. In order for this to occur, the United States may need to further open its market to African agricultural products, andprovide technical assistance to help Africanagricultural producers meet the high standards of the U.S. market. AGOA III seeks to improve African agricultural market access to the United States by providing assistance to African countries to enable them to meet U.S.technical agricultural standards. African agricultural producers have previously faced difficulties in meeting thesestandards. The AGOA Acceleration Actcalls for the placement of 20 full-time personnel to at least 10 countries in Africa to provide this assistance. Someobservers are skeptical about theeffectiveness of technical assistance without increased market access. Others are concerned that U.S. technicalassistance is hindered by laws restrictingagricultural technical assistance to products that would compete with U.S. farm products. However, technicalassistance proponents point to the lowinstitutional capacity in Africa as the main obstacle to African export-led development. They feel that U.S.-providedtechnical assistance can be an importantfactor in improving Africa's agricultural development and export performance. Table 1. Provisions from the AGOA Acceleration Act of 2004

On July 13, 2004, the "AGOA Acceleration Act of 2004" was signed by the Presidentand became P.L.108-274. This legislation amends the African Growth and Opportunity Act (AGOA; P.L. 106-200, Title I), extending it to2015. AGOA seeks to spur economicdevelopment and help integrate Africa into the world trading system by granting trade preferences and other benefitsto Sub-Saharan African countries that meetcertain criteria relating to market reform and human rights. Congress first amended AGOA in 2002 (P.L. 107-210)by increasing a cap on duty-free apparelimports and clarifying other provisions. The new AGOA amendment, commonly referred to as "AGOA III," extendsthe legislation beyond its currentexpiration date of 2008 and otherwise amends existing AGOA provisions. For further information on AGOA, seeCRS Report RL31772, U.S. Trade andInvestment Relationship with Sub- Saharan Africa: The African Growth and Opportunity Act and Beyond. This report will be updated as needed.

Section 956 of Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) requires financial regulators to adopt new rules placing certain limitations on the use of incentive or incentive-based compensation at financial firms. Section 956 was a response to the widely held but contested notion that incentive-based compensation (i.e., variable performance-based compensation) at financial firms, including commercial and investment banking firms, helped encourage executives and various operatives to take excessive risks that ultimately contributed to financial setbacks at individual firms, which contributed to the 2007-2009 financial crisis and since. As an example, in September 2016, Wells Fargo Bank, N.A. was fined $185 million for illegal sales practices, which might have been motivated by incentive-based compensation arrangements. In addition to the fine, at issue is whether the Wells Fargo incident highlights the potential usefulness of the Dodd-Frank incentive-based compensation clawback provision. An initial 2011 proposal to implement Section 956 was issued by financial regulators (collectively, the Agencies ): the National Credit Union Association (NCUA), the Board of Governors of the Federal Reserve System (Fed), the Federal Deposit Insurance Corporation (FDIC), the Federal Housing Finance Agency (FHFA), the Office of the Comptroller of the Currency (OCC), the Securities and Exchange Commission (SEC), and the Office of Thrift Supervision (OTS, later disbanded and merged into the OCC). The 2011 proposal, which was not adopted, met with substantial criticism from both investor interests and entities connected to the financial industry. Five years later, in April 2016, the Agencies issued a new proposal (also known as the re-proposal) for implementing Section 956. This report provides an overview of the 2016 incentive compensation proposal. It (1) explains incentive compensation; (2) discusses the two key opposing views on the role that incentive compensation may or may not have played in the financial crisis; (3) examines the Section 956 incentive compensation mandate in the Dodd-Frank Act and briefly describes the earlier 2011 proposal; (4) describes key elements of the 2016 proposal; and (5) highlights some of the early comments on the 2016 proposal's perceived impact. Incentive compensation or incentive-based compensation refers to the portion of an employee's pay that is not guaranteed (as is the salary). Incentive compensation takes the form of variable compensation that is contingent on the performance of designated metrics with respect to the employing firm, the employee's departmental unit, the employee, or some combination of these. The role that incentive compensation arrangements played in contributing to the financial crisis of 2007 to 2009 has been highly scrutinized by financial regulators, financial-sector practitioners, and academics. Some have found little evidence that the compensation structures directly affected financial firms' performance during the crisis. For example, Martin Conyon, a senior fellow at the Center for Human Resources at the University of Pennsylvania's Wharton School of Business, observed, There's been plenty of consultant research and academic research that has looked at the structure of incentives, in banking in particular, and whether there was a cause or link between those incentives and the subsequent financial crisis. And it's not clear--it hasn't been demonstrated in ways that pass muster. If structured properly, incentive compensation arrangements, often in the form of bonuses, stocks, or stock options, can serve as an employee recruitment, retention, and performance motivational tool while also helping to align a company's goals with those of its executives, employees, and shareholders. Moreover, after surveying research on the role of financial-sector compensation structures on the financial crisis, the SEC staff observed, [T]here are also studies that argue that compensation structures were not responsible for the differential risk-taking and performance of financial institutions during crises. In particular, a study argues that the differential risk culture across banks determines the differential performance of these institutions. For example, banks that performed poorly during the 1998 crisis were also found to perform poorly, and had higher failure rates, during the recent financial crisis. Another recent study argues that, prior to 2008, risk-taking was inherently different across financial institutions and the fact that high-risk financial institutions paid high amounts of compensation to their executives was not an indicator of excessive compensation practices but represented compensation for the additional risk to which executives' wealth was exposed. The presence of a number of mitigating factors may explain why evidence is inconclusive on the effects of incentive-based compensation on inappropriate risk-taking. One such factor is corporate governance and, more specifically, the board of directors oversight over executive compensation. Others, however, have found a causal connection and concluded that the prevalence of poorly structured incentive-based compensation arrangements at various financial institutions encouraged excessively risky behavior that contributed to financial firms' problems, which ultimately helped lead to the crisis. For example, during the crisis, Sheila Bair, then chair of the Federal Deposit Insurance Corporation, observed, The crisis has shown that most financial-institution compensation systems were not properly linked to risk management. Formula-driven compensation allows high short-term profits to be translated into generous bonus payments, without regard to any longer-term risks.... A similar dynamic was at work in the mortgage markets. Mortgage brokers and bankers went into the subprime and other risky markets because these markets generated high returns not just for investors but also for the originators themselves. The standard compensation practice of mortgage brokers and bankers was based on the volume of loans originated rather than the performance and quality of the loans made...." The Financial Crisis Inquiry Commission was a congressionally created panel charged with examining the causes of the financial crisis. Among other things, the majority view on the panel's 2011 study concluded that "compensation structures were skewed all along the mortgage securitization chain, from people who originated mortgages to people on Wall Street who packaged them into securities." Others have made similar observations: Non-executive [pay] incentives .... significantly affected bank risk-taking prior to the 2007 financial crisis; and the structure, as well as the level of those incentives, was determined largely by the market's demand for talent.... Among banks, however, combining performance-based pay with competition, where employees can move from one employer to the next, has had perverse results. Greater risk-taking can increase short-term bank profits and, in turn, the amount a non-executive is paid, potentially at the expense of long-term bank value. In greater detail, various financial regulators collectively spoke of a nexus between incentive compensation and potential financial loss: Some compensation arrangements rewarded employees--including non-executive personnel like traders with large position limits, underwriters, and loan officers--for increasing an institution's revenue or short-term profit without sufficient recognition of the risks the employees' activities posed to the institutions, and therefore potentially to the broader financial system. Traders with large position limits, underwriters, and loan officers are three examples of non-executive personnel who had the ability to expose an institution to material amounts of risk. Significant losses caused by actions of individual traders or trading groups occurred at some of the largest financial institutions during and after the financial crisis. An attendant observation spoke of the corrosive long-term corporate impact that poorly designed bonus-based incentive compensation schemes were believed to have had on various financial institutions, another observer noted, "[T]he revenues that [often] served as the basis for calculating bonuses were generated immediately, while the risk outcomes might not have been realized for months or years after the transactions were completed." Section 956 of the Dodd-Frank Act represents an attempt to reduce the presence of problematically risky financial-sector incentive-based compensation arrangements. The section requires the Agencies to jointly prescribe regulations or guidelines aimed at prohibiting incentive-based payment arrangements in financial institutions that they determine encourage inappropriate risks by providing excessive compensation or that could lead to a material financial loss. Those regulations or guidelines must also require the financial institutions to disclose information about the structure of their incentive-based compensation arrangements with enough detail to permit the financial regulators to ascertain whether the arrangements amount to excessive compensation or could result in a material financial loss to a financial institution. In April 2011, the Agencies issued an initial proposal to implement Section 956 of the Dodd-Frank Act. The proposal would have banned incentive-based compensation plans that encouraged inappropriate risks at a range of financial firms. Financial institutions with $1 billion or more in consolidated assets would have been required to have policies and procedures necessary for ensuring compliance with the proposal. They also would have been prohibited from providing incentive compensation that encouraged inappropriate risk-taking, which could lead to material financial losses to applicable employees, including executive officers and non-executives employees whose activities could expose the firms to material financial loss. In addition, the financial firms would have been required to adopt incentive compensation practices that (1) provided an appropriate balance between risk and financial rewards; (2) were compatible with effective risk management and controls; and (3) were bolstered by a robust corporate governance mechanism. Also under the proposal, large financial institutions , generally defined as firms with $50 billion or more in total consolidated assets, but also including credit unions and all Federal Home Loan banks with total consolidated assets of $1 billion or more, would have been required to adopt policies that ensured that executive officers and other key employees deferred at least half of their annual incentive compensation awards for at least three years. In addition, the proposal would have required the large financial institutions to have policies implemented and overseen by a firm's board of directors that identified non-executive employees with the ability to expose the institution to potentially substantial losses relative to its size, including securities traders with relatively large position limits. The large financial institution boards would have also been required to review and approve such non-executive employees' incentive-based compensation. The 2011 proposal elicited some 10,000 responses, most in the form of a few types of largely identical form letters. According to the Agencies, the respondents included an array of community organizations groups, labor unions, and pension funds that generally advised the Agencies to strengthen the proposal, including increasing the duration of or the amount of incentive pay subject to the mandatory deferral provision. By contrast, several financial institutions and financial industry trade groups reportedly recommended that the Agencies issue guidelines instead of rules for implementing Section 956. Many financial industry-based commenters also reportedly expressed opposition to the proposal's mandatory deferral provision with several arguing that it would potentially undermine a firm's ability to both attract and retain vital employees. The Agencies did not adopt the 2011 incentive compensation proposal. In the roughly seven years between the end of the financial crisis in 2009 and 2016, the Agencies report that the entities that they supervise have implemented incentive-based compensation plans that are generally in agreement with guidelines provided by the bank regulators such as the Fed. The regulators, however, also indicated that "[n]ot withstanding the recent progress, incentive-based compensation practices are still in need of improvement." In an October 2015 overview of the securities industry in New York City, the Office of the New York State Controller (OSC) spoke of changes in Wall Street incentive compensation practices to mitigate excessive risk taking and noted the continued salience of bonus-based incentive compensation payments: In recent years, the securities industry has changed its compensation practices in response to new regulations and other compensation reforms designed to discourage excessive risk-taking. Firms have raised base salaries for some employees, and now pay a smaller share of bonuses in the current year while a larger share is deferred to future years (usually for a period of three to five years) in the form of cash, stock options or other types of compensation. Clawback provisions [which authorize firms to confiscate earlier incentive compensation payments] are also more frequently being adopted, and a larger share of bonuses is now being paid outside the traditional bonus period, making it harder to distinguish bonuses from base salaries. Despite these actions, bonuses remain an important part of total compensation packages paid to securities industry employees. In March 2015, OSC estimated that the bonus pool paid to the City's securities industry employees for work performed in 2014, including bonus payments deferred from prior years, reached $28.5 billion .... This was the third-highest level ever and the highest level since the financial crisis. In April 2016, the Agencies issued a new incentive compensation proposal (or re-proposal) to implement Section 956 of the Dodd-Frank Act. Various reports have indicated that at least part of the regulators' challenge for the Agencies in formulating incentive compensation standards for the 2016 proposal involved the marked differences in compensation arrangements between banks and some of the entities overseen by the SEC, including hedge funds and private equity funds: Bank compensation tends to entail a fixed salary, equity in the company, and bonuses awarded at year's end. Although asset managers at SEC-regulated entities earn salaries, they are also typically paid through fees based on a fund's asset size and its investment performance. The re-proposal expands the more restrictive incentive compensation requirements in the 2011 proposal for senior employees, including the chief executive officer, to a larger group of financial institutions and to a new group of non-senior executive employees defined as significant risk-takers , who are non-senior employees in a position to subject their employer to significant risk or who are among the higher paid firm employees. The six regulators who comprise the Agencies will receive public comments on the proposal through July 22, 2016. To be finalized and adopted, the proposal will require the approval of each of them. Martin J. Gruenberg, chairman of the FDIC, one of the six regulatory agencies involved in issuing the 2016 proposal, said that it was "perhaps the most important Dodd-Frank rulemaking remaining to be implemented." A financial institution with average total consolidated assets of at least $1 billion that provides incentive-based compensation would be considered a covered financial institution (CFI). In addition to the $1 billion threshold, the Dodd-Frank Act specifically identifies the following types of institutions as CFIs: a depository institution or depository institution holding company, as defined in Section 3 of the Federal Deposit Insurance Act (FDIA); a broker-dealer registered under Section 15 of the Securities Exchange Act of 1934; a credit union, as described in Section 19(b)(1)(A)(iv) of the Federal Reserve Act; an investment adviser as defined in Section 202(a)(11) of the Investment Advisers Act of 1940; the Federal National Mortgage Association (Fannie Mae); the Federal Home Loan Mortgage Corporation (Freddie Mac); and any other financial institution that the appropriate federal regulators, jointly, by rule, determine should be treated as a CFI. The reporting requirements and the percentage of incentive compensation that is required to be deferred increase as the average consolidated assets threshold reaches higher limits. Also, the 2016 proposed rule includes more detailed disclosure and record-keeping requirements for larger institutions, Level 1 and Level 2, than did the 2011 proposed rule. The CFIs are grouped into three categories based on average total consolidated assets: Level 1--$250 billion or more in consolidated assets; Level 2--$50 billion or more and less than $250 billion in consolidated assets; and Level 3--$1 billion or more and less than $50 billion in consolidated assets. The proposed rule defines incentive-based compensation as "any variable compensation, fees, or benefits that serve as an incentive or reward for performance." Compensation, fees , or benefits mean "all direct and indirect payments, both cash and non-cash, awarded to, granted to, or earned by or for the benefit of, any covered person in exchange for services rendered to the CFI." The form of payment would not affect whether such payment meets the definition of compensation, fees, or benefits. The forms of payment would include, among other things, payments or benefits based on an employment contract, compensation, pension, or benefit arrangements, fee arrangements, perquisites, options, post-employment benefits, and other compensatory arrangements. Compensation that is solely awarded for, and the payment of which is solely tied to, continued employment (e.g., salary or retention award) would not be considered incentive-based compensation. Similarly, signing bonuses or compensation related to professional certification or higher-level educational achievement would not be considered incentive-based compensation. Neither would contributions to retirement plans be considered incentive-based compensation. In their proposal, the financial regulators appear to have recognized that incentive-based compensation arrangements are critical tools in the management of financial institutions. On the one hand, the regulators argue that incentive-based compensation can promote the health of financial institutions by aligning the interests of executives and employees with those of the institution's shareholders and other stakeholders. On the other hand, the regulators believe that poorly structured incentive-based compensation can lead executives and employees to take inappropriate risks that adversely affect the financial institutions and the long-term health of the U.S. economy. Larger financial institutions that are interconnected with one another or with many other companies or markets can be negatively affected from inappropriate risk-taking and can have broader consequences. The 2016 proposal would prohibit incentive-based compensation arrangements at CFIs that could encourage inappropriate risks by providing excessive compensation or that could lead to a material financial loss. Compensation, fees, and benefits will be considered excessive when amounts paid are unreasonable or disproportionate to the value of the services performed by a covered person, which take into consideration the following factors: the combined value of all compensation, fees, or benefits provided to a covered person; the compensation history of the covered person and other individuals with comparable expertise at CFIs; the financial condition of the CFI; compensation practices at comparable institutions, based upon such factors as asset size, geographic location, and the complexity of the CFIs' operations and assets; for post-employment benefits, the projected total cost and benefit to the CFI; and any connection between the covered person and any fraudulent act or omission, breach of trust or fiduciary rule, or insider abuse with regard to the CFI. Further, an incentive-based compensation arrangement would be considered to encourage inappropriate risks that could lead to material financial loss to the CFI, unless the arrangement appropriately balances risk and reward; is compatible with effective risk management and controls; is supported by effective governance; includes financial and non-financial measures of performance; is designed to allow non-financial measures of performance to override financial measures of performance, when appropriate; and is subject to adjustment to reflect actual losses, inappropriate risks taken, compliance deficiencies, or other measures or aspects of financial and non-financial performance. The 2016 proposed rule also places certain requirements on the CFI's board of directors: conduct oversight of the CFI's incentive-based compensation; approve incentive-based compensation arrangements for senior executive officers, including amounts of awards and, at the time of vesting, payouts under such arrangements; approve material exceptions or adjustments to incentive-based compensation policies or arrangements for senior executive officers; and annually create and maintain for at least seven years records that document the structure of incentive-based compensation arrangements and that demonstrate compliance with the proposed rule. The records would be required to be disclosed to the appropriate federal regulator upon request. The 2016 proposal contains specific disclosure and record-keeping requirements for Level 1 and Level 2 CFIs. All Level 1 and Level 2 institutions are required to create annually and maintain for at least seven years records that would allow for an independent audit of the compensation arrangements, policies, and procedures by federal regulators. There are specific requirements for how the records should be maintained: the CFI's senior executive officers and significant risk-takers, listed by legal entity, job function, organizational hierarchy, and line of business; the incentive-based compensation arrangements for senior executive officers and significant risk-takers, including information on the percentage of incentive-based compensation deferred and form of award; any forfeiture and downward adjustment or clawback reviews and decisions for senior executive officers and significant risk-takers; and any material changes to the CFI's incentive-based compensation arrangements and policies. The proposed rule would also require that incentive-based compensation arrangements for senior executives and significant risk-takers at Levels 1 and 2 CFIs include four mechanisms for deferring, withdrawing, or reducing such payments to them when they are associated with certain events or conduct. Those mechanisms are incentive-compensation deferrals, clawbacks, downward adjustments, and forfeitures. Under the proposed rules, a Level 1 institution would be required to defer at least 60% of a senior executive officer's and 50% of a significant risk-taker's qualifying incentive-based compensation for at least four years. Further, senior executive officers' and significant risk-takers' incentive-based compensation awarded under the long-term incentive plan would be deferred by 60% and 50%, respectively, for at least two years. Deferred compensation may vest no faster than on a pro-rata annual basis, and, for CFIs or their subsidiaries that issue equity, the deferred amount would be required to consist of substantial amounts of both deferred cash and equity-like instruments throughout the deferral period. Options-based compensation may not exceed 15% of the total incentive-based compensation for the performance period. A Level 2 institution would be required to defer at least 50% of a senior executive officer's and 40% of a significant risk-taker's qualifying incentive-based compensation for at least three years. Further, a senior executive officer's and a significant risk-taker's incentive-based compensation awarded under the long-term incentive plan would be deferred by 50% and 40%, respectively, for at least one year. Deferred compensation may vest no faster than on a pro-rata annual basis, and, for CFIs or their subsidiaries that issue equity, the deferred amount would be required to consist of substantial amounts of both deferred cash and equity-like instruments throughout the deferral period. Options-based compensation may not exceed 15% of the total incentive-based compensation for the performance period. The proposed rule would subject Level 1 and Level 2 CFIs' senior executive officers' and significant risk-takers' deferred but unvested incentive-based compensation to potential forfeiture. Similarly, deferred but unvested incentive-based compensation could also be subject to downward adjustments if any of the following occur: poor financial performance attributable to a significant deviation from the covered institution's risk parameters outlined in its policies and procedures; inappropriate risk-taking, regardless of the impact on financial performance; material risk management or control failures; noncompliance with statutory, regulatory, or supervisory standards resulting in an enforcement or legal action by a federal or state regulator or agency, or a requirement that the covered institution restates a financial statement to correct a material error; and other aspects of conduct or poor performance as defined by the CFI. The Sarbanes-Oxley Act of 2002 (SOX), a wide-ranging public company accounting reform, was enacted in the wake of widespread accounting scandals at companies such as Enron and WorldCom. Section 304 of SOX generally requires chief executive officers and chief financial officers to reimburse their employer for bonuses and other incentive compensation and stock sale profits if the company is required to restate its financial statements, as a result of their misconduct due to material noncompliance with the financial reporting requirements of the federal securities laws. Section 954 of the Dodd-Frank Act expanded on those SOX clawback provisions. Section 954 required the SEC to adopt rules directing national securities exchanges and associations to proscribe the listing of the security of a public company that is noncompliant with new requirements regarding the recovery of erroneously awarded incentive-based compensation and the disclosure of a company's clawback policy. In July 2015, the SEC proposed rules to implement Section 954. The proposal, which has yet to be finalized, lays out a public company's obligations regarding recovering incentive compensation awarded to its executive officers (basically the chief executive officer, the principal chief financial officer, and the principal accounting officer or the controller). Specifically, if a company is required to prepare an accounting restatement because of a material noncompliance with the financial reporting requirement under the federal securities laws, it would be required to recover from current or former executive officers awarded incentive-based compensation during the preceding three-year period based on the erroneous accounting data. The amount of that compensation would be in excess of what would have been paid to the employees under the restated accounting results. Recovery of the compensation would be required to be on a "no-fault" basis, meaning that it should not be contingent on whether any misconduct occurred or an executive officer's actual responsibility for the financial misstatements. The 2016 rules proposed to implement Section 956 of the Dodd-Frank Act expand on the aforementioned clawback provisions in the Sarbanes-Oxley Act and the SEC's proposed 2015 rules to implement Section 954 of the Dodd-Frank Act. Under the proposal, Level 1 and Level 2 CFIs would be required to claw back incentive-based compensation paid to senior executive officers or significant risk-takers that at the minimum provides for recovery of any vested incentive-based compensation from those employees for seven years after the applicable vesting date. The clawbacks would be triggered in the event that a senior executive officer or a significant risk-taker engages in (1) misconduct that resulted in significant financial or reputational harm to the covered institution; (2) employee fraud; or (3) intentional misrepresentation of information used to determine such individual's incentive-based compensation. Under the proposal, Level 1 and Level 2 CFIs would also have to consider adopting corporate protocols that would allow for the downward adjustment and forfeiture of senior executives' and significant risk-takers' incentive compensation when certain events occur, including poor financial performance that is attributable to a significant deviation from risk parameters in the CFI's policies and procedures; inappropriate risk-taking; material risk management or control failures; and failure to comply with statutory, regulatory or supervisory standards resulting in an enforcement or legal action or a requirement that the CFI report a financial restatement to correct a material error; other trigger events as defined by the CFI. The proposed rule contains a number of behavioral prohibitions for Level 1 and Level 2 CFIs. These prohibitions would apply to hedging, maximum incentive-based compensation opportunity, relative performance measures, and volume-driven incentive-based compensation. There are specific requirements for CFIs to have a risk management framework for their incentive-based compensation programs that is independent of any lines of business; includes an independent compliance program that provides for internal controls, testing, monitoring, and training with written policies and procedures; and is commensurate with the size and complexity of the CFI's operations. The proposal also requires Level 1 and Level 2 CFIs to provide individuals in control functions with appropriate authority to influence the risk-taking of the business areas they monitor and ensure covered persons engaged in control functions are compensated independently of the performance of business areas they monitor. The proposal requires independent monitoring of incentive-based compensation. Independent monitoring is expected to identify (1) whether the incentive plans appropriately balance risk and reward; (2) if the events related to forfeiture and downward adjustment and decision of forfeiture and downward adjustment reviews are consistent with the proposed rule; and (3) if the incentive-based compensation program is compliant with the CFI's policies and procedures. Level 1 and Level 2 CFIs would also be required to establish a compensation committee composed solely of directors, who are not senior executive officers, to assist the board of directors in carrying out its responsibilities under the proposed rule. The compensation committee would be required to obtain input from the CFI's risk and audit committees on the effectiveness of risk measures and adjustments used to balance incentive-based compensation agreements. In addition, management is required to submit to the compensation committee on an annual or more frequent basis a written assessment of the effectiveness of the CFI's incentive-based compensation program and related compliance and control processes in providing risk-taking incentives that are consistent with the CFI's risk profile. The committee would also be required to obtain an independently written assessment from internal audit or risk management function on the effectiveness of the CFI's incentive-based compensation program and related compliance and control processes in providing risk-taking incentives that are consistent with the risk profile of the particular CFI. The Agencies will accept formal public comments on the perceived impact of the incentive-compensation proposal through July 22, 2016. Pending those completed comments, this section describes some SEC staff observations on the proposal's potential impact on SEC-regulated entities and various observers' media comments on the proposal's potential impact on the banking sector. The proposal's clawback provision would require public disclosure when a financial institution acts to retrieve employee incentive compensation awards. In 2015, speaking about the value of such a policy change, New York City Comptroller Scott M. Stringer reportedly observed that "while many banks now have strong clawback policies on paper, absent disclosure, it's impossible for investors to know when and how they are being applied." By contrast, Alan Johnson, head of the compensation consultant firm Johnson Associates, cautioned that the proposal's clawback provision could drive personnel away from segments of the financial sector that would be significantly affected by it to less affected parts of the sector. Citing risk-mitigating incentive compensation practices that have been embraced by large numbers of banking institutions, Shearman & Sterling, a corporate law firm, predicted that if adopted, the proposal would likely not lead to "wholesale changes" for senior executive officers at many of the banks categorized as Level 1 institutions. However, in other areas such as the four-year deferral for yearly bonuses, the two-year deferral for long-term incentives, and the seven-year clawback, the law firm indicated that the proposal was "stricter" than are the current mechanisms that are employed by most banks. Shearman also predicted that because of such new risk-taker requirements, many financial institutions would find that "adjustments are necessary to the structure of incentive-based arrangements for a large number of employees, which may affect the fixed costs [such as salaries over a certain period] and governance structures of the organization." Bloomberg queried a number of executive recruiting firms on the proposal's potential impact. The consensus response to the inquiries was that if the proposal were adopted, the largest domestic banks would likely be providing larger salaries and smaller-sized bonuses for some "senior officials, dealmakers, and traders." A Wall Street Journal article discussed the potential scope of the employee impact at the six largest banks, all presumably Level 1 entities. It calculated that for J.P. Morgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley combined, the top earning 5% of employees under that protocol would collectively amount to a little less than 52,000 workers. However, the actual number of subject employees if the proposal is enacted could be less than that because it is unclear what proportion of those workers would meet the other requirement of having at least a third of their total compensation in incentive-based pay. In addition to the applicable banking institutions, certain SEC-regulated broker-dealers under the Securities Exchange Act of 1934, and investment advisers under the Investment Advisers Act of 1940, are also likely to be under the proposal's regulatory ambit if enacted. The agency estimated that 131 registered broker-dealers and about 669 investment advisers would likely be CFIs under the implemented proposal. It then projected that 49 of those 131 broker-dealers would likely be Level 1 or Level 2 CFIs and 82 would be Level 3. Of the agency's estimated 669 CFI investment advisers under the proposal, 18 were projected to be in Level 1, 21 were projected to be in Level 2, and 630 were projected to be in Level 3. Many of those 18 projected Level 1 investment advisers are reportedly bank-owned entities. In this context, there are indications that a number of investment advisers to private equity funds or hedge funds who manage asset levels that exceed the Level 1 CFI asset threshold ($250 billion) in the proposal could avoid that more rigorous classification level. This is because under the proposal, advisers would be able to exclude "non-proprietary" assets on their balance sheets, including assets that they hold on their clients' behalf. For example, the large private equity, the Blackstone Group, reportedly manages about $350 billion in assets, but only has about $20 billion in proprietary assets. Reports say that this would mean that Blackstone would likely face a considerably less rigorous incentive compensation regulatory regime under an adopted proposal than would likely Level 1 bank-based CFIs such as J.P. Morgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley. Accordingly, some observers say that this regulatory disparity could result in venture capital funds, hedge funds, or private equity firms such as BlackRock, that largely handle other people's money, facing less restrictive limits on their pay practices than large banks. As such, they caution that this could lead to a scenario in which large banks have a competitive disadvantage in the recruitment and retention of senior executives and other key personnel vis-a-vis less affected financial entities like hedge funds, private equity funds, and venture capital funds. Peter Wallison, an economist at the American Enterprise Institute, has raised concerns over the proposal's potentially negative impact on the overall volume of bank loans. He has argued that if the proposal were adopted, various bank officers would have personal incentives not to take on the risk of approving the loan, noting that "it isn't just the bank's financial health but also the bank officer's--the contemplated new house, the kids' college tuition--on the line." Under such a regulatory regime, Mr. Wallison noted that the bank officer could decide to place his own "financial well-being" over that of his business customers. Ultimately, Mr. Wallison warned that similar behavior by a multitude of loan officers across the nation would translate into a reduction in financial risk-taking and as a result, a large contraction in available credit. Others, however, question the plausibility of the aforementioned scenarios in which an adopted proposal would result in significant changes at large banks regarding their attractiveness to certain key personnel and the volume of loans that they might make. Instead, they argue that the proposal would probably not have a significant impact because bank compensation practices have been moving steadily in the direction of the proposal's provisions since the end of the financial crisis more than a half decade ago.

Incentive compensation or incentive-based compensation refers to the portion of an employee's pay that is not fixed in contrast to an annual or monthly salary. Incentive compensation takes the form of variable contingent compensation, particularly cash bonuses, that are based on the attainment of certain firm or employee performance metrics. Such pay has been a significant component of compensation for executives and other key personnel at many firms in the financial sector. Many argue that such compensation contributed to the 2007-2009 financial crisis by incentivizing pivotal financial firm personnel to take excessive, and in retrospect, dangerous risks that were financially problematic for their firms. They argue that such compensation could still potentially pose problems and encourage firm personnel to take excessive risks. As an example, in September 2016, Wells Fargo Bank, N.A. was fined $185 million for illegal sales practices, which might have been motivated by incentive-based compensation arrangements. In addition to the fine, at issue is whether the Wells Fargo incident highlights the potential usefulness of the Dodd-Frank incentive-based compensation clawback provision. In July 2010, in response to the financial crisis of 2007 to 2009, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act, P.L. 111-203). Section 956 of the law directed financial regulators to adopt new rules that jointly prescribe regulations or guidelines aimed at prohibiting incentive compensation arrangements that might encourage inappropriate risks at financial institutions. These regulators, the Agencies, are the National Credit Union Association, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission. In April 2016, after releasing an ultimately unimplemented proposal in 2011, the Agencies proposed new rules to implement Section 956. The proposal has a three-tiered protocol in which the stringency of incentive compensation limits grow as an entity's consolidated asset total increases: Level 1, $250 billion and up; Level 2, $50 billion to $250 billion; and Level 3, $1 billion to $50 billion. Public comment period for the proposal was through July 22, 2016. The proposal will then require the approval of each agency in order to be finalized and adopted. Level 1 and Level 2 institutions must comply with enhanced requirements as to the structure of their incentive compensation for senior executive officers (i.e., various top corporate leaders, including the president, the chief executive officer, and the chief operating officer) and significant risk-takers (i.e., top paid non-senior employees). For example, a Level 1 institution would be required to defer at least 60% of a senior executive officer's qualifying incentive-based compensation and 50% of a significant risk-taker's qualifying incentive-based compensation for up to four years. Senior executive officers' and significant risk-takers' incentive-based compensation awarded under the long-term incentive plan would be deferred by 60% and 50%, respectively, for at least two years. A Level 2 institution would be required to defer at least 50% of a senior executive officer's qualifying incentive-based compensation and 40% of a significant risk-taker's qualifying incentive-based compensation for at least three years. Senior executives and significant risk-takers at Level 1 and 2 institutions would also be subject to reductions in previously earned incentive compensation (i.e., forfeiture and downward adjustment) in the event of certain behaviors, including when (1) deviation from risk parameters causes a firm's poor financial performance, or (2) inappropriate risk-taking occurs regardless of the impact on the firm's financial performance. Those employees could also have their vested incentive compensation clawed back by their employer under conditions determined by the employer, including (1) the existence of significant financial or reputational harm caused by the employee's actions; (2) fraudulent conduct by the employee; or (3) intentional misrepresentations on the part of the employee.

This report provides an overview of appropriations for the Department of Homeland Security (DHS). The first portion of this report provides an overview and historical context for reviewing DHS appropriations, highlighting various aspects including the comparative size of DHS components, the amount of non-appropriated funding the department receives, and trends in the timing and size of the department's appropriations legislation. The second portion of this report outlines the legislative chronology of major events in funding the department for FY2014. The third portion of this report provides detailed information on DHS appropriations. The DHS appropriations bill includes funding for all components and functions of the department. For FY2013, pre-sequester DHS discretionary appropriations were $46.2 billion, with $12.1 billion in supplemental appropriations (see Table 1 ). For FY2014, the total request was $44.7 billion. House-passed and Senate-reported DHS appropriations legislation had similar total funding levels, $44.6 billion and $44.7 billion, respectively. Totals represent net discretionary budget authority, taking into account impacts of rescissions, and include emergency spending and disaster relief. Analyses that include the impact of fees and mandatory spending are found later in this report. Past CRS reports on DHS appropriations have carried detailed comparisons with previous years' funding levels. However, due to the impact of sequestration on budget authority available to the federal government under P.L. 113-6 and the Disaster Relief Appropriations Act of 2013 ( P.L. 113-2 ), official post-sequestration numbers are not available at the program, project, and activity level that would be directly comparable to the data provided in previous and future years' reports. While DHS released an FY2013 Post-Sequestration Operating Plan on April 26, 2013, that report did not include the funding provided through P.L. 113-2 , and press reports have indicated that reprogramming and transfer activity took place to address the impact of the nearly across-the-board cut administered through the sequestration process on priority programs. As there is no detailed comprehensive statement of post-sequestration resources available, the charts in this report contain information on pre-sequester funding levels for FY2013. In all cases, the data from P.L. 113-6 account for the two across-the-board cuts included in the general provisions of the act. Breaking down the DHS bill by title provides limited transparency into how DHS's appropriated resources are being used. Thus, looking at funding by component can be more instructive. The components of DHS vary widely in the size of their appropriated budgets. The largest component is Customs and Border Protection (CBP), with an FY2014 request of $10,833 million and final appropriation of $10,420 million. Table 2 and Figure 1 show DHS's discretionary budget authority broken down by component, from largest to smallest. Table 2 presents the raw numbers, while Figure 1 presents the same data in a graphic format, with additional information on the disaster relief adjustment to the allocation allowed under the Budget Control Act ( P.L. 112-25 ). For each set of appropriations shown in Figure 1 , the left column shows discretionary budget authority provided through the legislation, while the right column shows that amount plus resources available under the adjustments. This comparison looks only at the new budget authority requested or provided--not budget authority rescinded to offset the cost of the bill--so the totals will differ from Table 1 , which includes the impact of prior-year rescissions. Figure 1 , even with its accounting for discretionary cap adjustments, does not tell the whole story about the resources available to individual DHS components. Much of DHS's budget is not derived from discretionary appropriations. Some components, such as the Transportation Security Administration (TSA), rely on fee income or offsetting collections to support a substantial portion of their activities. U.S. Citizenship and Immigration Services (USCIS), for example, obtains less than 4% of its funding through direct appropriations--the bulk of the component's funding is derived from fee income. Figure 2 highlights how much of the DHS budget is not funded through discretionary appropriations. It presents a breakdown of the FY2014 budget request, showing the proposed discretionary appropriations, mandatory appropriations, and adjustments under the Budget Control Act, in the context of the total amount of budgetary resources available to DHS, as well as other non-appropriated resources. For FY2014, 67% of the proposed DHS gross budget was funded through discretionary appropriations. The remainder of the proposed budget was funded through fees, mandatory appropriations, BCA adjustments, and other non-appropriated resources. The amounts shown in this graph are derived from the Administration's budget request documents, and therefore do not exactly mirror the data presented in congressional documents, which are the source for the other data presented in the report, including Table 2 and Figure 1 . Table 3 presents DHS discretionary appropriations, as enacted, for FY2004 through FY2014. Generally speaking, annual appropriations for DHS rose from the establishment of the department, peaking in FY2010. However, the structural changes effected by the Budget Control Act that allowed disaster funding to be included in regular appropriations bills without being scored against the bill's allocation altered the downward trend as funding that might have been provided in a supplemental appropriations bill now was provided in the annual process. Without the impact of disaster relief funding, the nominal level of annual appropriations for the department declined each year since the FY2010 peak, until increasing in FY2014. Supplemental funding, which frequently addressed congressional priorities such as disaster assistance and border security, varies widely from year to year and as a result distorts year-to-year comparisons of total appropriations for DHS. Note the table includes two lines for FY2013. The first line for FY2013, in italics, describes pre-sequester resources provided to DHS. The second FY2013 line is derived from the post-sequester operating plan for the department, which examined only what was provided through the annual appropriations bill for DHS included in P.L. 113-6 . CRS does not have post-sequester totals for what was provided in P.L. 113-2 . Figure 3 shows the history of the timing of the DHS appropriations bills as they have moved through various stages of the legislative process. Initially, DHS appropriations were enacted relatively promptly, as stand-alone legislation. However, the bill is no longer an outlier from the consolidation and delayed timing that has affected other annual appropriations legislation. For FY2014, the Administration requested $39.028 billion in adjusted net discretionary budget authority for DHS, as part of an overall budget request of $60.0 billion (including fees, trust funds, and other funding that is not appropriated or does not score against the overall discretionary spending caps budget allocation for the bill). On June 6, 2013, the House passed H.R. 2217 with several amendments by a vote of 245-182. This report uses House-passed H.R. 2217 and the accompanying report ( H.Rept. 113-91 ) as the source for House-passed appropriations numbers. After floor action the House bill carried a net discretionary appropriation of $38.991 billion for DHS for FY2014. Several House-adopted floor amendments used management accounts as offsets, leaving funding for those activities 40% below the requested level. Increases approved by the House above the committee-recommended level for DHS activities included Customs and Border Protection's Border Security Fencing, Infrastructure, and Technology account; Coast Guard's Operating Expenses account; the Federal Emergency Management Agency's Urban Search and Rescue Response activities; and grant programs. On July 17, the Senate Appropriations Committee reported out H.R. 2217 with an amendment by a vote of 21-9. The Senate-reported bill carried a net discretionary appropriation of $39.1 billion for DHS for FY2014. Late on September 30, 2013, the Office of Management and Budget (OMB) gave notice to federal agencies that an emergency shutdown furlough would be put in place as a result of the failure to enact appropriations legislation for FY2014. On September 27, 2013, DHS released its "Procedures Relating to a Federal Funding Hiatus," which included details on how DHS planned to determine who was required to report to work, ceasing unexempted government operations, recalling certain workers in the event of an emergency, and restarting operations once an accord was reached on funding issues. More than 31,000 DHS employees were furloughed, and tens of thousands of others that were excepted from furlough and whose salaries were paid through annual appropriations worked without pay until the funding lapse was resolved. For a broader discussion of a federal government shutdown, see CRS Report RL34680, Shutdown of the Federal Government: Causes, Processes, and Effects , coordinated by [author name scrubbed]. On October 17, 2013, the Senate passed and the House of Representatives passed, and the President signed into law, a Senate-amended version of H.R. 2775 which carried a short term continuing resolution (CR) which funds government operations at a rate generally equivalent to FY2013 post-sequestration levels through January 15, 2014. The Senate passed the amended bill by a vote of 81-18, while the House passed it 285-144. This act temporarily resolved the lapse in funding, ending the emergency furlough, returning federal employees to work, and retroactively authorizing pay for both excepted and unexcepted employees for the duration of the funding lapse. Although a handful of legislative provisions are included to extend expiring authorities for the department and provide some flexibility for Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE) in operating under the constraints of the CR, as is usually the case with this type of legislation, account-level direction for funding is not provided, and no explanatory statement of congressional intent (such as a committee report) exists. On January 14, 2014, the House passed by voice vote H.J.Res. 106 , a short term continuing resolution, that would allow for three days of continued funding under the same terms as P.L. 113-46 . On January 15, the joint resolution passed the Senate by a vote of 86-14, and was signed into law that same day, becoming P.L. 113-73 and preventing an additional lapse in appropriations funding while a consolidated appropriations act for FY2014 completed the legislative process. On January 17, 2014, the President signed into law the Consolidated Appropriations Act, 2014, which included annual appropriations legislation covering the entire discretionary budget for the federal government for FY2014. Division F of P.L. 113-76 is the Homeland Security Appropriations Act, 2014, which includes $39,270 million in adjusted net discretionary budget authority for DHS. This amount is $922 million more than DHS reportedly received in its annual appropriation for FY2013 after taking into account the impact of sequestration. The act also included an additional $5.6 billion requested by the Administration for FEMA in disaster relief funding as defined by the Budget Control Act, and an additional $227 million for the Coast Guard to pay the costs of overseas contingency operations. Those additional costs are compensated for by adjustments in the discretionary spending limits outlined through the Balanced Budget and Emergency Deficit Control Act, as amended. Title I of the DHS appropriations bill provides funding for the department's management activities, Analysis and Operations (A&O) account, and the Office of the Inspector General (OIG). The Administration requested $1,239 million for these accounts in FY2014. The House-passed bill would have provided $883 million in Title I, a decrease of 28.0% from the requested level. The Senate-reported bill would have provided $1,054 million in Title I, 14.9% below the requested level. Division F of P.L. 113-76 included $1,037 million in Title I, 16.3% below the requested level. Table 5 lists the pre-sequester enacted amounts for the individual components of Title I for FY2013, the Administration's request for these components for FY2014, and the House-passed appropriations for the same. The heavy lines in this table and in similar ones later in the report serve as a reminder that direct comparisons between the pre-sequester FY2013 funding and FY2014 proposals are not comparisons of current levels of actual spending and proposals for the coming fiscal year, as one would normally see in this type of report. Title II of the DHS appropriations bill, which includes over three-quarters of the budget authority provided in the legislation, contains the appropriations for U.S. Customs and Border Protection (CBP), U.S. Immigration and Customs Enforcement (ICE), the Transportation Security Administration (TSA), the U.S. Coast Guard (USCG), and the U.S. Secret Service (USSS). The Administration requested $30,283 million for these accounts in FY2014. The House-passed bill would have provided $30,768 million under Title II, an increase of 1.60% from the requested level. The Senate-reported bill would have included $30,289 million in Title II, an increase of less than 0.1% from the requested level. Division F of P.L. 113-76 included $30,877 million in Title II, 2.1% above the requested level. Both the Senate-reported bill and the enacted annual appropriations act also included an additional $227 million in funding for overseas contingency operations of Coast Guard, compensated for by an adjustment in the discretionary spending limits outlined through the Balanced Budget and Emergency Deficit Control Act, as amended. Table 6 lists the enacted amounts for the individual components of Title II for FY2013, the Administration's request for these components for FY2014, the House-passed and Senate-reported appropriations for the same, and the annual appropriation enacted through Division F of P.L. 113-76 . Title III of the DHS appropriations bill contains the appropriations for the National Protection and Programs Directorate (NPPD), the Office of Health Affairs (OHA), and the Federal Emergency Management Agency (FEMA). The Administration requested $5,383 million for these accounts in FY2014. The House-passed bill would have provided $5,928 million, an increase of 10.1% above the requested level. The Senate-reported bill would have provided $5,955 million, an increase of 10.6% above the requested level. Division F of P.L. 113-76 included $5,952 million in Title III, 10.6% above the requested level. In addition, all three versions of this title also include a requested $5,626 million for disaster relief that is offset by an adjustment under the Budget Control Act. Table 7 lists the enacted amounts for the individual components of Title III for FY2013, the Administration's request for these components for FY2014, the House-passed and Senate-reported appropriations for the same, and the annual appropriation enacted through Division F of P.L. 113-76 . Title IV of the DHS appropriations bill contains the appropriations for U.S. Citizenship and Immigration Services (USCIS), the Federal Law Enforcement Training Center (FLETC), the Science and Technology directorate (S&T), and the Domestic Nuclear Detection Office. The Administration requested $2,214 million for these accounts in FY2014. The House-passed bill would have provided $1,890 million, a decrease of 14.7% below the requested level. The Senate-reported bill would have provided $1,885 million, a decrease of 15.0% below the requested level. Division F of P.L. 113-76 included $1,878 million in Title IV, 15.2% below the requested level. Table 8 lists the enacted amounts for the individual components of Title IV for FY2013, the Administration's request for these components for FY2014, the House-passed and Senate-reported appropriations for the same, and the annual appropriation enacted through Division F of P.L. 113-76 . Title V of the DHS appropriations bill contains the general provisions for the bill. These typically include a variety of provisions that apply generally to the bill, as opposed to a single appropriation. However, general provisions may carry additional appropriations, rescissions of prior-year appropriations, limitations on the use of funds, or permanent legislative language as well. The Administration's request was made in relation to the general provisions for DHS included in the FY2012 appropriations act (Division D of P.L. 112-74 ), as the FY2013 appropriations process had not been concluded while the FY2014 request was being developed. The Administration proposed dropping 36 general provisions, most of which they had proposed eliminating in FY2013. Eleven of those were already eliminated in the final FY2013 appropriations bill. The Administration also proposed adding 10 provisions and modifying 10 others. While many of those modifications were simple date changes, one represented a significant change from previous practices. The Administration proposed modifying Section 503, which governs reprogramming of funds, to provide transfer authority that would allow funds to be moved between appropriations accounts within DHS to expedite response to a catastrophic event. The House concurred with the Administration's request to drop three general provisions beyond the 11 that were dropped from the FY2013 DHS appropriations act. The House Appropriations Committee did not add any of the general provisions requested by the Administration--with the exception of a rescission provision that it modified --and rejected the expansion of reprogramming authority. H.R. 2217 as reported to the House had 65 general provisions. The House added 19 general provisions to the bill during floor action, bringing the total number of general provisions in its version of H.R. 2217 to 84. Eighteen of these newly added general provisions prohibit the use of funds provided in the bill for specific activities. The Senate Appropriations Committee chose to drop a provision that the House retained, kept four proposed for removal that the House did not, and added several other provisions. It added two provisions requested by the Administration--one authorizing the use of reimbursable fee agreements to fund CBP services, and a modified provision allowing DHS to receive donations to construct, alter, operate, or maintain land ports of entry. The Senate-reported bill includes 72 general provisions in all. Division F of P.L. 113-76 included 77 general provisions in all. Seven provisions of the 74 general provisions carried in the FY2013 Homeland Security Appropriations Act were dropped, and ten were added. Section 559 of the act included a modified version of the Administration's requested authority to enter into reimburseable fee agreements and to receive donations. The act did not include the requested expansion of reprogramming authority. House-passed H.R. 2217 included $460 million in rescissions in Title V, while the Senate-reported version included $241 million in rescissions. Division F of P.L. 113-76 included $693 million in Title V. These provisions reduce the net score of the act. The House-passed bill would have provided $34 million for DHS's data center consolidation effort through a general provision, while the Senate-reported bill would have provided $54 million in the same fashion, as well as $43 million for DHS headquarters consolidation at St. Elizabeths. These are cross-cutting initiatives which have been funded in the past in the general provisions of the legislation. The Senate-reported bill also included legislative language to allow DHS to use fee revenues collected as a result of lifting a fee exemption, which adds $110 million to the overall cost of the legislation. Division F of P.L. 113-76 included $3 million for a USCIS immigrant integration grant program, as well as $42 million for data center migration, $35 million for DHS headquarters consolidation, and $30 million for financial systems modernization. The division also includes the legislative language concerning fees as proposed by the Senate. These are the only provisions in this title that impact the score of the act.

This report provides a brief outline of the FY2014 appropriations legislation for the Department of Homeland Security (DHS). The Administration requested $39.0 billion in adjusted net discretionary budget authority for DHS for FY2014, as part of an overall budget of $60.0 billion (including fees, trust funds, and other funding that is not appropriated or does not score against the budget caps). Congress did not enact annual FY2014 appropriations legislation prior to the beginning of the new fiscal year. From October 1, 2013, through October 16, 2013, the federal government (including DHS) operated under an emergency shutdown furlough due to the expiration of annual appropriations for FY2014. More than 31,000 DHS employees were furloughed. Tens of thousands of others that were excepted from furlough, and those whose salaries were paid through annual appropriations, worked without pay until the lapse was resolved by passage of a short-term continuing resolution. From October 17, 2013, to January 17, 2014, the federal government operated under the terms of two consecutive continuing resolutions: P.L. 113-46, which lasted until its successor was enacted on January 15, 2014; and P.L. 113-73, which lasted until the Omnibus Appropriations Act, 2014 (P.L. 113-76), was enacted on January 17, 2014. Division F of P.L. 113-76 is the Homeland Security Appropriations Act, 2014, which includes $39,270 million in adjusted net discretionary budget authority for DHS. This is $922 million more than DHS reportedly received in its annual appropriation for FY2013 after taking into account the impact of sequestration. The act also included an additional $5.6 billion requested by the Administration for FEMA in disaster relief funding as defined by the Budget Control Act, and an additional $227 million for the Coast Guard to pay the costs of overseas contingency operations. Those additional costs are compensated for by adjustments in the discretionary spending limits outlined through the Balanced Budget and Emergency Deficit Control Act as amended. For a more detailed discussion of policy matters and legislative details beyond funding levels, see CRS Report R43147, Department of Homeland Security: FY2014 Appropriations, coordinated by [author name scrubbed]. This report will be updated as events warrant.

RS21689 -- Federal Pay - Status of January 2004 Adjustments: A Fact Sheet Updated January 24, 2004 Under 5 U.S.C. 5303, General Schedule basic salaries, and those of other related statutory systems, are to be adjusted the first pay periodbeginning on or after January 1 of each year (January 11, 2004). The adjustments are determined by the change inthe private sector element of the EmploymentCost Index (ECI) from September to September. The percentage of change, minus 0.5%, becomes the scheduledrate of adjustment. For January 2004, the rateof adjustment was scheduled at 2.7%. Locality-based payments are determined separately, based on wage surveydata from 32 geographicareas. Under 5 U.S.C. 5303 and 5 U.S.C. 5304, President George W. Bush sent forward an alternative plan in August 2003 that called for a 1.5%increase in General Schedule, and related systems, basic pay and an average of 0.5% in locality-based payments forJanuary 2004. Barring any action by Congress to establish a different rate or effective date, the President's alternative plan willgovern. Both the House and Senate voted to establish a 4.1% pay adjustment, effective January 2004. (2) With passage of the 4.1%, the basic pay adjustment will be the scheduled ECI adjustment of 2.7% and the locality pay adjustment willaverage 1.4%. For the Washington, DC, area, the net adjustment will be 4.41%. Under Section 704, P.L. 101-194 , the Ethics Reform Act of 1989, salaries of Members and officers of Congress, federal judges, andexecutive branch officials on the Executive Schedule (collectively referred to herein as "officials") are to be adjustedannually based on December-to-Decemberpercentage changes in the private sector element of the ECI, effective in the same month as the GSadjustments. The scheduled January 2004 pay adjustment, based on the ECI, is 2.2%. Section 704, as amended, stipulates that officials' pay adjustments cannot exceed the rate of adjustment for GS basicpay. P.L. 108-167 , as required under Section 140, P.L. 97-92 , permits the judges to receive the annual adjustment. GS pay adjustment in January 2004, pending presidential approval of the FY2004 Consolidated Appropriations Act, is limited to 1.5% forbasic pay and an average of 0.5% for locality. The net adjustment for the Washington, DC, area has been 2.12%(Executive Order 13322, 69 Federal Register 231). The pay adjustment for officials has been limited to 1.5%. Upon approval of the Consolidated Appropriations Act, 2004, GS pay will be adjusted to a total of 4.1%, retroactive to the first pay periodbeginning on or after January 1, 2004, with the rate of 2.7% for basic pay. Salaries of officials will increase to the2.2% rate,retroactively.

Federal pay adjustment rates going into effect in January 2004, under Executive Order13322 (69 Federal Register231) were less than those in the pending Consolidated Appropriations Act, 2004 (H.R. 2673). The GeneralSchedule (GS) and related salarysystems were limited to 2.0%, as opposed to the 4.1% subsequently passed. Salaries of officials in the threebranches were temporarily limited, due to the lowerGS rate, to 1.5%, rather than the scheduled 2.2%, which upon Presidential approval of H.R. 2673, will go into effectretroactively.

In 1976, President Gerald R. Ford signed the Toxic Substances Control Act (TSCA) , giving the U.S. Environmental Protection Agency (EPA) authority to regulate production and use of industrial chemicals in U.S. commerce in the interest of protecting health and the environment from unreasonable risks. Thirty-seven 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. Based on hearing testimony, a diverse set of stakeholders generally concur that TSCA needs to be updated, although there is disagreement about the extent and nature of any proposed revisions. For a summary of TSCA provisions and history, see CRS Report RL31905, The Toxic Substances Control Act (TSCA): A Summary of the Act and Its Major Requirements , by [author name scrubbed] . Legislation to amend TSCA Title I was introduced in the 111 th and 112 th Congresses. The Safe Chemicals Act (SCA), S. 847 , was reported by the Senate Committee on Environment and Public Works in the 112 th Congress. In the 113 th Congress, Senator Lautenberg reintroduced the reported bill as S. 696 . A few weeks later, Senator Lautenberg and 14 co-sponsors introduced a second comprehensive bill, the Chemical Safety Improvement Act (CSIA), S. 1009 . This CRS report compares key provisions of S. 696 and S. 1009 with provisions of TSCA Title I (15 U.S.C. 2601 et seq.) that would be affected if either bill became law. These provisions are summarized in Tables 1 through 6 of this report. Neither S. 1009 nor S. 696 would affect Titles II through VI of TSCA (except that S. 696 would change the definition of "asbestos" in Title II), nor would they change the basic organization of TSCA Title I. For example, provisions related to testing would remain in Section 4, requirements for notifying EPA when a new chemical or new use is proposed would remain in Section 5, and regulatory authorities would remain in Section 6. Also unaffected would be changes to TSCA Title I that were enacted during the 110 th Congress, such as a provision that bans exports of elemental mercury. However, S. 696 would amend or delete most of the original Title I provisions and would make substantial additions to the current statute. S. 1009 also would amend TSCA Title I provisions significantly but without adding most of the new provisions in S. 696 . Some key differences between the current statute and the bills are summarized in the following sections. S. 696 , as introduced, would direct the EPA Administrator to establish, by rule, various "minimum information sets" that would be required for different chemical substances or categories of substances. The bill would direct EPA to include in each minimum information set any information that the EPA deems necessary for the conduct of a screening-level risk assessment, "sufficient for the Administrator to administer this Act" with regard to categorization of new and existing chemical substances, assignment of priority classes, and safety standard determinations and redeterminations. S. 696 would require submission to EPA of a minimum information set by each manufacturer and processor of a new chemical substance or, as specified by the Administrator, of an existing chemical. The bill would authorize EPA to require, by rule or order, testing and submission by a specified date of additional results of tests not included in any applicable minimum information set "as necessary for making any determination or carrying out any provision" of TSCA. S. 696 would authorize EPA, by order, to take regulatory action if a manufacturer or processor failed to submit required information. Finally, S. 696 would direct EPA to accommodate use of testing methods and strategies to generate information quickly, at low cost, and with reduced use of animal-based testing, to the extent that such methods and strategies would yield information of equivalent quality and reliability. Neither S. 1009 nor the current statute requires development and submission of specified data for either new or existing chemicals. Instead, S. 1009 would direct the Administrator to develop a general framework, policies, and procedures for collecting, evaluating and developing data, and would require integration of relevant information from multiple sources into a tiered testing framework. The bill would authorize EPA to require manufacturers to develop new data if the agency promulgates a rule, enters into a testing consent agreement, or issues an order based on a determination that additional data are needed to perform a safety assessment, make a safety determination, or meet testing needs of an "implementing authority under another Federal statute." S. 1009 would require EPA to publish a statement identifying and explaining the need for data. It also would require EPA to specify a period for test data submission, "which period must not be of an unreasonable duration." Failure to submit any required information is a prohibited act and subjects the manufacturer or processor to penalties. Finally, S. 1009 would direct the Administrator to minimize the use of animals in testing of chemical substances or mixtures through various means. The bill would require the Administrator to promote the development and timely incorporation of new testing methods that are not laboratory animal-based. S. 1009 would authorize the Administrator to adapt or waive animal-testing requirements on request from a manufacturer or processor under specified circumstances. Under the current statute, there is no specific framework or minimum information set, but EPA has the authority to require data submission if it promulgates a rule, including a finding that a chemical "may present an unreasonable risk of injury to health or the environment," or is produced in very large volume and there is a potential for substantial quantity to be released into the environment or for substantial or significant human exposure. The agency also must demonstrate a need for data. EPA also may promulgate such rules for categories of chemicals, but is prohibited by Section 25(c)(2) from promulgating a rule for a group of chemicals that are grouped together solely on the basis of their being new chemical substances. Failure to submit any required information is a prohibited act and subjects the manufacturer or processor to penalties. Under the current statute, EPA maintains an inventory of all chemicals that have been in U. S. commerce since 1976. Manufacturers and importers must notify the EPA prior to manufacturing or importing a chemical not on the EPA inventory (that is, a "new" chemical). Based on information submitted with that notice (see TSCA 5(d) in Table 3 under the heading "Notice content for new chemical substances"), EPA has up to 90 days to determine whether a new chemical may present an unreasonable risk of injury to health or the environment. In addition, under the current statute EPA has authority to require notification 90 days prior to a significant new use of a chemical on the inventory, but the agency first must promulgate a Significant New Use Rule (SNUR) naming the chemical and defining the uses for which notice is required. Based on information submitted with that notice (see TSCA 5(d)), EPA must decide whether the new use may present an unreasonable risk. S. 696 and S. 1009 would continue the new chemical pre-manufacture notification requirement. S. 1009 is similar to the current statute in that it also would require notice prior to a significant new use of a chemical, if EPA has issued a SNUR. S. 696 would add a notification requirement for all chemicals already on the inventory prior to manufacture or processing for any new use or at a new production volume. For chemicals that had undergone a safety evaluation and determination by EPA, notice also would be required prior to a change in the manner of production or processing under S. 696 as introduced. In response to a pre-manufacture notice from a manufacturer to EPA, both bills would require EPA to categorize chemicals based on available information within 90 days of receiving a notice (but the period may be extended). S. 1009 also requires categorization of chemicals with proposed new uses. S. 696 would establish the following categories for new chemicals: Substances of Very High Concern, Substances Unlikely to Meet the Safety Standard, Substances with Insufficient Information, and Substances Likely to Meet the Safety Standard. S. 1009 would categorize new substances and uses as Not Likely to Meet the Safety Standard, Additional Information Is Needed, or Substances Likely to Meet the Safety Standard under Intended Conditions of Use. Under the current statute, the Interagency Testing Committee (ITC) advises the EPA Administrator regarding chemicals that should receive priority consideration for promulgation of a test rule. The ITC reports to EPA biannually, establishes a prioritized list of chemicals, and designates up to 50 chemicals on the list as the highest priority. In selecting chemicals, the committee is authorized to consider all relevant factors, including "the extent to which the substance or mixture is closely related to a chemical substance or mixture which is known to present an unreasonable risk of injury to health or the environment." Priority attention is to be given to chemicals "known to cause or contribute to or which are suspected of causing or contributing to cancer, gene mutations, or birth defects." The EPA Administrator also is authorized under TSCA 5(b)(4) to compile and keep current a list of chemical substances that the Agency has determined present or may present an unreasonable risk of injury to health or the environment. This list of chemicals of concern must be promulgated by notice and comment rulemaking under the Administrative Procedure Act (5 U.S.C. 553) and must provide opportunity for oral and written presentation of data, views, or arguments. In addition, EPA routinely prioritizes chemicals in commerce using its knowledge of chemistry and biology. S. 696 would eliminate the ITC provisions as well as the provision at TSCA 5(b)(4). Instead the bill would direct the Administrator to establish a system for assigning chemical substances into batches, categorizing them, and assigning priorities for testing and regulation. The bill would require the EPA Administrator to screen and prioritize all chemicals on the inventory for the purposes of risk assessment, safety standard determinations, and risk management. EPA would initially assign chemicals to batches. The first batch generally would include chemicals currently in commerce in the United States--that is, chemicals for which manufacturers submitted information to EPA in response to the most recent Chemical Data Reporting rule (issued under TSCA 8(a)). The bill then would direct EPA to assign all of the chemicals in the first batch to one of four categories based on available information: Substances of Very High Concern, Substances with Insufficient Information, Substances of Very Low Concern, and Substances to Undergo Safety Standard Determinations. S. 696 also would direct EPA to add new chemical substances categorized previously by EPA as Substances Likely to Meet the Safety Standard to the inventory of existing chemicals, assign each to a batch, and further categorize each as a Substance of Very Low Concern or a Substance to Undergo a Safety Standard Determination. All chemicals on the inventory categorized as Substances to Undergo a Safety Standard Determination would be prioritized further (Priority 1, Priority 2, or Priority 3) for risk assessment. After the initial categorization and prioritization, S. 696 would direct EPA to review information continually with an eye toward revising chemical assignments. S. 1009 retains the ITC but would require it to advise EPA with regard to testing consent agreements and test orders in addition to test rules. S. 1009 eliminates the chemicals of concern listing provisions of TSCA 5(b)(4), but would direct the Administrator to establish a risk-based screening process as well as criteria for identifying whether existing chemical substances are a high or a low priority for a safety assessment and determination. Priorities would be determined based on: (1) the ability of EPA to schedule and complete safety assessments and determinations in a timely manner; and (2) reasonably available data and information concerning the hazard, exposure, and use characteristics at the time the decision is made. The agency's proposed prioritization screening process and criteria would be published for public comment. Using the screening process, EPA would be required "in a timely manner" to evaluate all existing chemical substances or categories of substances on the active inventory (created under proposed TSCA 8(b)). Substances would be removed from the list of high-priority substances when a safety determination is published. The current statute allows chemicals to remain in U.S. commerce until EPA promulgates a rule and publishes a finding that a chemical presents or will present an "unreasonable risk" to human health or the environment. If EPA demonstrates that a risk associated with a chemical is unreasonable (relative to the benefits provided by the chemical and the estimated risks and benefits of any alternatives), the Agency is required to initiate rulemaking, but only to the extent necessary to reduce that risk to a reasonable level and using "the least burdensome" restriction. Under S. 696 , as introduced, continued production and use of a chemical would be permitted only if EPA made, or expected to make, an affirmative safety determination for the chemical. S. 696 would require manufacturers of chemicals to supply scientific data sufficient for EPA to conclude, based on a risk assessment, that the chemical would meet the safety standard: "there is a reasonable certainty that no harm will result to human health or the environment from aggregate exposure to the chemical substance" under the use conditions evaluated and specified by EPA. The bill would require EPA to base these safety determinations "solely on considerations of human health and the environment, including the health of vulnerable populations." An EPA determination that a chemical would not meet the safety standard would not require a risk assessment. S. 696 would prohibit manufacture, processing, and distribution of a chemical substance that EPA decided did not meet the safety standard; assigned to the category Substances of Very High Concern; assigned to the category Substances Unlikely to Meet the Safety Standard; or assigned to the category Substances with Insufficient Information (pending submission of the applicable minimum information set and re-categorization). In addition, S. 696 would prohibit manufacture of a chemical for any proposed new use that had not been considered in the safety determination issued for that chemical. S. 696 would allow production and use of a chemical determined by EPA to meet the safety standard; pending completion of the safety standard determination for a chemical assigned to the category Substances to Undergo Safety Standard Determinations; or assigned to the category Substances of Very Low Concern. S. 696 would authorize EPA to impose restrictions on the manufacture, processing, use, distribution in commerce, or disposal of a chemical substance, mixture, or article containing a chemical substance to ensure that a chemical use would meet the safety standard. S. 1009 is similar to the current statute in that it would allow manufacture and processing of, and commerce in, a chemical until EPA identified it as high priority and determined that it did not meet the safety standard for the intended conditions of use. EPA would be required to base its safety determinations on risk-based safety assessments considering hazard, use, and exposure (including exposure of vulnerable populations) for the chemical substance under the intended conditions of use. Under S. 1009 , the safety standard that each chemical would be required to meet "ensures that no unreasonable risk of harm to human health or the environment will result from exposure to the chemical." Before conducting the safety assessment, S. 1009 would require that EPA develop a science-based framework for making decisions, including a methodology for conducting safety assessments that addresses specified issues and that is subjected to public comment and scientific peer review. Also included in the framework would be procedural rules for safety determinations. S. 1009 would direct EPA to impose various restrictions on high-priority chemicals that do not meet the safety standard for the intended conditions of use. To ban or phase out manufacture, processing, or use of a chemical substance, EPA would first have to consider and publish a statement discussing "availability of technically and economically feasible alternatives for the substance under the intended conditions of use;" relative risks posed by those alternatives; "economic and social costs and benefits of the proposed regulatory action and options considered, and of potential alternatives; and" "the economic and social benefits and costs of" "the chemical substance," "alternatives to the chemical substance," and "any necessary restrictions on the chemical substance or alternatives." The current statute provides EPA with broad authority, as well as mandates, to require data and to restrict chemical use to prevent unreasonable risk of injury. In the exercise of this authority, manufacturers and processors produce and provide data, while EPA bears responsibility for collecting, analyzing, and evaluating the information and making a case in the public record for each of its risk management decisions for each chemical substance. Under the current statute, EPA is obligated to follow procedures laid out in the Administrative Procedure Act and to provide opportunities for persons to present data, views, or arguments orally and in written submissions. The current statute requires that a transcript be made of oral presentations, and the EPA Administrator must publish findings. TSCA Section 19 [15 U.S.C. 2618 ] authorizes any person to file a petition with the U.S. Court of Appeals for the District of Columbia Circuit or for the circuit in which the person resides or in which the person's principal place of business is located, for judicial review of specified TSCA rules within 60 days of issuance. The appropriate circuit court is directed to set aside specified rules if they are not supported by "substantial evidence in the rulemaking record ... taken as a whole." "Rulemaking record" is defined at length in TSCA 19(a)(3). S. 696 would expedite regulatory action relative to the process under the current statute by authorizing EPA to issue administrative orders with respect to specific chemical substances instead of rules (which must be promulgated under the current statute). In addition, S. 696 would exempt certain EPA decisions from judicial review and remove TSCA rulemaking requirements not specified in the Administrative Procedure Act (5 U.S.C. 553) for informal notice and comment rulemaking. The proposed amendments to TSCA also would increase public access to information about EPA's decisions and to some information about chemicals that currently is treated as confidential business information. S. 696 provides for judicial review of safety determinations, in addition to all rules and orders. In the event that a safety determination is challenged in court, S. 696 would require that each manufacturer and processor "at all times bear the burden of proof in any legal proceeding relating to a decision of the Administrator regarding whether the chemical substance meets the safety standard." The bill imposes a duty on the manufacturer or processor of a chemical to provide sufficient information for EPA to determine whether the chemical meets the safety standard, and imposes a duty on EPA to determine whether a chemical meets the safety standard. The scope of EPA oversight also would be expanded by S. 696 . As introduced, the bill includes 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. S. 696 also might broaden the scope of environmental risks that EPA is authorized to manage by defining "environment" to include the indoor environment. S. 696 would authorize EPA activities not currently authorized under TSCA to allow implementation of three international agreements pertaining to persistent organic pollutants and other hazardous chemicals. For example, the proposal would authorize EPA to regulate chemicals manufactured solely for export. The authority provided by the bill would be specific to three international agreements, rather than more generally authorizing regulatory activity to implement any ratified international agreement concerning chemicals. The bill would prohibit production and use of chemicals when it was inconsistent with U.S. obligations under any of the three international agreements after they had entered into force for the United States. S. 1009 is similar to the current statute, providing EPA with broad authority and mandates to require data and to restrict chemical use to ensure no unreasonable risk of harm from exposure. In the exercise of this authority, manufacturers and processors would produce and provide data, while EPA would bear responsibility for collecting, analyzing, and evaluating the information and making a case on the public record for each of its risk management decisions for each chemical substance. S. 1009 would allow EPA to negotiate consent agreements or to issue orders rather than rules in some cases. EPA uses consent agreements currently. Under S. 1009 , EPA would be required to justify its use of orders. The proposed legislation would direct EPA to develop and use a framework for decision making that incorporates most of the analytic, data quality control, publication, and notice and comment requirements of rulemaking and the Information Quality Act (Section 515 of P.L. 106-554 ). Under S. 1009 , EPA would still be obligated to follow procedures laid out in the Administrative Procedure Act when promulgating a rule but TSCA requirements beyond those in the APA would be eliminated. Like the current statute, S. 1009 would authorize any person to file a petition with the U.S. Court of Appeals for the District of Columbia Circuit or for the circuit in which the person resides or in which the person's principal place of business is located, for judicial review of a Title I rule (not an order) requiring data development, imposing a restriction or prohibition, including restriction or prohibition for elemental mercury, or requiring information reporting. Judicial review would not be authorized for significant new use determinations, rules regarding PCBs, or rules regarding asbestos or lead-based paint under Titles II and IV, respectively. Proposed TSCA Section 19 would retain the current standard of evidence for rules requiring data development or imposing a restriction or prohibition (including a restriction or prohibition for elemental mercury), but would define "evidence" to mean any matter in the rulemaking record and would prohibit review of the contents and adequacy of the statement of basis and purpose, except as part of the rulemaking record as a whole. Currently, TSCA Section 18 includes certain preemptions of state and local authority, and limitations to those preemptions. 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 risk than the EPA requirement does, but does not "unduly burden interstate commerce." S. 696 would significantly simplify this section of TSCA. As amended, TSCA would not preempt laws relating to a chemical substance, mixture, or article unless compliance with both federal and the state or local laws was impossible. S. 1009 would preempt state laws, new and existing , that (1) require testing or information "reasonably likely to produce the same data and information required" by rule, consent agreement, or order under proposed TSCA Section 4, 5, or 6; (2) prohibit or restrict the manufacturing, processing, distribution in commerce, or use of a chemical after issuance of a completed safety determination under proposed TSCA Section 6; or (3) require notification for a significant new use of a chemical if EPA requires notification under proposed TSCA Section 5. Proposed TSCA Section 18 also would preempt new state prohibitions or restrictions for any high-priority and low-priority substance. Exceptions to the general preemption provision would include laws--adopted under the authority of any other federal law; implementing a reporting or information collection requirement not redundant of federal law; or adopted pursuant to state authority related to water quality, air quality, or waste treatment or disposal, as long as it does not impose a restriction on the manufacture, processing, distribution in commerce, or use of a chemical and is not redundant or inconsistent with an EPA action under proposed TSCA Section 5 or 6. TSCA Section 14 [15 U.S.C. 2613] protects proprietary confidential information submitted to EPA about chemicals in commerce. Disclosure by EPA employees of such information generally is not permitted, except to other federal employees or when relevant in any proceeding under TSCA. Manufacturers, processors, or distributors in commerce may designate information that they believe is entitled to confidential treatment. If EPA proposes to release such data to the public (in the limited cases where it is authorized to do so), then the EPA Administrator must notify the manufacturer, processor, or distributor who designated the information confidential. Disclosure of confidential business information (CBI) is required when "necessary to protect health or the environment against an unreasonable risk of injury to health or the environment." S. 696 would increase public access to information about EPA's decisions and to some information about chemicals that currently is treated as CBI. Like the current statute, S. 696 would prohibit disclosure of CBI by EPA employees except to other federal agencies and EPA contractors or if the disclosure is necessary to protect human health or the environment (the qualifier "against an unreasonable risk" is omitted). Proposed TSCA Section 14 also would direct EPA to disclose information upon request to a state or tribal government for the purpose of administration or enforcement of a law, if an agreement ensured that appropriate steps would be taken to maintain the confidentiality of the information. EPA also would be directed to disclose information to public health or environmental health professionals or medical personnel under certain conditions. S. 696 would categorize and specify types of CBI as (1) information always eligible for protection, (2) information that may be eligible for protection, and (3) information never eligible for protection. The bill would direct EPA to promulgate rules specifying acceptable bases on which written requests to maintain confidentiality might be approved and documentation and justification that must accompany such a request. The Administrator would be required to review and respond to requests for confidentiality within 90 days of receiving the information. S. 696 would require those designating CBI to justify such claims and to certify that the information is not otherwise publicly available. If approved, submitted information generally would be protected from disclosure for up to five years. S. 1009 is similar to the current statute, but the bill would require persons to substantiate any claim that information qualifies for disclosure protection. As in the current statute, the proposed requirements of S. 1009 would not apply if the Administrator determined that disclosure was necessary to protect human health or the environment (the qualifier "against an unreasonable risk" is omitted) nor to disclosure of information to an officer, employee, contractor or employees of that contractor of the United States. Information also may be disclosed to a state or political subdivision of a state, or to a health professional under specified circumstances. Information may be disclosed when necessary in a proceeding under proposed TSCA or to any duly authorized committee of the Congress. If enacted, the bill would prohibit the Administrator from disclosing trade secrets and other information defined as presumed to be protected. Also, S. 1009 would identify information not protected from disclosure, including identity of a chemical unless the person meets substantiation requirements; specified health and safety information and determinations; and certain general information. The bill would require the submitter to justify why information qualifies for confidentiality protection, and to certify that the information submitted is true and correct. In addition, for claims related to chemical identity, S. 1009 would require the submitter to provide specified information demonstrating that confidentiality of the identity has been and is likely to be protected, and disclosure is likely to cause substantial harm to the competitive position of the person. In such cases, the submitter would have to identify a time period for which disclosure protection is necessary and a generic name for the chemical. S. 1009 would require the Administrator to protect CBI from disclosure for the period of time requested by the person submitting and justifying the claim, or for such period of time as the Administrator determines to be reasonable. The Administrator would be authorized to request "redocumentation" of a claim. S. 1009 would dictate a process for receiving and acting on claims for protection from information disclosure, and for providing recourse in the event the Administrator decides to release such data. Finally, S. 1009 would ensure that EPA may not require substantiation of a confidentiality claim for protection from disclosure of information submitted to EPA prior to the date of enactment of S. 1009 or to require more substantiation than proposed TSCA Section 14 requires. Several new provisions would be included in an amended TSCA under S. 696 , but not under S. 1009 . One provision under S. 696 , 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." S. 696 also would require EPA to establish a program to create market incentives for the development of safer alternatives to existing chemical substances that reduce or avoid the use and generation of hazardous substances. The program would be required to expedite review of a new chemical substance if an alternatives analysis by a manufacturer or processor indicated the substance was a safer alternative, and to recognize a substance or product determined by EPA to be a safer alternative. Another new provision of S. 696 would direct the EPA Administrator to coordinate with the Secretary of Health and Human Services to conduct a biomonitoring study for any chemical that research indicated might be present in human tissues and that could have adverse effects on human development. The study would be designed to determine whether the chemical in fact was present in pregnant women and infants. If the chemical were found to be present, manufacturers and processors would have to disclose to EPA, commercial customers, consumers, and the general public all known uses of the chemical and all articles in which the chemical was expected to be present. Children's environmental health also is addressed by S. 696 . It 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. S. 696 also would establish at least four research centers to encourage the development of safer alternatives to existing hazardous chemical substances. In addition, "green chemistry and engineering" would be promoted through grants. In the remainder of this CRS report, Tables 1 through 6 summarize selected provisions of S. 696 and S. 1009 , as introduced, and current TSCA.

Thirty-seven years of experience implementing and enforcing the Toxic Substances Control Act (TSCA) since its enactment have demonstrated the strengths and weaknesses of the law and led many to propose legislative changes to TSCA's core provisions. The Safe Chemicals Act (S. 696) and the Chemical Safety Improvement Act (S. 1009) introduced in the 113th Congress would amend TSCA Title I. This CRS report compares key provisions of S. 696 and S. 1009 with the language of the current statute (15 U.S.C. 2601 et seq.). Existing Law TSCA as enacted authorizes the Environmental Protection Agency (EPA) to require manufacturers to develop data about chemical toxicity and exposure if EPA determines that a chemical may pose an unreasonable risk, or if chemical exposure is expected to be substantial. TSCA allows a chemical to enter and remain in commerce unless EPA can show that it poses "an unreasonable risk of injury to health or the environment." EPA then must regulate to control unreasonable risk, but only to the extent necessary using the "least burdensome" means of available control. This TSCA standard has been interpreted to require cost-benefit balancing. The current statute preempts state and local laws regarding chemicals specifically regulated by EPA. Proposed Legislation S. 696 would amend TSCA to require chemical manufacturers and processors to submit specified information about the toxicity and usage of chemicals in commerce to EPA. The information would be used by EPA to determine whether a chemical would meet the safety standard of "a reasonable certainty of no harm from aggregate exposure," given the imposition of any needed restrictions on manufacture, processing, distribution, use, or disposal. S. 696 would prohibit uses of evaluated chemical substances unless they were determined by EPA to meet the safety standard. S. 696 would increase public access to information about EPA's decisions and to some information about chemicals that currently is treated as confidential business information. S. 696 would rarely preempt state and local laws. S. 1009 would authorize EPA to require manufacturers to develop new information if EPA can show need in the context of an evaluative framework for chemical risk assessment and management. The bill would require EPA to screen all chemicals in commerce and assign each to one of three categories: high priority for risk assessment, low priority for risk assessment, or in need of additional information. S. 1009 would require EPA regulation, by rule or order, ensuring "no unreasonable risk of harm from exposure" to a chemical under the intended conditions of use. S. 1009 would preempt new state and local laws for chemicals identified as high or low priority. Both Senate bills would evaluate the existing inventory of chemicals in U.S. commerce since 1976 to allow prioritization of the estimated 9,000 chemicals currently produced and used in the United States. In addition, both bills would explicitly require manufacturers to substantiate some requests for protection of confidential business information from public disclosure. S. 696 (but not S. 1009) also would add a new section to TSCA to allow U.S. implementation of three international agreements. S. 1009 would amend an existing section of TSCA to allow implementation of one treaty. Other provisions included in S. 696 would authorize EPA to support research in "green" engineering and chemistry, promote alternatives to toxicity testing on animals, encourage research on children's environmental health, require biomonitoring of pregnant women and infants, require EPA to identify "hot spots" where residents are exposed disproportionately to pollution, and direct EPA to develop strategies for reducing their risks. Key provisions of S. 696 and S. 1009 are compared with current statute in Tables 1 through 6 of this CRS report.

The privacy and security of health information is recognized as a critical element of transforming the health care system through the use of health information technology. As part of H.R. 1 , the American Recovery and Reinvestment Act of 2009, the 111 th Congress is considering legislation to promote the widespread adoption of health information technology (HIT), and the bill includes provisions dealing with the privacy and security of health records, and specifically authorizes state attorneys general to file lawsuits in federal court on behalf of state residents, seeking injunctive relief or civil damages against "any person" who violates HIPAA's privacy provisions. In 1996, Congress enacted the Health Insurance Portability and Accountability Act of 1996 (HIPAA) to "improve portability and continuity of health insurance coverage in the group and individual markets." Congress enacted HIPAA to guarantee the availability and renewability of health insurance coverage and limit the use of pre-existing condition restrictions. HIPAA also included tax provisions related to health insurance and administrative simplification provisions requiring issuance of national standards to facilitate the electronic transmission of health information. Part C of HIPAA requires "the development of a health information system through the establishment of standards and requirements for the electronic transmission of certain health information." Such standards are required to be consistent with the objective of reducing the administrative costs of providing and paying for health care. These Administrative Simplification provisions require the Secretary of HHS to adopt national standards to facilitate the electronic exchange of information for certain financial and administrative transactions; select or establish code sets for data elements; protect the privacy of individually identifiable health information; maintain administrative, technical, and physical safeguards for the security of health information; provide unique health identifiers for individuals, employers, health plans, and health care providers; and to adopt procedures for the use of electronic signatures. Health plans, health care clearinghouses, and health care providers who transmit financial and administrative transactions electronically are required to use standardized data elements and comply with the national standards and regulations promulgated pursuant to Part C. Failure to comply with the regulations may subject the covered entity to civil or criminal penalties. Under HIPAA, the Secretary is required to impose a civil monetary penalty (CMP) on any person failing to comply with the Administrative Simplification provisions in Part C. The maximum civil money penalty (i.e., the fine) for a violation of an administrative simplification provision is $100 per violation and up to $25,000 for all violations of an identical requirement or prohibition during a calendar year. A number of procedural requirements that are relevant to the imposition of CMP's for violations of the Administrative Simplification standards are incorporated by reference in HIPAA from the general civil money penalty provision in 42 U.S.C. SS 1320a-7a. The Secretary may not initiate a CMP action "later than six years after the date" of the occurrence that forms the basis for the CMP action. The Secretary may initiate a CMP by serving notice in a manner authorized by Rule 4 of the Federal Rules of Civil Procedure (Commencement of Action). The Secretary must give written notice to the person on whom he wishes to impose a CMP and an opportunity for a determination to made "on the record after a hearing at which the person is entitled to be represented by counsel, to present witnesses, and to cross-examine witnesses against the person." Judicial review of the Secretary's determination and the issuance and enforcement of subpoenas is available in the United States Court of Appeals. A CMP may not be imposed with respect to an act that constitutes criminal disclosure of individually identifiable information "if it is established to the satisfaction of the Secretary that the person liable for the penalty did not know, and by exercising reasonable diligence would not have known, that such person violated the provisions"; or if "the failure to comply was due to reasonable cause and not to willful neglect" and is corrected within 30 days after learning of the violation. The Secretary may provide technical assistance during such period. A CMP may be reduced or waived "to the extent that the payment of such penalty would be excessive relative to the compliance failure involved." Three specific affirmative defenses bar the imposition of civil money penalties: (1) the act is a criminal offense under HIPAA's criminal penalty provision--wrongful disclosure of individually identifiable health information; (2) the covered entity did not have actual or constructive knowledge of the violation; and (3) the failure to comply was due to reasonable cause and not to willful neglect, and the failure to comply was corrected during a 30-day period beginning on the first date the person liable for the penalty knew, or by exercising reasonable diligence would have known, that the failure to comply occurred. The Office of Civil Rights (OCR) in HHS is responsible for enforcing the Privacy Rule. OCR has said that any civil penalties imposed will only affect covered entities; in other words, a member of a workforce who is not a covered entity appears not to be subject to civil sanctions by OCR. HIPAA establishes criminal penalties for any person who knowingly and in violation of the Administrative Simplification provisions of HIPAA uses a unique health identifier or obtains or discloses individually identifiable health information. Enhanced criminal penalties may be imposed if the offense is committed under false pretenses, with intent to sell the information or reap other personal gain. The penalties include (1) a fine of not more than $50,000 and/or imprisonment of not more than 1 year; (2) if the offense is "under false pretenses," a fine of not more than $100,000 and/or imprisonment of not more than 5 years; and (3) if the offense is with intent to sell, transfer, or use individually identifiable health information for commercial advantage, personal gain, or malicious harm, a fine of not more than $250,000 and/or imprisonment of not more than 10 years. These penalties do not affect any other penalties that may be imposed by other federal programs. In 2005, the Justice Department Office of Legal Counsel (OLC) addressed which persons may be prosecuted under HIPAA. Based on its reading of the plain terms of the statute, the privacy regulations, and Executive Order 13,141 (To Protect the Privacy of Protected Health Information in Oversight Investigations), OLC concluded that only a covered entity could be criminally liable "in violation of this part." Because Part C applies only to covered entities and mandates compliance only by covered entities, OLC concluded that direct liability for violations of section 1320d-6 was limited to covered entities (health plans, health care clearinghouses, those health care providers specified in the statute, and Medicare prescription drug card sponsors); and depending on the facts of a given case, certain directors, officers, and employees of these entities may be liable directly under section 1320d-6, based on general principles of corporate criminal liability. Other persons who obtain protected health information in a manner that causes a covered entity to release the information in violation of HIPAA, including recipients of protected information, may not be liable directly. The liability of persons for conduct that may not be prosecuted directly under section 1320d-6 is to be determined by principles of aiding and abetting liability under 18 U.S.C. SS 2 and of conspiracy liability under 18 U.S.C. SS 371. OLC also noted that such conduct may also be punishable under other federal laws, such as the identity theft under 18 U.S.C. SS 1028 and fraudulent access of a computer under 18 U.S.C. SS 1030. The Office of Legal Counsel also considered what the "knowingly" element of the offense requires and concluded that the "knowingly" element is best read, consistent with its ordinary meaning, to require only proof of knowledge of the facts that constitute the offense. To carry out the requirements of Part C, the HIPAA Privacy Rule, 45 C.F.R. Parts 160 and 164, was adopted as the national standard for the protection of individually identifiable health information. Enforcement of the Privacy Rule began on April 14, 2003, except that for small health plans with annual receipts of $5 million or less enforcement began April 2004. The Office of Civil Rights (OCR) in HHS is responsible for enforcing the Privacy Rule. The Centers for Medicare and Medicaid Services (CMS) has delegated authority to enforce the non-privacy HIPAA standards, including the Security Rule. Because of the explicit language of HIPAA, the Privacy Rule applies only to a specified set of "covered entities": (1) health plans, (2) health care clearinghouses, and (3) health care providers who transmit information in electronic form in connection with standard transactions governed by the Administrative Simplification provisions. Medicare prescription drug sponsors were added to the list of "covered entities" in 2003. Excluded from the definition of covered entities are employees of covered entities. Business associates of covered entities are subject to certain aspects of the Privacy Rule. The Privacy Rule applies to protected health information that is individually identifiable health information "created or received by a health care provider, health plan, or health care clearinghouse" that "[r]elates to the ... health or condition of an individual" or to the provision of or payment for health care. The HIPAA Privacy Rule governs the use and disclosure of protected health information by HIPAA-covered entities (health plans, health care providers, and health care clearinghouses). The Rule requires a covered entity to obtain the individual's written authorization for any use or disclosure of protected health information that is not for treatment, payment or health care operations or otherwise permitted or required by the Privacy Rule. A covered entity is required to disclose protected health information in two situations: (1) to individuals when they request access to or an accounting of disclosures of their protected health information; and (2) to HHS for compliance review or enforcement action. The HIPAA Privacy Rule permits use and disclosure of protected health information, without an individual's authorization or consent, for 12 national priority purposes. Regulations governing security standards under HIPAA require health care covered entities to maintain administrative, technical, and physical safeguards to ensure the confidentiality, integrity, and availability of electronic protected health information; to protect against any reasonably anticipated threats or hazards to the security or integrity of such information, as well as protect against any unauthorized uses or disclosures of such information. The Centers for Medicare and Medicaid Services (CMS) has been delegated authority to enforce the HIPAA Security Standard. Effective on February 16, 2006, the Department of Health and Human Services delegated to CMS the authority and responsibility to interpret, implement, and enforce the HIPAA Security Rule provisions; to conduct compliance reviews and investigate and resolve complaints of HIPAA Security Rule noncompliance; and to impose civil monetary penalties for a covered entity's failure to comply with the HIPAA Security Rule provisions. The Security Rule applies only to protected health information in electronic form (EPHI), and requires a covered entity to ensure the confidentiality, integrity, and availability of all EPHI the covered entity creates, receives, maintains, or transmits. Covered entities must protect against any reasonably anticipated threats or hazards to the security or integrity of such information, and any reasonably anticipated uses or disclosures of such information that are not permitted or required under the Privacy Rule; and ensure compliance by its workforce. The Security Rule allows covered entities to consider such factors as the cost of a particular security measure, the size of the covered entity involved, the complexity of the approach, the technical infrastructure and other security capabilities in place, and the nature and scope of potential security risks. The Rule establishes "standards" in three categories--administrative, physical, and technical--that covered entities must meet, accompanied by implementation specifications for each standard. The Security Rule requires covered entities to enter into agreements with business associates who create, receive, maintain or transmit EPHI on their behalf. Under such agreements, the business associate must: implement administrative, physical and technical safeguards that reasonably and appropriately protect the confidentiality, integrity and availability of the covered entity's electronic protected health information; ensure that its agents and subcontractors to whom it provides the information do the same; and report to the covered entity any security incident of which it becomes aware. The contract must also authorize termination if the covered entity determines that the business associate has violated a material term. A covered entity is not liable for violations by the business associate unless the covered entity knew that the business associate was engaged in a practice or pattern of activity that violated HIPAA, and the covered entity failed to take corrective action. On February 16, 2006, HHS published the Final Enforcement Rule, with both procedural and substantive provisions, applicable to all HIPAA administrative simplification standards in Part C. The final rule went into effect March 16, 2006. The following discussion summarizes the main provisions of the Enforcement rule. With respect to ascertaining compliance with and enforcement of the administrative simplification provisions, the Secretary of HHS is to seek the voluntary cooperation of covered entities. Enforcement and other activities to facilitate compliance include the provision of technical assistance, responding to questions, providing interpretations and guidance, responding to state requests for preemption determinations, and investigating complaints and conducting compliance reviews. The Privacy Rule permits any person to file an administrative complaint for violations. It did not create a private right of action for individuals to sue to remedy privacy violations. Individuals must direct their complaints to the HHS Office for Civil Rights (OCR) or to the covered entity. An individual may file a compliant with the Secretary if the individual believes that the covered entity is not complying with the administrative simplification provisions. Complaints to the Secretary may be filed only with respect to alleged violations occurring on or after April 14, 2003. The Secretary's investigation may include a review of the policies, procedures, or practices of the covered entity, and of the circumstances regarding the alleged acts or omissions. The Secretary is also authorized to conduct compliance reviews. According to OCR, it is conducting Privacy Rule compliance reviews only where compelling and unusual circumstances demand. Covered entities are required to provide records and compliance reports to the Secretary to determine compliance, and to cooperate with complaint investigations and compliance reviews. In cases where no violation is found, the Secretary is to inform the covered entity and the complainant in writing. In cases where an investigation or compliance review has indicated noncompliance, the Secretary is to inform the covered entity and the complainant in writing, and attempt to resolve the matter informally. If the Secretary determines that the matter cannot be resolved informally, the Secretary may issue written findings documenting the noncompliance. The covered entity has 30 days to respond to the Secretary's findings and must be given an opportunity to submit written evidence of any mitigating factors or affirmative defenses, as it proceeds to the civil monetary penalty phase. Finally, the Rule includes a provision that prohibits covered entities from threatening, intimidating, coercing, discriminating against, or taking any other retaliatory action against anyone who complains to HHS or otherwise assists or cooperates in the HIPAA enforcement process. Actions must be brought by the Secretary within six years from the date of the violation. Three specific affirmative defenses would bar the imposition of civil money penalties: (1) the violation is a criminal offense under HIPAA--wrongful disclosure of individually identifiable health information; (2) the covered entity did not have actual or constructive knowledge of the violation; or (3) the failure to comply was due to reasonable cause and not to willful neglect, and was corrected during a 30-day period beginning on the first date the person liable for the penalty knew, or by exercising reasonable diligence would have known, that the failure to comply occurred. With respect to the first two defenses, the Secretary may waive the civil money penalty if it would be excessive in relation to the violation. The Enforcement rule provides that the "Secretary will impose a civil money penalty upon a covered entity if the Secretary determines that the covered entity has violated an administrative simplification provision." The Secretary is required to provide notice of a proposed penalty to the covered entity, including the respondent a right to request a hearing within 90 days before an Administrative Law Judge. If the respondent fails to request a hearing, the Enforcement Rule states that "the Secretary will impose the proposed penalty or any lesser penalty permitted by 42 U.S.C. 1320d-5." Once a penalty has become final, the Secretary is obligated to notify the public, state, and local medical and professional organizations; state agencies administering health care programs; utilization and quality peer review organizations; and state and local licensing agencies and organizations. To determine the number of "violations" to compute the amount of the civil penalty, the Secretary is to base the decision upon the nature of the covered entity's obligation to act or not under the violated provision. The Rule also provides that HHS may consider the following aggravating or mitigating factors when determining the amount of the penalty: the nature of the violation; the circumstances under which the violation occurred; the degree of culpability; any history of prior compliance, including violations; the financial condition of the covered entity; and such "other matters as justice may require." The Secretary is authorized to settle any issue or case or to compromise any penalty. HHS refers to the DOJ for criminal investigation appropriate cases involving the knowing disclosure or obtaining of individually identifiable health information in violation of the Privacy Rule. Criminal convictions have been obtained in four cases involving employees of covered entities who improperly obtained protected health information. Three of the HIPAA criminal cases were brought after the OLC legal opinion limiting direct liability for violations to covered entities. The first case prosecuted by a U.S. Attorney's Office under the HIPAA criminal statute involved a Seattle phlebotomist employed at a cancer center who was sentenced to 16 months in prison and 3 years of supervised release in 2004 for stealing credit card information from a cancer patient, charging $9,000 worth of merchandise on it, and using that information to get credit cards in the defendant's name. The defendant was ordered to pay restitution in the amount of $15,000. The U.S. attorney's office in Seattle chose to prosecute the identity theft as a criminal HIPAA violation because the information had been collected from a patient, instead of prosecuting the defendant for identity theft. Specifically, the defendant was charged with and pled guilty to the wrongful disclosure of individually identifiable health information for economic gain in violation of 42 U.S.C. SS 1320d-6(a)(3) and (b)(3). It is notable that the defendant was not a covered entity but a member of the covered entities workforce not acting within the scope of his employment. The OLC legal opinion was issued after the defendant's conviction. In 2006, a Texas woman employed in the office of a doctor who had a contract to provide physicals and medical treatment to FBI agents was convicted of selling an FBI agent's medical records for $500. The defendant pled guilty to the federal felony offense of wrongfully using a unique health identifier intending to sell individually identifiable health information for personal gain, 42 U.S.C. SS 1320d-6(a)(1) and (b)(3), and of violating 18 U.S.C. SS2. She was sentenced to six months in jail and four months of home confinement to be followed by a two-year term of supervised release. The defendant was also ordered to pay a criminal money penalty of $100. Two aggravating factors were found by the court. First, the defendant had sold the confidential medical record, and second, the record belonged to a federal agent. The defendant was an employee of a medical clinic and improperly obtained Medicare information and other patient information for more than 1,100 clinic patients and sold that information to the owner of a medical claims business for $5 to $10 each. The information was then used by medical providers to fraudulently bill Medicare for services not rendered and equipment not supplied, resulting in a $7 million fraud to Medicare and the payment of approximately $2.5 million to providers and suppliers. The defendants were charged with conspiracy in violation of 18 U.S.C. SS 371, with computer fraud in violation of 18 U.S.C. SS 1030(a)(4)and (c)(3)(A), wrongful disclosure of individually identifiable health information in violation of 42 U.S.C. SS 1320d-6(a)(2) and (b)(3), and aggravated identity theft in violation of 18 U.S.C. SS 1028A(a)(2). Because the clinic-employer was a cooperating witness and the defendant was acting outside the scope of her lawful employment, the clinic was not charged. In January 2007, Florida defendant Machado pled guilty to conspiracy to commit computer fraud, conspiracy to commit identity theft and conspiracy to wrongfully disclose individually identifiable health information. The defendant testified against her co-defendant. The defendant was sentenced on April 27, 2007, and faced a maximum of 5 years imprisonment, $250,000 fine, and possible restitution. Defendant Machado was sentenced to 3 years probation, including 6 months of home confinement, and also ordered to pay restitution in the amount of $2,505,883. Co-defendant Ferrer, owner of the medical claims business, was convicted by a jury of all eight counts (one count of conspiring to defraud the United States, one count of computer fraud, one count of wrongful disclosure of individually identifiable health information, and five counts of aggravated identity theft). Defendant Ferrer was also sentenced on April 27, 2007, and faced a maximum statutory term of imprisonment of 5 years on the conspiracy count; a maximum statutory term of imprisonment of 5 years on the computer fraud count; a maximum statutory term of imprisonment of 10 years on the wrongful disclosure of individually identifiable health information count; and a maximum statutory term of imprisonment of 2 years on each count of aggravated identity theft. Ferrer was sentenced to 87 months in prison, 3 years of supervised release, and ordered to pay restitution in the amount of $2,505,883. According to DOJ, this is the first HIPAA violation case that has gone to trial. The two other cases resulted in guilty pleas. The defendant, a licensed practical nurse at the time of the crime, pleaded guilty in April, 2008 to wrongfully disclosing individually identifiable health information for personal gain, a violation of the health information privacy provisions of HIPAA. On December 3, 2008, the defendant was sentenced to two years probation including 100 hours of community service. According to recently released data from HHS, from April 2003, when enforcement of the Privacy Rule began, to December 31, 2008, approximately 41,107 health information privacy complaints were filed with HHS. In 23,466 cases, HHS did not find enforcement authority under HIPAA. HHS found authority to investigate and resolve 7,729 cases. In those cases, HHS obtained changes in the investigated entity's privacy practices or other corrective actions. HHS found no violation of the Privacy Rule in 3,858 cases. Almost 6,054 cases remained unresolved. According to HHS, the compliance issues most frequently investigated were for impermissible use or disclosure of protected health information, lack of adequate safeguards for protected health information, lack of patient access to his or her protected health information, the disclosure of more information than is minimally necessary to satisfy a particular request for information, and failure to have an individual's authorization for a disclosure that requires one. The covered entities most commonly required to take corrective action by HHS, in order of frequency, include private practices, general hospitals, outpatient facilities, health plans, and pharmacies. According to its enforcement website, HHS did not report any civil penalties during the five-year period of 2003-2008. HHS reported that more than 448 cases were referred by HHS to DOJ for criminal investigation of knowing disclosure or access to protected health information in violation of the Privacy Rule. An additional 285 cases were referred to the Centers for Medicare and Medicaid Services (CMS) for investigation of cases that involve a potential violation of the HIPAA Security Rule. Although information on criminal convictions was not reported by HHS, criminal convictions were obtained in four cases involving employees of covered entities who improperly obtained protected health information. Concerns have been raised by some that the HIPAA Privacy Rule is being underenforced by the U.S. Departments of Health and Human Services (HHS) and Justice (DOJ). Privacy advocates have been critical of HHS' enforcement of the HIPAA Privacy Rule which has focused on technical assistance and voluntary cooperation for the covered entity with HHS. According to HHS, several factors contribute to the number of enforcement actions taken by it for violations of the HIPAA Privacy Rule. First is HHS's preference for voluntary compliance, corrective action, and/or resolution agreement. Second, HIPAA applies only to certain groups, defined as covered entities, health plans, health care clearinghouses, and health care providers who transmit financial and administrative transactions electronically. HIPAA does not cover all types of entities that maintain personal health information (e.g., life insurers, employers, workers compensation carriers, schools and school districts, state agencies such as child protective service agencies, law enforcement agencies, and municipal offices). Third, HIPAA does not cover of all types of health transactions. Fourth, the statute does not create a private right of action, but rather public enforcement by HHS and DOJ. Fifth, the complained-of activity might not be a violation of the Privacy Rule. In July 2008, the first time since the Privacy Rule went into effect in 2003, HHS required a resolution agreement from a covered entity (a contract signed by HHS and the covered entity) for violations of the HIPAA Privacy and Security Rules. HHS entered into a resolution agreement with Providence Health & Services requiring the covered entity to pay $100,000 and to implement a corrective action plan to safeguard identifiable electronic patient information to settle potential violations of the HIPAA Privacy and Security Rules. In this case the violations involved the loss of backup tapes and theft of laptops containing individually identifiable health information. The Centers for Medicare & Medicaid Services (CMS) is the agency within HHS that is responsible for enforcing the HIPAA Security Rule. In October 2008, the HHS inspector general released a report on the results of his audit to evaluate the effectiveness of CMS's oversight and enforcement of covered entities' implementation of the HIPAA Security Rule. Inspector General Daniel R. Levinson concluded that CMS had taken limited actions to ensure that covered entities adequately implement the HIPAA Security Rule. These actions had not provided effective oversight or encouraged enforcement of the HIPAA Security Rule by covered entities. Although authorized to do so by Federal regulations as of February 16,2006, CMS had not conducted any HIPAA Security Rule compliance reviews of covered entities. To fulfill its oversight responsibilities, CMS relied on complaints to identify any noncompliant covered entities that it might investigate. As a result, CMS had no effective mechanism to ensure that covered entities were complying with the HIPAA Security Rule or that ePHI was being adequately protected. Although CMS did not agree with those findings, the inspector general recommended that CMS establish policies and procedures for conducting HIPAA Security Rule compliance reviews of covered entities.

The privacy and security of health information is recognized as a critical element of transforming the health care system through the use of health information technology. As part of H.R. 1, the American Recovery and Reinvestment Act of 2009, the 111th Congress is considering legislation to promote the widespread adoption of health information technology which includes provisions dealing with the privacy and security of health records. For further information, see CRS Report RS22760, Electronic Personal Health Records, by [author name scrubbed]. P.L. 104-191, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), directed HHS to adopt standards to facilitate the electronic exchange of health information for certain financial and administrative transactions. Health plans, health care clearinghouses, and health care providers are required to use standardized data elements and comply with the national standards and regulations. Failure to do so may subject the covered entity to penalties. The HIPAA Privacy Rule was adopted by HHS as the national standard for the protection of health information. It regulates the use and disclosure of protected health information by health plans, health care clearinghouses, and health care providers who transmit financial and administrative transactions electronically; establishes a set of basic consumer protections; permits any person to file an administrative complaint for violations; and authorizes the imposition of civil or criminal penalties. Enforcement of the Privacy Rule began in 2003. The HIPAA Security Rule was adopted by HHS as the national standard for the protection of electronic health information. It requires covered entities to maintain administrative, technical, and physical safeguards to ensure the confidentiality, integrity, and availability of electronic protected health information; to protect against any reasonably anticipated threats or hazards to the security or integrity of such information, as well as protect against any unauthorized uses or disclosures of such information. The Centers for Medicare and Medicaid Services (CMS) has been delegated authority to enforce the HIPAA Security Standard, effective February 16, 2006. On March 16, 2006, the Final HIPAA Administrative Simplification Enforcement Rule became effective. The Enforcement Rule has both procedural and substantive provisions, and is applicable to all HIPAA administrative simplification standards. The Enforcement Rule establishes procedures for the imposition of civil money penalties for violations of the rules. Lawmakers and others are examining the statutory and regulatory framework for enforcement of the HIPAA Privacy and Security standards, and ways to ensure that agencies use their enforcement authority under HIPAA to address improper uses and disclosures of protected health information. Concerns have been raised by some that the HIPAA Privacy and Security Rules are being under enforced by HHS, DOJ, and CMS. Of approximately 41,107 health information privacy complaints filed with HHS since 2003, HHS found authority to investigate and resolve 7,729 cases. Criminal convictions have been obtained by DOJ in four cases involving employees of covered entities who improperly obtained protected health information. Since February 2006, CMS has not conducted any HIPAA Security Rule compliance reviews. This report provides an overview of the HIPAA Privacy and Security Rules, and of the statutory and regulatory enforcement scheme. In addition, it summarizes enforcement activities by HHS, DOJ, and CMS. This report will be updated.

Since 2007, the Supreme Court has ruled on two separate occasions that the Clean Air Act authorizes the Environmental Protection Agency (EPA) to set standards for emissions of greenhouse gases (GHGs). In the first case, Massachusetts v. EPA , the Court held that GHGs are air pollutants within the Clean Air Act's definition of that term and that EPA must regulate their emissions from motor vehicles if the agency found that such emissions cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare. In the second case, American Electric Power, Inc. v. Connecticut , the Court held that corporations cannot be sued for GHG emissions under federal common law, because the Clean Air Act delegates the management of carbon dioxide and other GHG emissions to EPA: "... Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants; the delegation is what displaces federal common law." GHGs are a disparate group of pollutants --the most significant of them being carbon dioxide (CO 2 ). According to a widely held scientific consensus, these gases trap the sun's energy in the Earth's atmosphere and contribute to climate change. In 2009, the House passed comprehensive legislation that would have limited numerous elements of EPA's existing authority over GHGs, substituting economy-wide cap-and-trade systems to reduce GHG emissions. Companion legislation emerged from committee in the Senate, but failed to reach the floor. Since then, Congress has made no serious effort to revive the legislation. Instead, in the 112 th -114 th Congresses, attention to the issue has focused on various bills to repeal or limit EPA's authority over GHG emissions without providing a substitute. Meanwhile, EPA has taken action, using its existing Clean Air Act (CAA) authority: In April 2010, then-EPA-Administrator Lisa Jackson signed final regulations that required auto manufacturers to limit emissions of GHGs from new Model Year (MY) 2012-2016 cars and light trucks. Effective in January 2011, EPA began requiring new and modified major stationary sources to undergo pre-construction review under the Prevention of Significant Deterioration/New Source Review (PSD/NSR) program with respect to their GHG emissions in addition to any other pollutants subject to CAA regulation that they emit. This review requires affected new and modified sources to obtain permits and install Best Available Control Technology (BACT) to address their GHG emissions. At the same time, EPA began requiring large existing stationary sources of GHG emissions (in addition to new sources) to obtain operating permits under Title V of the Clean Air Act (or have existing permits modified to include their GHG emissions). In September 2011, EPA promulgated GHG emission standards for MY2014-2018 medium- and heavy-duty trucks. In October 2012, EPA promulgated a second round of GHG emission standards for cars and light trucks, applicable to MY2017-2025 vehicles. In July 2015, EPA proposed a second round of GHG emission standards for medium- and heavy-duty trucks, applicable to MY2021-2027 trucks and engines, and MY2018 and later trailers. In August 2015, EPA promulgated emission standards for new and existing fossil-fueled electric generating units (EGUs) under Section 111 of the Clean Air Act. EPA's potential regulation of GHG emissions (particularly from stationary sources) has led many in Congress to suggest that the agency delay taking action or be stopped from proceeding. In each Congress since the 111 th , bills have been introduced to rescind or limit EPA's greenhouse gas authority. Early on, EPA attempted to respond to congressional and stakeholder concerns by clarifying the direction and schedule of its actions. The agency provided three clear responses to implementation issues as it was taking the first regulatory actions described above: The first came on March 29, 2010, when the Administrator reinterpreted a 2008 memorandum concerning the effective date of the stationary source permit requirements. Facing a possibility of having to begin the permitting process on April 1, 2010 (the date the first GHG standard for automobiles was finalized), the March 29 decision delayed for nine months (to January 2, 2011) the date on which EPA would consider stationary source GHGs to be subject to regulation, and thus subject to the permitting requirements of PSD/NSR and Title V. On May 13, 2010, the Administrator signed the GHG "Tailoring" Rule, which provided for a phasing in of Title V and PSD/NSR permitting requirements, so that only a limited number of very large sources would initially have to meet requirements. On November 10, 2010, EPA released a package of guidance and technical information to assist local and state permitting authorities in implementing PSD and Title V permitting for greenhouse gas emissions. The EPA Administrator and the President also repeatedly expressed their preference for Congress to take the lead in designing a GHG regulatory system. However, EPA simultaneously stated that, in the absence of congressional action, it must proceed to regulate GHG emissions: the April 2007 Supreme Court decision in Massachusetts v. EPA compelled EPA to address whether GHGs were air pollutants that endanger public health and welfare, and if it found they were, to embark on a regulatory course prescribed by statute. Having made an affirmative decision in response to the endangerment question, EPA proceeded with regulations. Thus, EPA and many Members of Congress have been on a collision course. EPA is proceeding to regulate emissions of GHGs under the Clean Air Act, as it maintains it must. Opponents of this effort in Congress continue to explore approaches to alter the agency's course. The President has made clear that he intends to take action to control GHG emissions. In his second inaugural address, he promised to "respond to the threat of climate change." He has reiterated his determination to address the issue in multiple State of the Union addresses. In June 2013, he directed EPA to propose New Source Performance Standards for greenhouse gas emissions from new fossil-fueled power plants by September 20, 2013, and to propose guidelines for existing power plants by June 1, 2014. EPA met both of these deadlines and finalized the power plant rules in August 2015--leaving Congress to consider whether and how best to respond. This report discusses elements of this controversy, providing background on stationary sources of greenhouse gas pollution and identifying options Congress has if it chooses to address the issue. The report discusses four sets of options: (1) resolutions of disapproval under the Congressional Review Act; (2) freestanding legislation directing, delaying, or prohibiting EPA action; (3) the use of appropriations bills as a vehicle to influence EPA activity; and (4) amendments to the Clean Air Act, including legislation to establish a new GHG control regime. The report considers each of these in turn, but first provides additional detail regarding the sources of GHG emissions, the requirements of the Clean Air Act, and a brief description of the two rules that would limit power plant GHG emissions. Although this report focuses on Congress and the Executive Branch, there is, of course, a third branch of government, the judiciary, which continues to be involved in the issues discussed here. The courts have upheld EPA's regulations related to GHG emissions from motor vehicles. The Supreme Court has issued a stay, however, of the Clean Power Plan, EPA's August 2015 regulations governing GHG emissions from existing fossil-fueled power plants. Challenges to both EPA power plant rules are proceeding in the U.S. Court of Appeals for the D.C. Circuit, with the potential for appeals thereafter to the Supreme Court. Stationary sources are the major sources of the country's GHG emissions. As shown in Figure 1 , 64% of U.S. emissions of greenhouse gases comes from stationary sources (the remainder comes from mobile sources, primarily cars and trucks, and from agriculture, which has elements in both the stationary and mobile source groups). If EPA (or Congress) is to embark on a serious effort to reduce greenhouse gas emissions, stationary sources, and in particular large stationary sources such as power plants, will have to be included. The substantial amount of greenhouse gas emissions emanating from stationary source categories is even more important from a policy standpoint: reducing greenhouse gas emissions from these sources is likely to be more timely and cost-effective than attempts to reduce emissions from the transport sector. A relatively small number of stationary sources (a few thousand power plants, for example) account for a large percentage of total emissions, making regulation easier to administer and enforce. By contrast, there are more than 200 million sources in the fleet of cars and trucks. EPA has no legal authority to impose more stringent standards on these existing vehicles. Even for new vehicles, standards have to be phased in: the manufacturers can't be expected to develop new vehicle designs and engines for every model simultaneously. The fleet of vehicles turns over slowly. Thus, although new vehicles will be required to reduce GHG emissions by about 50% in Model Year 2025 and later vehicles, it will be 2040 or later before the full effect of that requirement is felt. Existing power plants and other stationary sources--although not easily modified--are somewhat more amenable to changes than mobile sources: fuel sources can be switched; processes can be made more efficient, reducing fuel consumption; and demand for power can be modified through a variety of measures. Section 111 of the Clean Air Act provides authority for EPA to impose performance standards on stationary sources of air pollution directly in the case of new (or modified) stationary sources (Section 111(b)), and through the states in the case of existing sources (Section 111(d)). Because power plants and other stationary sources are the largest sources of GHG emissions, EPA has begun the process of regulating their emissions through the two authorities. New Source Performance Standards (NSPS) are emission limitations imposed on designated categories of new (or substantially modified) stationary sources of air pollution. A new source is subject to NSPS regardless of its location or ambient air conditions. The authority to impose performance standards on new and modified sources refers to any category of sources that the Administrator judges "causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare" (Sec. 111(b)(1)(A))--language similar to the endangerment and cause-or-contribute findings EPA promulgated for new motor vehicles in December 2009. In establishing these standards, Section 111 gives EPA considerable flexibility with respect to the source categories regulated, the size of the sources regulated, the particular gases regulated, along with the timing and phasing-in of regulations (Section 111(b)(2)). This flexibility extends to the stringency of the regulations with respect to costs, and secondary effects, such as non-air-quality, health and environmental impacts, along with energy requirements (Section 111(a)(1)). This flexibility is encompassed within the Administrator's authority to determine what control systems have been "adequately demonstrated" (Section 111(a)(1)). (For discussion of what is meant by the term "adequately demonstrated," see CRS Report R43127, EPA Standards for Greenhouse Gas Emissions from New Power Plants .) Standards of performance developed by the states for existing sources under Section 111(d) can be similarly flexible. EPA first proposed NSPS for fossil-fueled electric generating units (EGUs) on April 13, 2012. After receiving more than 2.5 million public comments, the most on any proposed rule in EPA's 40-year history up to that time --and in response to a Presidential directive --the agency withdrew the 2012 proposal and proposed a somewhat modified version of the rule on January 8, 2014. In addition, the President directed the agency to propose guidelines for existing EGUs under Section 111(d) by June 1, 2014, with final action one year later. The agency finalized both rules on August 3, 2015. The standards for new sources limit GHG emissions from both coal-fired and natural-gas-fired EGUs. Gas-fired plants are able to meet the standard without add-on emission controls, but coal-fired plants (which generate carbon dioxide (CO 2 ) at a rate at least double that of new combined cycle natural gas plants) would need to reduce CO 2 emissions by roughly 20% as compared to the best performing U.S. coal-fired power plants currently in operation in order to meet the NSPS standard. Achieving this would require the installation of partial carbon capture and storage systems at new coal-fired plants, an expensive technology not yet commercially demonstrated on a large U.S. coal-fired EGU. EPA states that this technology will soon be demonstrated by plants currently under construction, and that the rule will provide the certainty needed to stimulate the technology's further development; but many view EPA's rule as effectively prohibiting the construction of new coal-fired power plants. As a result, many in Congress have expressed interest in blocking this EPA regulatory action. The standards for existing EGUs, which EPA calls the "Clean Power Plan" (CPP), would set state-specific goals for CO 2 emissions from power generation. In the CPP, EPA established different goals for each state based on three "building blocks": improved efficiency at coal-fired power plants; substitution of natural gas combined cycle generation for coal-fired power; and zero-emission power generation (from increased renewable or nuclear power). Two sets of goals were promulgated: an interim set, which would apply to the average emissions rate in a state in the 2022-2029 time period; and a final set for the years 2030 and beyond. Under the rule, the states are required to develop plans to reach their goal using whatever combination of measures they choose, but it would be difficult to reach the goals without reducing emissions from coal-fired power plants. (For additional information on the Clean Power Plan see CRS Report R44341, EPA's Clean Power Plan for Existing Power Plants: Frequently Asked Questions .) As noted earlier, if Congress favors a different approach to GHG controls than those on which EPA has embarked, including stopping the agency in its tracks, at least four sets of options are available to change the agency's course: the Congressional Review Act; freestanding legislation; appropriations riders; and amendments to the Clean Air Act. Among the most widely discussed options has been the Congressional Review Act. The Congressional Review Act (CRA, 5 U.S.C. SSSS801-808), enacted in 1996, establishes special congressional procedures for disapproving a broad range of regulatory rules issued by federal agencies. Before any rule covered by the act can take effect, the federal agency that promulgates the rule must submit it to both houses of Congress and the Government Accountability Office (GAO). If Congress passes a joint resolution disapproving the rule under procedures provided by the act, and the resolution becomes law, the rule cannot take effect or continue in effect. Also, the agency may not reissue either that rule or any substantially similar one, except under authority of a subsequently enacted law. The CRA has been much discussed as a tool for overturning EPA's regulatory actions on GHG emissions. In the 111 th Congress, on December 15, 2009, four identical resolutions were introduced to disapprove the first of EPA's GHG rules, the endangerment finding--one in the Senate ( S.J.Res. 26 ) and three in the House ( H.J.Res. 66 , H.J.Res. 76 , and H.J.Res. 77 ). Of the four, one ( S.J.Res. 26 ) proceeded to a vote: on June 10, 2010, the Senate voted 47-53 not to take up the resolution. The path to enactment of a CRA resolution is a steep one. In the nearly two decades since the CRA was enacted, only one resolution has ever been enacted. The path is particularly steep if the President opposes the resolution's enactment, which is the case with resolutions disapproving EPA rules for GHG emissions. The Obama Administration has made the reduction of GHG emissions one of its major goals; any legislation restricting EPA's authority to act, if passed by Congress, is likely to encounter a presidential veto. Overriding a veto requires a two-thirds majority in both the House and Senate. The potential advantage of the Congressional Review Act lies primarily in the procedures under which a resolution of disapproval is to be considered in the Senate. Pursuant to the act, an expedited procedure for Senate consideration of a disapproval resolution may be used at any time within 60 days of Senate session after the rule in question has been published in the Federal Register and received by both houses of Congress. The expedited procedure provides that, if the committee to which a disapproval resolution has been referred has not reported it by 20 calendar days after the rule has been received by Congress and published in the Federal Register , the panel may be discharged if 30 Senators submit a petition for that purpose. The resolution is then placed on the Calendar. Under the expedited procedure, once a disapproval resolution is on the Senate Calendar, a motion to proceed to consider it is in order. Several provisions of the expedited procedure protect against various potential obstacles to the Senate's ability to take up a disapproval resolution. The Senate has treated a motion to consider a disapproval resolution under the CRA as not debatable, so that this motion cannot be filibustered through extended debate. After the Senate takes up the disapproval resolution itself, the expedited procedure of the CRA protects the ability of the body to continue and complete that consideration. It limits debate to 10 hours and prohibits amendments. The Congressional Review Act sets no deadline for final congressional action on a disapproval resolution, so a resolution could theoretically be brought to the Senate floor even after the expiration of the deadline for the use of the CRA's expedited procedures. To obtain floor consideration, the bill's supporters would then have to follow the Senate's normal procedures, however. Similarly, a resolution could reach the House floor through its ordinary procedures, that is, generally by being reported by the committee of jurisdiction (in the case of CAA rules, the Energy and Commerce Committee). If the committee of jurisdiction does not report a disapproval resolution submitted in the House, a resolution could still reach the floor pursuant to a special rule reported by the Committee on Rules (and adopted by the House), by a motion to suspend the rules and pass it (requiring a two-thirds vote), or by discharge of the committee (requiring a majority of the House [218 Members] to sign a petition). The CRA establishes no expedited procedure for further congressional action on a disapproval resolution if the President vetoes it. In such a case, Congress would need to attempt an override of a veto using its normal procedures for considering vetoed bills. In December 2015, Congress passed and sent to the President two resolutions of disapproval under the CRA: S.J.Res. 23 , which would disapprove the New Source Performance Standards for power plants promulgated by EPA on August 3, 2015, and S.J.Res. 24 , which would disapprove the emission guidelines for existing power plants, also promulgated by EPA on August 3, 2015. The President vetoed both resolutions on December 18. As of April, 2016, neither the House nor the Senate has attempted to override the President's vetoes. For additional information on the Congressional Review Act, see CRS In Focus IF10023, The Congressional Review Act (CRA) , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. To provide for a more nuanced response to the issue than permitted under the CRA, Members have introduced freestanding legislation or legislation that amends the Clean Air Act in a targeted way. More than a dozen bills (and several amendments) have been introduced in the 113 th and 114 th Congresses that would prohibit temporarily or permanently EPA's regulation of greenhouse gas emissions. These bills have faced the same obstacle as a CRA resolution of disapproval (i.e., being subject to a presidential veto); in addition, they would likely need 60 votes to be considered on the Senate floor. On June 24, 2015, the House passed Representative Whitfield's H.R. 2042 , the Ratepayer Protection Act of 2015, 247-180. The bill would delay the compliance date of GHG emission standards for existing EGUs (including the date by which states must submit implementation plans) until after the completion of judicial review of any aspect of the rule--a provision now rendered largely moot by the Supreme Court's issuance of a stay on February 9, 2016. It would also allow a state to opt out of compliance if the governor determines that the rule would have an adverse effect on rate-payers or have a significant adverse effect on the reliability of the state's electricity system. A Senate bill, Senator Capito's S. 1324 , was reported by the Environment and Public Works Committee on October 29, 2015. In addition to provisions similar to those of H.R. 2042 , S. 1324 would prohibit EPA from regulating under Section 111(d) any category of existing sources regulated under Section 112, the hazardous air pollutant section of the act. Power plants are regulated under the Mercury and Air Toxics Standards, promulgated by EPA under Section 112 in 2012. The bill would also revoke the Clean Power Plan and NSPS for power plants, would establish separate categories for coal-fired and natural-gas-fired units, and would prohibit EPA from promulgating or implementing GHG emission standards for new, modified, or reconstructed units in each of those categories until at least six power plants representative of the operating characteristics of electric generation units at different locations across the United States have demonstrated compliance with proposed emission limits for a continuous period of 12 months on a commercial basis. Projects demonstrating the feasibility of carbon capture and storage that received government funding or financial assistance could not be used in setting such standards. Given the role of the U.S. Department of Energy in financing demonstrations of clean coal technology and the cost of developing new emissions control technologies not required by regulation, the bill would effectively prohibit EPA from promulgating New Source Performance Standards for GHG emissions from EGUs. The agency's now-promulgated NSPS sets a standard that no coal-fired EGU in the United States currently meets, and it relies on technology that is being implemented with financial assistance from the Department of Energy. A separate category would be established for units burning low rank coals, with any NSPS for the category to be based on similar requirements achieved by at least three units. Before issuing, implementing, or enforcing a GHG emission rule for power plants, the Administrator would also be required under the Senate bill to submit a report to Congress describing the quantity of GHG emissions that the rule is projected to reduce as compared to overall domestic and global GHG emissions and meet other, including state-specific, requirements. Other bills introduced in the 114 th Congress would exclude GHGs from the CAA definition of "air pollutant" ( H.R. 3880 ), impose requirements for cost-benefit analysis of GHG rules ( H.R. 3015 ), and prevent EPA from using funds to enforce the Clean Power Plan or any cap-and-trade program ( H.R. 3626 ), among other provisions. In the 113 th Congress, more than a dozen bills addressing EPA's GHG regulatory authority were introduced. Among these, H.R. 3826 , the Electricity Security and Affordability Act, passed the House March 6, 2014, and was also included in House-passed H.R. 2 , later in the that Congress. It addressed the New Source Performance Standards proposed by EPA, rather than the standards for existing power plants. It had provisions similar to those described above in S. 1324 in the 114 th Congress, regarding the degree to which a system of emission reduction would have to have been demonstrated before EPA could promulgate an emission standard based on its use. In addition, it would have required that the standards not take effect unless Congress enacted new legislation setting an effective date. Although the bill passed the House, it was not considered in the Senate. In the 112 th Congress, attention focused on several bills that passed the House and/or were considered in the Senate. Several of these bills would have delayed any action by EPA under the Clean Air Act with regard to stationary sources for a period of two years. Three such bills were voted on in April 2011 (as amendments to other Senate legislation)-- S.Amdt. 215 , S.Amdt. 236 , and S.Amdt. 277 --and were not agreed to, by lopsided margins. Legislation that received broader support in the 112 th Congress, H.R. 910 / S. 482 , was introduced by Chairman Upton of the House Energy and Commerce Committee and Senator Inhofe, then-ranking Member of the Senate Environment and Public Works Committee. It would have permanently removed EPA's authority to regulate greenhouse gases. The House version passed, 255-177, April 7, 2011. In the Senate, Senator McConnell introduced language identical to the bill as an amendment to S. 493 ( S.Amdt. 183 ). The amendment was not agreed to, on a vote of 50-50, April 6, 2011. The Upton-Inhofe-McConnell bill would have repealed a dozen EPA greenhouse-gas-related regulations, including the Mandatory Greenhouse Gas Reporting rule, the Endangerment Finding, and the PSD and Title V permitting requirements. It would have redefined the term "air pollutant" to exclude greenhouse gases. And it stated that EPA may not "promulgate any regulation concerning, take action related to, or take into consideration the emission of a greenhouse gas to address climate change." The bill would have had no effect on federal research, development, and demonstration programs. The already promulgated light-duty motor vehicle GHG standards and the GHG emission standards for Medium- and Heavy-Duty Engines and Vehicles would have been allowed to stay in effect, but no future mobile source rules for GHG emissions would have been allowed. Also, EPA would have been prohibited from granting another California waiver (under Section 209(b) of the Clean Air Act) for greenhouse gas controls from mobile sources. A third option that Congress has used to delay regulatory initiatives is to place an amendment, or "rider" on the agency's appropriation bill to prevent funds from being used for the targeted initiative. In comparison to a CRA resolution of disapproval or freestanding legislation, addressing the issue through an amendment to the EPA appropriation--an approach that has been discussed at some length since 2009--may be considered easier. The overall appropriation bill to which it would be attached would presumably contain other elements that would make it more difficult to veto. This approach has been considered in every session of Congress since 2010. House appropriations riders considered during this time would have prohibited EPA (during the one-year period following enactment) from proposing or promulgating New Source Performance Standards for GHG emissions from electric generating units and refineries; declared any statutory or regulatory GHG permit requirement to be of no legal effect; prohibited common law or civil tort actions related to greenhouse gases or climate change, including nuisance claims, from being brought or maintained; prohibited the preparation, proposal, promulgation, finalization, implementation, or enforcement of regulations governing GHG emissions from motor vehicles manufactured after model year 2016, or the granting of a waiver to California so that it might implement such standards; and prohibited EPA from requiring the issuance of permits for GHG emissions from livestock and prohibited requiring the reporting of GHG emissions from manure management systems. Throughout this period, the only riders affecting EPA's GHG regulatory authority that have been enacted have dealt with the potential regulation of agricultural sources of GHGs. The FY2016 appropriation and every previous EPA appropriation since FY2010 have included such provisions: Section 417, in Title IV of Division G of P.L. 114-113 provides that "none of the funds made available in this Act or any other Act may be used to promulgate or implement any regulation requiring the issuance of permits under title V of the Clean Air Act ... for carbon dioxide, nitrous oxide, water vapor, or methane emissions resulting from biological processes associated with livestock production." Section 418 prohibits the use of funds to implement mandatory reporting of GHG emissions from manure management systems. The most comprehensive approach that Congress could take to alter EPA's course would be to amend the Clean Air Act to modify EPA's current regulatory authority as it pertains to GHGs or to provide alternative authority to address the GHG emissions issue. In the 111 th Congress, this was the option chosen by the House in passing H.R. 2454 , the American Clean Energy and Security Act (the Waxman-Markey bill) and by the Senate Environment and Public Works Committee in its reporting of S. 1733 , the Clean Energy Jobs and American Power Act (the Kerry-Boxer bill). The bills would have amended the Clean Air Act to establish an economy-wide cap-and-trade program for GHGs, established a separate cap-and-trade program for hydrofluorocarbons (HFCs), preserved EPA's authority to regulate GHG emissions from mobile sources while setting deadlines for regulating specific mobile source categories, and required the setting of New Source Performance Standards for uncapped major sources of GHGs. While giving EPA new authority, both bills contained provisions to limit EPA's authority to set GHG standards or regulate GHG emissions under Sections 108 (National Ambient Air Quality Standards), 112 (Hazardous Air Pollutants), 115 (International Air Pollution), 165 (PSD/NSR), and Title V (Permits) because of the climate effects of these pollutants. The bills would not have prevented EPA from acting under these authorities if one or more of these gases proved to have effects other than climate effects that endanger public health or welfare. The bills differed in the extent of their exemptions from the permitting requirements of the PSD and Title V programs. H.R. 2454 would have prevented new or modified stationary sources from coming under the PSD/NSR program solely because they emit GHGs. In contrast, the Senate bill would have simply raised the threshold for GHG regulation under PSD from the current 100 or 250 short tons to 25,000 metric tons with respect to any GHG, or combination of GHGs. Likewise, with respect to Title V permitting, H.R. 2454 would have prevented any source (large or small) from having to obtain a state permit under Title V solely because they emit GHGs. In contrast, the exemption under the Senate bill was restricted to sources that emit under 25,000 metric tons of any GHG or combination of GHGs. Amending the Clean Air Act to revoke some existing regulatory authority as it pertains to GHGs while establishing new authority designed specifically to address their emissions is the approach that was advocated by the Administration and, indeed, by many participants in the climate debate regardless of their position on EPA's regulatory initiatives. However, the specifics of a bill acceptable to a majority would be challenging to craft. In some respects, EPA's greenhouse gas decisions are similar to actions it has taken previously for other pollutants. Beginning in 1970, and reaffirmed by amendments in 1977 and 1990, Congress gave the agency broad authority to identify pollutants and to proceed with regulation. Congress did not itself identify the pollutants to be covered by National Ambient Air Quality Standards (NAAQS); rather, it told the agency to identify pollutants that are emitted by "numerous or diverse" sources, and the presence of which in ambient air "may reasonably be anticipated to endanger public health or welfare" (CAA Section 108(a)(1)). EPA has used this authority to regulate six pollutants or groups of pollutants, the so-called "criteria pollutants." EPA also has authority under other sections of the act--notably Sections 111 (New Source Performance Standards), 112 (Hazardous Air Pollutants), and 202 (Motor Vehicle Emission Standards)--to identify pollutants on its own initiative and promulgate emission standards for them. Actions with regard to GHGs follow these precedents and can use the same statutory authorities. The differences are of scale and of degree. Greenhouse gases are global pollutants to a greater extent than most of the pollutants previously regulated under the act; reductions in U.S. emissions without simultaneous reductions by other countries may somewhat diminish but will not solve the problems the emissions cause. Also, GHGs are such pervasive pollutants, and arise from so many sources, that reducing the emissions may have broader effects on the economy than most previous EPA regulations. These and other considerations have led many in Congress to try to prevent EPA from using its general authority to control GHG emissions. If the rules are to be overturned during the remainder of the Obama Administration, there are two arenas in which to do so: the courts and the Congress. Opponents of the regulations have not prevailed in either venue, thus far, although the Supreme Court has stayed EPA's implementation of the Clean Power Plan pending the resolution of court challenges to the rule. In the courts, several of EPA's early GHG-related actions, in 2009 and 2010, survived challenges in 95 consolidated petitions for review in the D.C. Circuit. The Supreme Court agreed to review only a narrow question raised by this ruling--whether EPA's regulation of GHG emissions from motor vehicles triggered CAA permitting requirements for GHG emissions from stationary sources as well--leaving the remainder of the D.C. Circuit decision intact. When the Supreme Court ruled on this one issue, in 2014, it gave EPA most of what it wanted, allowing it to require such permitting for GHG emitters who would be subject to permit requirements anyway because of other pollutants they emit. In contrast to this record, petitioners may have better chances in the litigation that has been filed against EPA's rules for new and existing power plants. That is one interpretation of the Supreme Court's unprecedented stay of the Clean Power Plan, issued in February 2016. Until now, opponents in Congress have been unable to overturn most of EPA's GHG actions. With new congressional majorities in the 114 th Congress, legislation to overturn EPA's rulemaking has had easier going than in previous Congresses. But the legislation still faces two important obstacles: the filibuster rule in the Senate and the likelihood of presidential vetoes. Whether either obstacle can be overcome depends on the specifics of the bills in question. While any congressional action to overturn EPA's GHG regulations will face challenges, most analysts expect riders to appropriation bills to have the best odds of success.

In August 2015, the Environmental Protection Agency (EPA) promulgated standards to limit emissions of greenhouse gases (GHGs) from both new and existing fossil-fueled electric power plants. Because of the importance of electric power to the economy and its significance as a source of GHG emissions, the EPA standards have generated substantial interest. The economy and the health, safety, and well-being of the nation are affected by the availability of a reliable and affordable power supply. Many contend that that supply would be adversely impacted by controls on GHG emissions. At the same time, an overwhelming scientific consensus has formed around the need to slow long-term global climate change. The United States is the second largest emitter of greenhouse gases, behind only China, and power plants are the source of about 30% of the nation's anthropogenic GHG emissions. If the United States is to reduce its total GHG emissions, as the President has committed to do, it will be important to reduce emissions from these sources. Leaders of both the House and Senate in the 114th Congress have stated their opposition to GHG emission standards, so Congress has considered several bills to prevent EPA from implementing the promulgated rules. Such legislation could take one of several forms: 1. a resolution (or resolutions) of disapproval under the Congressional Review Act; 2. freestanding legislation; 3. the use of appropriations bills as a vehicle to influence EPA activity; or 4. amendments to the Clean Air Act. Following promulgation of the power plant GHG standards, Congress passed and sent to the President S.J.Res. 23 and S.J.Res. 24, joint resolutions disapproving the standards for both new and existing power plants under the Congressional Review Act. The President vetoed both resolutions on December 18, 2015. Earlier, the House passed H.R. 2042, which would delay the compliance date of GHG emission standards for electric generating units and would allow a state to opt out of compliance if the governor determines that the rule would have an adverse effect on rate-payers or have a significant adverse effect on the reliability of the state's electricity system. The Senate Environment and Public Works Committee has reported a bill with similar (and additional) provisions, S. 1324, but as of this writing the full Senate has not acted on it. This report discusses elements of the GHG controversy, providing background on stationary sources of GHG emissions and providing information regarding the options Congress has at its disposal to address GHG issues.

RS20678 -- Hate Crimes: Sketch of Selected Proposals and Congressional Authority Updated May 17, 2002 S. 625 , the Local Law Enforcement Enhancement Act of 2001, introduced by Senator Kennedy on March 27, 2001, has 50 cosponsors; its companionin the House, H.R. 1343 , the local Law Enforcement Hate Crimes Prevention Act of 2001, introduced byRepresentative Conyers, has over 180cosponsors. They are virtually identical to the Kennedy hate crime amendment (Amend. 3473) to the NationalDefense Authorization Act for Fiscal Year 2001( H.R. 4205 ) which passed the Senate during the 106th Congress but was dropped from the billprior to final enactment. Representative Jackson-Leehas offered an alternative proposal ( H.R. 74 , the Hate Crimes Prevention Act of 2001), which closelyresembles her offering in the 106th Congress( H.R. 77 ). A second alternative from the 106th Congress, Senator Hatch's S. 1406 , has,as yet, not been proposed in this Congress. New Crimes : S. 625 / H.R. 1343 creates two federal crimes. Both outlaw willfully causing physical injuries; using fire, firearms, orbombs; or attempting to do so -- motivated by certain victim characteristics (whether real or perceived). Offendersare subject to imprisonment for not more than10 years, or for any term of years or life if the crime involves attempted murder, kidnapping, attempted kidnapping,rape or attempted rape. The two offensesdiffer in that the first applies to crimes motivated by the victim's race, color, religion, or national origin and containsno other explicit federal jurisdictionalelement. The second applies to crimes motivated by the victim's gender, sexual orientation, disability, race, color,religion, or national origin and contains a seriesof alternative jurisdictional elements of a commerce clause stripe. Federal prosecution of either offense wouldrequire certification of a senior Department ofJustice official that state or local officials are unable or unwilling to prosecute, favor federal prosecution, or haveprosecuted to a result that leaves federal interestin eradicating bias-motivated violence unvindicated. H.R. 74 would establish the same two offenses, but hasno certification requirement. Hate Statistics : The companion bills and H.R. 74 add gender to the list of predicate characteristics for hate crime statistical collection purposes,section 280003(a) of the Violent Crime Control and Law Enforcement Act of 1994. Assistance to Local Law Enforcement : Unlike H.R. 74 , the companion bills each call for the Justice Department to assist state and tribal lawenforcement efforts to investigate and prosecute violent, felonious hate crimes, motivated by animosity towardsthose of the victim's race, color, religion, nationalorigin, gender, sexual orientation, disability or other characteristic found in the state's or tribe's hate crime law. Theyinsist that priority be given to cases infiscally strapped rural jurisdictions and to cases involving multistate offenders. Grants : Each of the proposals features a grant program to help the states combat hate crimes committed by juveniles, authorizing such appropriations as arenecessary. S. 625 / H.R. 1343 calls for an additional extraordinary grant program available to the statesand tribes to addressinvestigative and prosecutorial needs that cannot otherwise be met. The bills authorize appropriations of $5 millionfor each of fiscal years 2002 and 2003, but noindividual grant may not exceed $100,000 per year. Sentencing Guidelines : Each proposal instructs the Sentencing Commission to study and make any appropriate adjustments in the federal sentencing guidelinesconcerning adult recruitment of juveniles to commit hate crimes, consistent with the other federal sentencingguidelines and being sure to avoid duplication. Commerce Clause : Congress enjoys only those legislative powers that flow from the Constitution. U.S.Const. Amends. IX, X. The commerce clause, section 5of the Fourteenth Amendment and section 2 of the Thirteenth Amendment and Fifteenth Amendment, are the grantsof power most often mentioned whendiscussing Congress' authority to proscribe hate crimes, and to enact other forms of civil rights legislation. Under the commerce clause, Congress is empowered "to regulate commerce with foreign nations, and among the several States, and with the Indian Tribes."U.S.Const. Art.I, 8, cl.3. The Supreme Court in Lopez and Morrison identified the threeways in which Congress may exercise its prerogatives under the clause:"First, Congress may regulate the use of the channels of interstate commerce. Second, Congress is empowered toregulate and protect the instrumentalities ofinterstate commerce, or persons or things in interstate commerce, even though the threat may come only fromintrastate activities. Finally, Congress' commerceauthority includes the power to regulate those activities having a substantial relation to interstate commerce, . . . i.e.,those activities that substantially affectinterstate commerce."). This last category, the "affects interstate commerce" category, can sometimes be the most difficult to define for it may embrace what appears to be purelyintrastate activity. Morrison cited with approval the signposts of this aspect of the commerce powerthat Lopez sought in vain when examining the Gun-FreeSchools Act (18 U.S.C. 922(q)(1)(A)). First, the statute had "nothing to do with commerce or any sort of economicenterprise, however broadly one might definethose terms." Second, "the statute contained no express jurisdictional element which might limit its reach to adiscrete set of firearm possessions that additionallyhave an explicit connection with or effect on interstate commerce." Third, neither the statute "nor its legislativehistory contains express congressional findingsregarding the effects upon interstate commerce of gun possession in a school zone." Finally, the link between gunpossession in a school zone and commerceinterest urged by the government (the cost of violent crime and damage to national productivity caused by violentcrime) was too attenuated without more tosupport a claim to commerce clause authority. In this last regard, Morrison observed, "[w]e accordingly reject the argument that Congress may regulate noneconomic, violent criminal conduct based solely onthat conduct's aggregate effect on interstate commerce. The Constitution requires a distinction between what is trulynational and what is truly local. . . Theregulation and punishment of intrastate violence that is not directed at the instrumentalities, channels, or goodsinvolved in interstate commerce has always beenthe province of the States." The hate crime proposals present two, somewhat different, claims to commerce clause power. First, they create a federal crime for which an aspect of interstatecommerce is an element, i.e., in the case of H.R. 74 : either that (a) "in connection with theoffense, the defendant or the victim travels in interstatecommerce or foreign commerce, uses a facility or instrumentality of interstate or foreign commerce, or engages inany activity affecting interstate or foreigncommerce; or (b) the offense is in or affects interstate or foreign commerce;" and in the case of S. 625 / H.R. 1343 : either that (1) theoffense "occurs during the course of, or as a result of, the travel of the defendant or the victim " either (a) "acrossa State line or national border" or (b) "using achannel, facility, or instrumentality of interstate or foreign commerce;" or (2) the defendant uses a channel, facility,or instrumentality of interstate or foreigncommerce" in the commission of the offense; or (3) in connection with the offense "the defendant employs afirearm, explosive or incendiary device, or otherweapon that has traveled in interstate or foreign commerce; or (4) the offense either (a) interferes with commercialor other economic activity in which the victimis engaged at the time of the conduct; or (b) otherwise affects interstate or foreign commerce." Then they create a second federal crime whose claim to a commerce clause nexus must be more inferential, tied to the findings and the general nature andconsequences of hate crimes. Morrison suggests that the findings and general nature of the offenses involved are likely to be insufficient to support an assertion that the commerce clauseempowers Congress to enact the provisions. Morrison rejected virtually the same argument with respectto a statute creating a civil remedy for the victims ofgender-motivated violence. Its success here would seem to depend on convincing the Court that race-motivated,or color-motivated, or religion-motivated, ornational origin-motivated violence are somehow more commercially influential than gender-motivated violence. Brighter seem the prospects for a judicial conclusion that the offenses that come with commerce-explicit elements come within Congress' commerce clausepowers. They have the distinct advantage of precluding conviction unless the prosecution can convince the courtsof the statutory nexus between the defendant'sconduct and the commerce impacting element of the offense. Moreover, several of the elements involve preventingthe channels of commerce from becoming theavenues of destructive misconduct or protecting the flow of commerce from destructive ingredients -- the mark ofcircumstances that indisputably fall withinCongress' authority under the commerce clause. Section 5 of the Fourteenth Amendment : Where the proposals seem beyond Congress' reach under the commerce clause they may be within the scope of otherlegislative powers such as the legislative clauses of the Thirteenth, Fourteenth, and Fifteenth Amendments. Morrison addresses the breadth of Congress'legislative power under section 5 of the Fourteenth Amendment. The Amendment guarantees certain civil rightsoften by forbidding state or federal interference. Under section 5 the Congress is vested with "power to enforce, by appropriate legislation, the [Amendment's]provisions." Morrison pointed out that UnitedStates v. Harris held that section 5 did not vest Congress with the power to enact a statute "directedexclusively against the action of private persons, withoutreference to the laws of the state, or their administration by her officers." And in Civil Rights Cases ,"we held that the public accommodation provisions of theCivil Rights Act of 1875, which applied to purely private conduct, were beyond the scope of the 5 enforcementpower. . . . The force of the doctrine of staredecisis behind these decisions stems not only from the length of time they have been on the books, but also fromthe insight attributable to the Members of theCourt at that time . . . [who] obviously had intimate knowledge and familiarity with the events surrounding theadoption of the Fourteenth Amendment." The statute in Morrison created a cause of action against private individuals who perpetrated gender-motivated violence enacted in the face of evidence that thestates often failed to adequately investigate and prosecute such crimes. The authority under section 5, however,extends only to state action including theenactment of a "remedy corrective in its character, adapted to counteract and redress the operation of such prohibitedstate laws or proceedings of state officers." The Morrison statute rested on the wrong side of the divide, for its remedy fell not upon wayward stateofficials, but upon private individuals. The hate crimeproposals seem perilously comparable at best. They address private misconduct, not the deficiencies of state action. Section 2 of the Thirteen Amendment : The companion bills and H.R. 74 each stake a claim to the legislative authority in section 2 of the ThirteenAmendment within their findings. The Civil Rights Cases , considered so instructive with respect toCongressional powers under the Fourteenth Amendment, alsoafforded the Court its first opportunity to construe section 2 of the Thirteenth Amendment. Unlike, the Fourteenth,it speaks not of state action, but declares"Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been dulyconvicted, shall exist within the United States,or any place subject to their jurisdiction." U.S.Const. Amend. XIII, 1. It finishes with the stipulation that "Congressshall have power to enforce this article byappropriate legislation." U.S.Const. Amend. XIII, 2. The Civil Rights Cases observed that section 2 "clothes Congress with power to pass all laws necessary and proper for abolishing all badges and incidents ofslavery in the United States." This power it concluded, however, reached "those fundamental rights whichappertain to the essence of citizenship" and but not the"social rights" (access lodging, transportation, and entertainment) that Congress had by statute endeavored to protectfrom racial discrimination. The Court said little of section 2 for nearly a century thereafter until Jones v. Alfred H. Mayer Co. , which found that Congress might ban racial discriminationfrom real estate transactions under the section. Almost in passing, Jones dismissed without repudiatingthe social rights distinction: "Whatever the presentvalidity of the position taken by the majority on that issue--a question rendered largely academic by Title II of theCivil Rights Act of 1964, 78 Stat. 243 (seeHeart of Atlanta Motel v. United States , 379 U.S. 241; Katzenbach v. McClung , 379U.S. 294 [confirming the Title's validity as an exercise ofcommerce clause power])--we note that the entire Court agreed upon at least one proposition: The ThirteenAmendment authorizes Congress not only to outlawall forms of slavery and involuntary servitude but also to eradicate the last vestiges and incidents of a society halfslave and half free, by securing to all citizens, ofevery race and color, the same right to make and enforce contracts, to sue, be parties, give evidence, and to inherit,purchase, lease, sell and convey property, as isenjoyed by white citizens." Three years later in Griffin the Court confirmed that 42 U.S.C. 1985(3)(relating to conspiracies in deprivation of the rights of citizenship) was within the scope ofsection 2 authority. Griffin opined that "Not only may Congress impose such liability, but the varietiesof private conduct that it may make criminally punishableor civilly remediable extend far beyond the actual imposition of slavery or involuntary servitude. By the ThirteenthAmendment, we commit ourselves as a Nationto the proposition that the former slaves and their descendants should be forever free. To keep that promise,Congress has the power under the ThirteenthAmendment rationally to determine what are the badges and incidents of slavery, and the authority to translate thatdetermination into effective legislation. Wecan only conclude that Congress as wholly within its powers under 2 of the Thirteen Amendment in creating astatutory cause of action for Negro citizens whohave been the victims of conspiratorial, racially discriminatory private action aimed at depriving them of the basisrights that the law secures to all free men." 403U.S. at 105. Section 2 envisions legislation for the benefit of those who bore the burdens slavery and their descendants (race, color), but does it contemplate a wider range ofbeneficiaries ( e.g. , religion, national origin). The hate crime proposals would have encloaked groupssubject to classification by "race, color, religion, or nationalorigin." In construing the civil rights statutes enacted contemporaneously with the Thirteenth, Fourteenth andFifteenth Amendment, the Supreme Court held thatArabs and Jews would have been considered distinct "races" at the time the statutes were passed and theAmendments drafted, debated and ratified. Whether thiswould be considered sufficient to embrace all religious discrimination is another question. Would Roman Catholicsor Methodists, for example, have beenconsidered distinct "races" even in the Nineteenth Century? Of course, even this expansion of beneficiaries does not ensure that the Court would consider violence a badge or incident of slavery. Although commenting onits irrelevancy in light of Congress' use of commerce clause, even Jones did not go so far as to rejectthe fundamental versus the social rights distinction of the Civil Rights Cases . Perhaps more to the point, the anxiety of Morrison and Lopez lest an overly generous commerce clause construction swallow all state criminaljurisdiction over violence might argue against the prospect of the Court embracing violence as a badge or incidentof slavery for purposes of Congress' legislativeauthority under section 2 of the Thirteenth Amendment.

Hate crime legislation (S. 625/H.R. 1343), comparable to a measure whichpassed the Senateas an amendment to the National Defense Authorization Act for Fiscal Year 2001 (but which was dropped prior topassage), has been introduced with a substantialnumber of cosponsors in both the House and Senate. It outlaws hate crimes, establishes a system of JusticeDepartment and grant program assistance, andinstructs the Sentencing Commission to examine adult recruitment of juveniles to commit hate crimes. It has beenreported out of committee unchanged in theSenate, S.Rept. 107-147 (2002). An alternative (H.R. 74), more sweeping in its criminal provisions and moremodest in its grant provisions, has alsobeen proposed. In both alternatives, the newly established federal offenses take two forms and are based on Congress'legislative authority under the commerce clause, thelegislative sections of the Thirteenth, Fourteenth, and Fifteenth Amendment. One species outlaws hate crimescommitted on the basis of race, color, religion,national origin, gender, sexual orientation, or disability under various commerce clause circumstances and appearsconsistent with the Supreme Court'spronouncements in Lopez and Morrison. The other forbids hate crimes committed on thebasis of race, color, religion or national origin. Although its claim toCongressional authority seems strongest when based on the Thirteenth Amendment and proscribing violencecommitted on the basis of race, its hold appearsotherwise more tenuous. This report is an abridged version of CRS Report RL30681(pdf), Hate Crimes: Summary of Selected Proposalsand Congressional Authority, stripped of the footnotes,authorities, and appendices of that report; for additional related information, see also CRS Report 98-300, Hate Crime Legislation: An Update.

By standard convention, the balance of payments accounts are based on a double-entry bookkeeping system. As a result, each transaction entered as a credit must have a corresponding debit and vice versa. This means that a surplus or deficit in one part of the accounts necessarily will be offset by a deficit or surplus, respectively, in another account so that, overall, the accounts are in balance. This convention also means that a deficit in one account, such as the merchandise trade account, is not necessarily the same as a debt. The trade deficit can become a debt equivalent depending on how the deficit is financed and the expectations of those who hold the offsetting dollar-denominated U.S. assets. The balance of payments accounts are divided into three main sections: the current account, which includes the exports and imports of goods and services and personal and government transfer payments; the capital account, which includes such capital transfers as international debt forgiveness; and the financial account, which includes official transactions in financial assets and private transactions in financial assets and direct investment in businesses and real estate. In these accounts, exports are recorded as a positive amount even though they represent an outflow of goods and services from the economy, because they represent a credit for which there is a specific obligation of repayment. Similarly, although imports represent an inflow of goods and services to the economy, they are recorded as a negative amount, because they represent a debt that must be repaid. When the basic structure of the balance of payments was established, merchandise trade transactions dominated the accounts. Financial transactions recorded in the capital accounts generally reflected the payments and receipts of funds that corresponded to the importing and exporting of goods and services. As a result, the capital accounts generally represented "accommodating" transactions, or financial transactions associated directly with the buying and selling of goods and services. During this early period, exchange rates between currencies were fixed, and private capital flows, such as foreign investment, were heavily regulated so that nearly all international flows of funds were associated with merchandise trade transactions and with some limited government transactions. Since the 1970s, however, private capital flows have grown markedly as countries have liberalized their rules governing overseas investing and as nations have adopted a system of floating exchange rates, where the rates are set by market forces. Floating exchange rates have spurred demand for the dollar. The dollar also is sought for investment purposes as it has become a vehicle itself for investment and speculation and it serves as a major trade invoicing currency. This means that the balance of payments records not only the accommodating flows of capital which correspond to imports and exports of goods and services, but also autonomous flows of capital that are induced by a broad range of economic factors that are unrelated directly to the trading of merchandise goods. Liberalized capital flows and floating exchange rates have greatly expanded the amount of autonomous capital flows between countries. 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 1 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 2013, these markets amounted to over $900 trillion, or more than 50 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 $655 trillion in 2013, more than twice the size of the combined total of all public and private bonds, equities, and bank assets. For the United States, such derivatives total more than 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, since 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 intervene 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. In addition, various central banks moved aggressively following the Asian financial crisis in the 1990s to bolster their holdings of dollars in order to use the dollars to support their currencies should the need arise. The dollar is also 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. During the decade preceding the recent global financial crisis, banks and other financial institutions expanded their global balance sheets from $10 trillion in 2000 to $34 trillion in 2007. These assets were comprised primarily of dollar-denominated claims on non-bank entities, including retail and corporate lending, loans to hedge funds, and holdings of structured finance products based on U.S. mortgages and other underlying assets. As the crisis unfolded, the short-term dollar funding markets served as a major conduit through which financial distress was transmitted across financial markets and national borders, according to analysts with the Bank for International Settlements (BIS). When these short-term dollar funding markets collapsed in the early stages of the crises, the U.S. Federal Reserve engaged in extraordinary measures, including a vast system of currency swap arrangements with central banks around the world, to supply nearly $300 billion. After initially expanding the then-existing reciprocal currency arrangements (swap lines) with the European Central Bank, the Bank of England, the Swiss National Bank, and the Bank of Japan, the Federal Reserve made an unprecedented announcement in October 2008 that it would provide swap lines to "accommodate whatever quantity of U.S. dollar funding is necessary" to stem the dollar shortage. At the same time, the U.S. Treasury announced a money market guarantee program to stop the withdrawal of funds from the money markets and to offset the withdrawals by providing public funds. The prominent role of the dollar 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 2016 indicates that the daily trading of foreign currencies through traditional foreign exchange markets totaled $5.1 trillion, down 5% from the $5.3 trillion reported in the previous survey conducted in 2013, as indicated in Figure 1 . 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 $2.7 trillion in April 2016. The combined amount of nearly $8.0 trillion for daily foreign exchange trading in the traditional and OTC markets is more than four times the annual amount of U.S. exports of goods and services. The BIS data also indicate that 88.0% of the global foreign exchange turnover in April 2016 was in U.S. dollars, as indicated in Figure 2 . This share was slightly higher than the 87.0% share reported in a similar survey conducted in 2013. Table 2 presents a summary of the major accounts in the U.S. balance of payments over the four quarters of 2015 and the first two quarters of 2016. The data indicate that throughout the period, the U.S. current account, or the balance of exports and imports of goods, services and transfers, was in deficit, or the United States imported more goods and services than it exported. The current account balance represents the broadest measure of U.S. trade in goods, services, and certain income flows. The balance worsened by 16% from 2014 to 2015. On a quarterly basis, the deficit in the current account has varied from quarter to quarter, although remaining negative, reflecting a broad range of economic activities. Most economists argue that, given the current composition of the U.S. economy, foreign capital inflows play an important role by bridging the gap between domestic supplies of and demand for capital, or between the total amount of saving in the economy relative to the total amount of investment. Indeed, economists generally argue that it is this interplay between the demand for and the supply of credit in the economy, rather than the flow of manufactured goods and services, that drives the broad inflows and outflows of capital and serves as the major factor in determining the international exchange value of the dollar and, therefore, the overall size of the nation's trade deficit or surplus. Capital inflows, in turn, place upward pressure on the dollar's exchange rate, pushing the exchange value of the dollar up relative to other currencies. As the dollar rises in value, the price of U.S. exports rises and the price of imports falls, which tends to increase the current account deficit. The important role capital flows play in determining the overall trade balance is demonstrated in the recent changes that have occurred in the price of oil and its impact on the U.S. trade deficit. Given the prominent role that energy imports play in the U.S. trade deficit, the U.S. trade deficit might be expected to decline along with the drop in the price of oil that occurred in 2014 and 2015, but this was not the case. From 2014 to 2015, the average price of an imported barrel of crude oil fell by nearly half from an average annual price of $91 per barrel to an average annual price of $47 per barrel, although the price of imported crude oil fell below $40 per barrel by the end of 2015. At the same time that the average price in imported crude oil dropped sharply, the quantity of imported crude oil fell by 1.4%. As a result of this drop in crude oil prices and relatively stable quantity of imports, crude oil imports fell from accounting for more than 40% on average of the annual U.S. merchandise trade deficit in 2012 to about 10% on average of the annual U.S. trade deficit in 2015. Despite the drop in the average annual price of imported crude oil and the decline in the role of imported crude oil in the value of the U.S. trade deficit in 2014 to 2016, the U.S. merchandise deficit increased in 2015 over that recorded in 2014. Instead of seeing the overall trade deficit decline, the composition of the trade deficit changed, with non-petroleum products replacing petroleum products, seemingly affirming the proposition that the overall value of the trade deficit is determined primarily by macroeconomic forces, as indicated in Figure 3 . According to the balance of payments accounts, the United States experienced deficits in the merchandise trade goods accounts over the last eight quarters in the range of $113 billion to $123 billion and a surplus in the services accounts during the same period in the range of about $61 to $67 billion, as indicated in Table 2 . In the income accounts, which represent inflows of income on U.S. assets abroad relative to outflows of income earned on U.S. assets owned by foreigners, the net balance of the accounts was in surplus throughout the period. The data also indicate that the U.S. financial accounts were in surplus throughout the period, because they represent the opposite and offsetting transactions to the deficits in the current account. Indeed, the accounting of the balance of payments is such that the surplus in the financial accounts is equivalent to the deficit in the combined balance in the capital account, the statistical discrepancy, and the balance on the current account. The balance in the financial accounts represents the difference between the capital outflows associated with U.S. investments abroad, which are recorded as a net positive outflow, and the capital inflows associated with foreign investment in the United States, which are recorded as a net positive inflow. These investment flows represent the combined amount of both private and official investments, or investments by private individuals and institutions and investments by governments and governmental institutions, respectively. The balance on the financial account (the difference between the net U.S. acquisition of foreign financial assets and the net foreign acquisition of U.S. financial assets) in 2015 fell from that recorded in 2014 due to an increase in U.S. net purchases of assets abroad and a drop in foreign net purchases of assets in the United States. The relative decline in foreign acquisitions of U.S. assets in 2015 below those recorded in 2014 reflects a 180% drop in foreign official purchases of U.S. portfolio assets, including a decline of 200% in official purchases of U.S. Treasury securities. Foreign private purchases of U.S. portfolio assets declined by 40%, reflecting a decline by 33% in foreign private purchases of U.S. treasury securities and an increase year-over-year of 75% in private purchases of corporate bonds. During the same period, U.S. purchases of foreign equities and debt securities fell by 75%, year-over-year. The data in Table 2 also indicate that in 2015, the flows in direct investment, particularly foreign direct investment in the United States, experienced significant changes. U.S. direct investment abroad rose slightly in 2015 to reach $348.6 billion, and foreign direct investment in the United States rose by 83% to reach $379 billion. A lower value for foreign direct investment in 2014 reflected a $130 billion stock repurchase transaction that occurred between Verizon and the French-owned Vodafone. Another way of viewing the balance of payments data is presented in Table 3 , which shows the net amount of the flows in the major accounts, or the difference between the inflows and outflows. Net inflows are represented by positive numbers; net outflows are represented by negative numbers. In 2015 for instance, total net capital inflows representing the net balance on the current account, the capital account, and the statistical discrepancy, were a negative $195.2 billion, which was equivalent to the offsetting amount recorded in the financial accounts and is below the amount recorded in 2014. These values are subject to periodic revisions. Department of the Treasury data indicate that foreign private net purchases of Treasury securities have shifted between positive and negative values at various times, as indicated in Figure 4 . Foreign official net acquisitions of Treasury securities have also tended to change abruptly on an annual basis, at times reflecting the role of the dollar and dollar-denominated securities as safe haven assets. During the midst of the financial crisis in 2009 and 2010, for instance, foreign private investors sharply increased their net purchases of Treasury securities, which rose to over $500 billion in 2010. From 2010 to 2013, however, as concerns over financial market stability eased foreign private net purchases of Treasury securities fell to $52 billion in 2013. Similarly, foreign governments increased their net purchases of Treasury securities in 2008 and 2009, which they maintained until foreign official net purchases fell in 2013 and again in 2015 when foreign official entities liquidated more than $200 billion in treasury securities. As Figure 4 indicates, financial flows over the 2007-2015 net private and net official capital inflows have changed abruptly at times. Private capital flows, representing the combination of net purchases of Treasury securities, corporate stocks and bonds, and other U.S. Government agency bonds, shifted from a net inflow of $1.7 trillion in 2007 to a net outflow in 2008 and 2009, reflecting the contraction in capital flows as a result of the financial crisis. Between 2010 and 2015, net private inflows have varied sharply, often reflecting changes in private net purchases of a broad range of financial assets exclusive of Treasury securities. Net private inflows by U.S. citizens resumed in the 2012 to 2014 period. During the same period, net foreign official accumulations of U.S. financial assets increased from $188 billion in 2007 to $225 billion in 2012, shifting to a net outflow in 2015 of over $200 billion. Table 4 data show the total net accumulation of long-term U.S. securities, or the amount of securities purchased less those that were sold, by foreign private and official sources from 2013 to 2015 and five recent quarters. The data indicate that in between 2013 and 2014, the net foreign private accumulation of U.S. securities tripled from $80 billion to $249 billion, before falling by a third to $155 billion in 2015. According to the Department of the Treasury, the drop in net foreign purchases of U.S. securities reflects adjustments by private investors in their portfolios by reducing their holdings of U.S. corporate stocks and U.S. Treasury securities and increasing their net purchases of corporate bonds and the bonds of U.S. government agencies other than Treasury securities. As indicated above, the data in Table 2 and Table 3 show that the trade deficit is accompanied by an equal capital inflow that represents an accumulation of dollar-denominated assets by foreigners. Some observers have equated the trade deficit and the associated accumulation of foreign-owned dollar-denominated assets as a debt that the U.S. economy owes to foreigners that will have to be repaid. This characterization, however, is not entirely appropriate. The debts owned by foreign investors represent claims on assets, rather than loans where payments on the principal and interest are specified according to a fixed schedule and where failure to meet the repayment schedule can result in the loans being called in and made payable in full. While foreign investors have expectations of a positive return on their dollar-denominated assets, returns, except for Treasury securities, are not guaranteed, but are subject to market forces. An important feature of claims by foreign investors on U.S. assets is that some or all of the profits or returns on the assets can be repatriated to the home country of the foreign investor, thereby reducing the returns that otherwise would remain in the U.S. economy. Depending on the tax convention the United States has with other governments, private foreign investors who own U.S. Treasury securities will owe taxes on the interest income. According to the most commonly accepted approach to the balance of payments, macroeconomic developments in the U.S. economy are the major driving forces behind the magnitudes of capital flows, because the macroeconomic factors determine the overall demand for and supply of capital in the economy. Economists generally conclude that the rise in capital inflows can be attributed to comparatively favorable returns on investments in the United States when adjusted for risk, a surplus of saving in other areas of the world, the well-developed U.S. financial system, the overall stability of the U.S. economy, and the generally held view that U.S. securities, especially Treasury securities, are high quality financial instruments that are low risk. In turn, 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 spend beyond its means, including financing 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, U.S. Treasury securities, and real estate and U.S. businesses. While this exchange of assets is implicit in the balance of payments, the Department of Commerce explicitly accounts for this broad flow of dollar-denominated assets through the nation's net international investment position. The U.S. net international investment position represents the accumulated value of U.S.-owned assets abroad and foreign-owned assets in the United States measured on an annual basis at the end of the calendar year. Some observers refer to the net of this investment position (or the difference between the value of U.S.-owned assets abroad and the value of foreign-owned assets in the United States) as a debt, or indicate that the United States is a net debtor nation, because the value of foreign-owned assets in the United States is greater than the value of U.S.-owned assets abroad. In fact, the nation's net international investment position is not a measure of the nation's indebtedness similar to the debt borrowed by some developing countries, but it is simply an accounting of assets. The Department of Commerce uses three different methods for valuing direct investments that can yield different estimates for the net position, depending on the stock market value of the investments. For example, by year-end 2015 the overseas assets of U.S. residents totaled $22.0 trillion, with U.S. direct investment abroad valued at historical cost, while foreigners had acquired about $28.0 trillion in assets in the United States, with direct investment measured at historical cost. As a result, the U.S. net international investment position was about a negative $5.6 trillion in 2015, with direct investment measured at historical cost, but was valued at negative $7.3 with direct investment valued at current cost, as indicated in Table 5 . Foreign investors who acquire U.S. assets do so at their own risk and accept the returns accordingly. While foreign investors likely expect positive returns from their dollar-denominated assets, the returns on most of the assets in the international investment position, except for bonds, are not guaranteed and foreign investors stand to gain or lose on them similar to the way U.S. domestic investors gain or lose. As Table 5 indicates, investments in the international investment position include such financial assets as corporate stocks and bonds, government securities, and direct investment in businesses and real estate. The value of these assets, measured on an annual basis, can change as a result of purchases and sales of new or existing assets; changes in the financial value of the assets that arise through appreciation, depreciation, or inflation; changes in the market values of stocks and bonds; or changes in the value of currencies. For instance, by year-end 2015, U.S. holdings abroad had risen in value to $22 trillion, with direct investment valued at historical cost, and $23.2 trillion and $21.4 trillion with direct investment valued at current cost and market value, respectively, reflecting an upward revaluation in the values of foreign corporate stocks due to an increase in stock market values. Similarly, the value of foreign owned assets in the United States rose in 2015 to $27.2 trillion with direct investment valued at historical cost and $30.6 trillion with direct investment valued at market cost, with rising stock values pulling up the overall investment position of foreign investors. The foreign investment position in the United States continues to increase as foreigners acquire additional U.S. assets and as the value of existing assets appreciates. These assets are broadly divided into official and private investments, reflecting transactions by governments among themselves and transactions among the public. While the foreign official share of the overall amount of capital inflows has grown sharply as indicated in Table 3 , the overall foreign official share of foreign-owned assets in the United States has remained relatively modest. As Figure 6 indicates, foreign official asset holdings were valued at about $6.0 trillion in 2015, or about 20% of the total foreign investment position, a share that rose above 20% in 2008 as foreign official holdings of U.S. Treasury securities rose during the global financial crisis. Official assets include such monetary reserve assets as gold, the reserve position with the International Monetary Fund (IMF), and holdings of foreign currency. An important component of foreign official holdings in the United States is the acquisitions of U.S. Treasury securities by foreign governments. At times, such acquisitions are used by foreign governments, either through coordinated actions or by themselves, to affect the foreign exchange price of the dollar. Foreign currency holdings account for a relatively small share of the total foreign investment position. Private asset holdings are comprised primarily of direct investment in businesses and real estate, purchases of publicly traded government securities, and corporate stocks and bonds. As indicated in Figure 7 , the composition of U.S. assets abroad and foreign-owned assets in the United States differs in a number of ways. The strength and uniqueness of the U.S. Treasury securities markets make these assets sought after by both official and private foreign investors, whereas U.S. investors hold few foreign government securities. As a result, foreign official assets in the United States far outweigh U.S. official assets abroad. Both foreign private and official investors have been drawn at times to U.S. government securities as a safe haven investment during troubled or unsettled economic conditions. The persistent U.S. trade deficit raises concerns in Congress and elsewhere due to the potential risks such deficits may pose for the long-term rate of growth for the economy. In particular, some observers are concerned that foreigner investors' portfolios will become saturated with dollar-denominated assets and foreign investors will become unwilling to accommodate the trade deficit by holding more dollar-denominated assets. The shift in 2004 in the balance of payments toward a larger share of assets being acquired by official sources generated speculation that foreign private investors had indeed reached the point where they were no longer willing to add more dollar-denominated assets to their portfolios. This shift was reversed in 2005, however, as foreign private investments rebounded. Another concern is with the outflow of profits that arise from the dollar-denominated assets owned by foreign investors. This outflow stems from the profits or interest generated by the assets and represents a clear outflow of capital from the economy that otherwise would not occur if the assets were owned by U.S. investors. These capital outflows represent the most tangible cost to the economy of the present mix of economic policies in which foreign capital inflows are needed to fill the gap between the demand for capital in the economy and the domestic supply of capital. Indeed, as the data presented indicate, it is important to consider the underlying cause of the trade deficit. According to the most commonly accepted economic approach, in a world with floating exchange rates and the free flow of large amounts of dollars in the world economy and international access to dollar-denominated assets, macroeconomic developments, particularly the demand for and supply of credit in the economy, are the driving forces behind the movements in the dollar's international exchange rate and, therefore, the price of exports and imports in the economy. As a result, according to this approach, the trade deficit is a reflection of macroeconomic conditions within the domestic economy, and an attempt to address the issue of the trade deficit without addressing the underlying macroeconomic factors in the economy likely would prove to be of limited effectiveness. In addition, the nation's net international investment position indicates that the largest share of U.S. assets owned by foreigners is held by private investors who acquired the assets for any number of reasons. As a result, the United States is not in debt to foreign investors or to foreign governments similar to some developing countries that run into balance of payments problems, because the United States has not borrowed to finance its trade deficit. Instead the United States has traded assets with foreign investors who are prepared to gain or lose on their investments in the same way private U.S. investors can gain or lose. It is certainly possible that foreign investors, whether they are private or official, could eventually decide to limit their continued acquisition of dollar-denominated assets or even reduce the size of their holdings, but there is no firm evidence that such presently is the case.

The U.S. merchandise trade deficit is a part of the overall U.S. balance of payments, a summary statement of all economic transactions between the residents of the United States and the rest of the world, during a given period of time. Some Members of Congress and other observers have grown concerned over the magnitude of the U.S. merchandise trade deficit and the associated increase in U.S. dollar-denominated assets owned by foreigners. International trade recovered from the global financial crisis of 2008-2009 and the subsequent slowdown in global economic activity that reduced global trade flows and, consequently, reduced the size of the U.S. trade deficit. Now, however, U.S. exporters face new challenges with an increase in the international exchange value of the dollar relative to other key currencies and the slow rate of economic growth in important export markets in Europe and Asia. This report provides an overview of the U.S. balance of payments, an explanation of the broader role of capital flows in the U.S. economy, an explanation of how the country finances its trade deficit or a trade surplus, and the implications for Congress and the country of the large inflows of capital from abroad. The major observations indicate the following. The current account balance, the broadest measure of U.S. trade in goods, services, and certain income flows, worsened by 18% in 2015 from that recorded in 2014. Foreign-owned assets in the United States continued to outpace U.S. ownership of foreign assets, reflecting the deficit in the current account, but the net amount, or the difference between U.S.-acquisition of foreign assets and foreign acquisition of U.S. assets, dropped by about one-third in 2015 compared with 2014 and down by over half since 2012. The relative decline in foreign acquisitions of U.S. assets in 2015 reflected a drop in the net private purchases of U.S. corporate stocks and a decline by one-third in net private purchases of U.S. treasury securities. In addition, foreign official purchases of U.S. portfolio purchases shifted from positive net purchases in 2014 to negative net purchases in 2015, including a 38% decline in purchases of corporate stocks and a 58% decline in official purchases of U.S. Treasury securities. Foreign private net purchases of U.S. Treasury securities in 2015 fell by one-third from those in 2014, but foreign private purchases of U.S. equities increased by 20% in 2015 compared with 2014. At the same time, foreign direct investment increased by 83% in 2015 compared with 2014, rising from $207 billion in 2014 to $379 billion in 2015; U.S. direct investment abroad in 2015 rose slightly above the amount invested in 2014, although U.S. net purchases of foreign equities and debt securities in 2015 fell by 75%, compared with net purchases in 2014. The inflow of capital from abroad supplements domestic sources of capital and likely allows the United States to maintain its current level of economic activity at interest rates that are below the level they likely would be without the capital inflows. Foreign official and private acquisitions of dollar-denominated assets likely will generate a stream of returns to overseas investors that would have stayed in the U.S. economy and supplemented other domestic sources of capital had the assets not been acquired by foreign investors. In general terms, foreign private holders of U.S. Treasury securities are taxed on their interest income, depending on U.S. tax conventions with other countries.

Geographically and by population, Poland is the largest of the countries recently admittedinto the European Union (EU) and NATO; with 38 million citizens, Poland is now the 6th mostpopulous country in the EU. And with strong growth rates and a GDP exceeding $200 billion, it isa major player economically, especially in Central and Eastern Europe. Some foreign policy analystsargue that, if it continues on its current path, Poland may well emerge as a leading nation in Europe-- particularly within the EU and NATO. This report provides background information on recentU.S.-Polish relations, a summary of Poland's political situation and economic conditions, and adescription of Poland's major foreign policy initiatives, mainly with neighboring states. Poland and the United States have enjoyed close relations over the years. The Reagan andGeorge H. W. Bush administrations actively supported Poland's efforts to shake off communism. The Clinton Administration strongly advocated Poland's candidacy for NATO membership,beginning with Clinton's speech before the Polish parliament in 1994 and ending with his signatureon the instruments of ratification on May 21, 1998. President George W. Bush visited Poland duringhis first official trip to Europe in June 2001; then-National Security Advisor Condoleezza Rice hascharacterized Poland as a "strategic partner" to the United States. (1) Warsaw has been a particularly reliable supporter and ally since the terrorist attacks ofSeptember 11; it has aided U.S. efforts in the global war on terrorism, and has contributed troops tothe U.S.-led coalitions in both Afghanistan and Iraq. Over the past year, however, many Poles haveconcluded that their country's involvement in Iraq has increasingly become a political liability,particularly on the domestic front. With elections likely in 2005, the government announced inDecember 2004 that it would maintain a presence in Iraq, but that troop levels would be drawn downafter the January 30 Iraqi elections. Some Poles are of the view that their loyalty to the United Stateshas gone unrewarded, and hope that the Bush Administration still might respond favorably to Polishrequests for increased military assistance, Iraq reconstruction contracts to Polish firms, and changesto in U.S. visa policy. Poland has been a staunch supporter, both diplomatically and militarily, of the U.S.-led waron terrorism. In a March 2002 address, Polish President Kwasniewski pressed the internationalcommunity to restrain its criticisms of the United States; he reminded his audience that "Americansoldiers ... were the first to stand up to the evil" of terrorism. In December 2004, after visitingPoland to assess its efforts in the war on terrorism, a team of EU officials announced that they hadfound the counter-terrorism services to be "professional and enthusiastic." (2) Poland has also supported EUefforts to improve law enforcement cooperation against terrorism. Poland has contributed military engineers, logistics personnel, and commandos to theInternational Security Assistance Force (ISAF) in Afghanistan, where Poles are assisting in mineremoval. Currently, 200 Polish troops -- chiefly combat engineers -- serve in Bagram. During aJuly 2004 visit to Kabul, Polish Prime Minister Marek Belka urged other NATO members toincrease their troop commitments to ISAF; he mentioned Germany by name. (3) Most observers believe that the Poles' determination to cooperate with the United States inthe global war on terrorism spans political parties, and that this resolve will remain unchanged,regardless of who might win the next elections. When Poland joined the U.S.-led coalition in the war to topple Saddam Hussein in early2003, it was acting with historical consistency. During the 1991 Gulf War, Warsaw joined themultinational coalition that pushed Iraq out of Kuwait, providing rescue ships and medical staff. After the conflict, Poland served as the United States' diplomatic go-between, and represented U.S.interests in Baghdad for the next decade. It was the first time the United States had called upon aformer communist country to play such a role. (4) Unconfirmed reports have indicated that, in 2003, approximately 200 Polish special forcestroops participated in Operation Iraqi Freedom -- the initial combat portion of the Iraq conflict. Itis said that the commandos were already present in Iraq before hostilities were launched, and thatthey worked in close cooperation with U.S. Navy SEALs and other special operations units. Since the end of declared hostilities, Poland has also contributed substantially to post-warpeacekeeping efforts. Its military contingent of 2,500 troops made it the third largest in themultinational stability force. On August 25, 2003, Poland assumed command of one of threemilitary sectors. At its peak, the command consisted of more than 9,000 troops, from Europe, Asia,and Latin America; the Polish-led division has also received intelligence, communications, andlogistics support from NATO. Because some countries have reduced or withdrawn their troops, totalstrength of the Polish-led contingent as of June 2005 was estimated at around 4,000. Several incidents related to Iraq captured the attention of Poles at home. In July 2004, agroup calling itself the Al Qaeda Organization in Europe posted on its website a warning that Polandand Bulgaria would suffer terrorist attacks similar to the March 2004 bombings in Madrid unlessthey pulled their troops out of Iraq. The Polish deputy defense minister said the government wouldnot cave in to such demands, but the Madrid bombings may have increased Poland's sense ofvulnerability to such attacks. In October, armed insurgents in Iraq kidnaped a Polish citizen; she wasreleased unharmed the following month. Finally, Poland has suffered several casualties in Iraq; todate, it has lost 17 military troops and 4 civilians, including a well-known television reporter. Over100 Poles have been wounded. In May 2004, following revelations of prisoner abuse at Abu Ghraib, a poll found that Polishopposition to the troop deployment had surged from 60% to 74%. Later that month, shortly beforea parliamentary confidence vote, Defense Minister Szmajdzinski said that the Poland wanted to"significantly reduce our presence" after Iraq's January 2005 elections. In a series of subsequentpronouncements -- some contradictory -- government officials continued to affirm that their country'stroop levels would be reduced. Finally, in December, dates and numbers were provided: Polandwould withdraw up to 700 troops after the Iraqi elections, and that a decision on the remainder ofits contingent would be made after the vote. In early February, during a joint press conference withSecretary of State Rice, Polish Foreign Minister Rotfeld stated that the Iraqi elections had "totallychanged our optics on Iraq." This new perspective does not appear to have affected the pulloutdecision, however; the government has since announced that as many as 300 additional troops wouldreturn to Poland by August, and that all Polish soldiers would exit Iraq when the UN multinationalforces mandate expires in December 2005. Warsaw will likely continue to support NATO trainingof the Iraq officer corps. (5) Although the reaction to the March 11, 2004 Madrid bombing and the inmate mistreatmentat Abu Ghraib were the main reasons cited by the media for Poland's downsizing of its militarycontingent in Iraq, other factors also played a role. For example, the stabilization mission in Iraq hasbeen a difficult one for Poland in terms of both scope and location. Iraq has been the country'sbiggest combat deployment, and the country's climate has presented special challenges. In addition,the cost of the Iraq mission has been burdensome to Poland. In an April 2005 announcementdetailing further troop cutbacks, Defense Minister Szmajdzinski stated that the deployment had costPoland $210 million. (6) Polish officials also note that the cost of the Iraq mission has necessitated a postponement ofPoland's defense modernization. Observers point out that, despite the human casualties and financial costs their country hasborne, Poland has not reaped significant, tangible benefits for its presence in Iraq. In particular,Polish officials and others note three sensitive areas related to the United States: Iraq reconstructioncontracts, military assistance, and a waiver from U.S. visa requirements. (7) Iraq Reconstruction Contracts. In an October2004 interview, former Polish Foreign Minister Cimoszewicz was asked to comment on Poland'sexpectations of being awarded "lucrative" contracts to help rebuild Iraq; he replied that "[i]t is truethat many Polish companies expected to become involved in the economic reconstruction of Iraq,and that has not happened." (8) The Economist Intelligence Unit (EIU) noted that "Washington'sdecision to reward the biggest [Iraq reconstruction] contracts to a few US companies has stokedresentment in Poland." (9) U.S. officials were aware of this disappointment and tried to correct the situation. In December2004, for example, it was announced that Iraq had agreed to purchase military materiel from Poland,including helicopters and ground transportation vehicles, and in late January another Polish defensecompany landed a large contract. Other contracts reportedly were under negotiation. Someobservers suggest that perhaps Poland's expectations for offsetting contracts were too high. Military Aid. On defense-related assistance,Polish officials note that their army is still in transition, and that Iraq has put a severe strain on itsresources; Deputy Defense Minister Janus Zemke commented that "[w]e simply will not be able tosqueeze more of our own budget for military procurement. At the same time, these huge outlays forIraq are delaying the final transformation of our armed forces. It is a fundamental problem." Polesalso have complained that their country received U.S. military aid packages similar in size tocountries that had sent far smaller contingents to Iraq. Some Polish policymakers hoped that theUnited States would help offset the steep costs by stepping up its military assistance to Warsaw. InFebruary 2005, President Bush pledged to seek $100 million in such aid to Poland. The funds weresubsequently requested, as part of a supplemental appropriations bill. Congress approved a $200million "Solidarity Fund" intended to help countries that had contributed troops to Iraq. However,because the contingency fund covers several countries, it is uncertain whether Poland will receivethe full amount that President Bush sought to provide. Poland will also likely receive $32 millionin regular military assistance requested by the Administration for FY2006. (10) Visa Waiver. Finally, Warsaw has hoped for awaiver of the U.S. government requirement that Poles traveling to the United States for three monthsor less carry a visa; currently applicants pay a $100 non-refundable fee, and then submit to aninterview at a U.S. embassy or consulate. U.S. policy is grounded in the belief that if somecountries, including Poland, received a waiver of the visa requirement, too many of their citizenswould travel to the United States and remain illegally. Analysts note that Poland has failed to meetthe qualifications for the visa waiver program. The Polish government argues, however, that Polandis no longer under Communism, and is no longer desperately poor -- two major incentives in the pastto leave the country. They also point out that millions of illegal immigrants are already living in theUnited States. Polish leaders have raised the issue with their U.S. counterparts. At the conclusionof the latest Bush/Kwasniewski meeting, the two sides announced that they had agreed upon a"roadmap" of steps aimed at helping resolve the issue. Although details of the plan have not yet beenmade public, it would reportedly eliminate certain outdated information requirements. Also,Members of Congress have submitted legislation on this issue; in the 109th Congress, SenatorsSantorum and Mikulski introduced S. 635 , which would add Poland to the list of 27countries on the visa waiver program. Representative Jackson-Lee's bill, H.R. 634 ,would do the same thing, with certain conditions. (11) Other Members of Congress, however, generally oppose theexpansion of the visa waiver program because of security concerns. Poland has had an eventful political scene in recent years. Since 2001, two prime ministershave fallen; analysts believe that both turnovers may be attributed to what the Financial Times (FT) called "the constant drip of scandals and sleaze in the Polish body politic." (12) And although it hassteered the nation into the EU, nurtured a strong economy, and weathered two confidence votes, thecurrent government's days are numbered, in the eyes of many. In their last parliamentary elections, held in October 2001, Poles ejected the incumbentcenter-right parties. Leszek Miller, head of the Democratic Left Alliance (SLD) became the newprime minister, replacing Jerzy Buzek of Solidarity Electoral Action (AWS). The SLD joined incoalition with the Union of Labor (UP), and the Polish Peasants' Party (PSL); together, theycommanded a majority of the seats in the lower house of parliament, the Sejm . The centrist,pro-market Civic Platform (PO) party became the main opposition; the remainder of the seats wasdivided among the radical nationalist Self-Defense party, and the League of Polish Families (LPR),an ultra-conservative party aligned with the Catholic church. AWS failed to pass the thresholdrequired to be seated in parliament. (13) In the meantime, Poland has been rocked by several high-profile scandals. In March 2004,as a result of one of the incidents, more than two dozen MPs left the SLD. The defectionsprecipitated Miller's resignation and left his successor, former Finance Minister Marek Belka, in aweak position. The SLD can boast of two years of robust economic growth, as well as the attainment ofPoland's long-sought entry into the European Union, but these achievements may not be enough forPolish voters. Indeed, many believe that in the next elections, the SLD, tainted by scandals andhobbled by the growing unpopularity of involvement in Iraq, will lose even more support and thatthe center-right parties will prevail. Some observers believe that two parties -- the PO and theconservative Law and Justice (PiS) -- may win enough votes to form a government, but may needthe support of LPR. Elections are scheduled for September 2005. (14) In October 2000, Aleksander Kwasniewski of the SLD won a resounding electoral victoryand a second five-year term as President. For most of his tenure, Kwasniewski consistently toppedpublic opinion polls, and was usually voted the most popular politician in the country. However,because of a two-term limit, he will be unable to run in the next presidential elections, which are set for October 2005. The Polish economy is among the most successful transition economies in east centralEurope; all of the post-1989 governments have generally supported free-market reforms. Today theprivate sector accounts for over two-thirds of economic activity. In recent years, Poland has for themost part enjoyed rapid economic development. After two years in the doldrums, Poland's GDPgrew by 3.8% in 2003, and is estimated to have reached 5.3% in 2004. Forecasters predict thatPoland's economy will continue to grow in the 4-5% range in 2005. Unemployment, however, stoodat 19.3% in April 2005 -- the highest in the European Union. The Polish economy's rebound from its 2001-2002 slump was largely led by an increase inexport sales, a testament to the importance that trade -- which accounts for nearly half of GDP --plays in Poland's economy. Once reliant upon sales to the Soviet bloc, Poland today sends itsexports overwhelmingly to countries belonging to the EU, which Poland, along with 9 other mostlyeastern European countries, joined on May 1, 2004. In 2003, Germany alone purchased one-thirdof Poland's exports and supplied one-fourth of its imports. Economic report cards issued by international organizations have given Poland mixedreviews. In a review measuring progress on reforms, the European Bank for Reconstruction andDevelopment ranked Poland fourth-highest among 27 former communist countries; while praisingPoland's price liberalization and business privatization, it recommended that the country improveits investment climate, reform its labor market, restructure its agricultural sector, and tighten its fiscalpolicy. Transparency International's 2004 Corruption Perceptions Index put Poland in 67th place outof 145 countries and last among EU members. The Organization for Cooperation and Developmentin Europe found Poland's labor market to be the "worst performing in all its 30 rich-countrymembers," faulting Poland's "high payroll tax, minimum wage, and firing restrictions [as]impediments to hiring new labor." Finally, in the World Economic Forum's 2004 GlobalCompetitiveness Index, Poland appeared in 60th place out of 105 countries, a decline from 45th placein 2003. (16) For both commercial and political reasons, agriculture is an important part of Poland'seconomy. The farming sector is highly inefficient by U.S. and west European standards: althoughagriculture is responsible for about one-fifth of all employment, it accounts for only 3% of GDP. Nonetheless, Poland is the largest food producer of the ten countries that recently joined the EU, andagriculture was a major sticking point in Warsaw's accession negotiations. Poland's farmers largelyopposed membership, fearing that competition with western European producers, who are moreefficient and receive higher subsidies, would drive many Poles out of business. These sentimentswere exploited by Andrzej Lepper, populist leader of the Self Defense party. Lepper sought to attractsupport by various -- often illegal -- means, including destroying railcar loads of imported grain,blockading highways, and occupying the agricultural ministry building. Despite their misgivings, nearly all Polish farmers applied for EU subsidies. After Polandbecame an EU member, agricultural exports and commodity prices rose steeply, and producers --including Mr. Lepper -- began to receive checks from Brussels. In addition, the EU has pledged tofund half of the cost of modernizing Polish farms. The rather sudden economic advantages of beingin the EU have impressed rural Poland, and have already dampened support for anti-EU politicalprotest parties. (17) Corruption is a common theme that runs through discussions of Poland's political andeconomic scene. Although most observers deplore what they characterize as widespread graft, somecontrarians have argued that, because Poland now has free and active media, this issue may be akind of reverse iceberg. According to this view, instances of corruption are being revealed in alltheir detail today, rather than being swept under the carpet, as they were in the past. Not only havethese recent cases been reported in newspapers, commission investigations have been aired onnational telecasts. The fact that one hears so much about corruption may actually be a good thing,they argue, as it could result in more active pursuit of such crimes by law enforcement authoritiesand in lower societal tolerance of corruption, especially at higher levels of business andgovernment. (18) Nevertheless, some worry that Poland's most recent high-profile political scandals may beinflating its reputation for graft and contributing to the creation of an anti-business atmosphere. Butin spite of its poor recent showing in surveys that attempt to measure corruption andcompetitiveness, Poland has continued to attract foreign funding. To encourage continuedinvestment, Poland maintains a low corporate tax rate -- about one-half that of Germany. Over thepast year, there have been reports of several U.S.-based firms entering or expanding their activitiesin the Polish market, including Boeing, Smithfield Foods, Wrigley, and General Motors. Like most of the former Warsaw Pact countries, Poland was quick to shift its security orientation to the West after the collapse of Communism. It signed up for NATO's Partnership forPeace program in 1994, and began the process of defense modernization. In 1999, along withHungary and the Czech Republic, Poland became a full-fledged member of NATO. Modernization. Modernization has been high onthe list of defense priorities. In 2003, Poland signed a $3.5 billion contract with U.S. aircraftmanufacturer Lockheed Martin for 48 new F-16 fighters. Poland is using U.S. Foreign MilitaryFinancing to purchase communications equipment, navigational aids for airfields, Humvees, and C130 cargo aircraft. (19) Polish officials maintain that the assistance is being spent well and has benefits for the United States,as much of the funds are being re-invested in U.S. industries on items that are interoperable withU.S. equipment. Poland has set a goal of having 60% of its military be professional by 2006. Observers note that the Iraq deployment is providing the Polish military with invaluable experience,not the least of which includes commanding a multinational division. (20) NATO. Since beginning accession negotiations,Poland has sought to meet its NATO obligations. Between 1999 and 2002, the government spentaround 2.0% of GDP on defense, equal to or slightly above the non-U.S., alliance-wide average. ThePoles have also sought to comply with NATO's Prague Capabilities Commitment, the most recentof the alliance's initiatives to enable members collectively to respond better to out-of-area missions. Warsaw has done so by developing so-called "niche capabilities;" for example, as noted above,Poland already is able to deploy experienced special forces units, and is acquiring tactical airlift. Inaddition, Poland will be developing units trained in counter-nuclear, biological, and chemicalwarfare. Poland has also negotiated over the use of its territory for NATO and U.S. military facilities. In June 2004, the alliance opened a Joint Force Training Center in Bydgoszcz for high-rankingofficers. Poland has been modernizing its airfields. Airstrips are being rebuilt according to NATOspecifications, but will also be able to meet U.S. standards; for example, they will be able toaccommodate C-17 transport aircraft. Poland can offer large field training areas where allies couldconduct live-fire exercises with, for example, tanks or attack helicopters, and Poland also has areasthat would be suitable for Stryker armored combat vehicle training maneuvers. Missile Defense. Poland has taken a differentpath than some European countries on the issue of the U.S. missile defense system; Warsaw maybecome a participant in the program. Both sides reportedly are interested and have established aJoint Missile Defense Working Group. In July 2004, Washington and Warsaw announced that theyhad begun "preliminary" discussions on basing interceptor missiles on Polish soil (the CzechRepublic is also said to be under consideration). Poland's foreign policy ranges energetically in all directions of the compass, but it is to theeast and west that Poland's major initiatives have been directed. To the east, Poland has been achampion of democracy in Ukraine and has had an active diplomacy toward Belarus and Russia. And to the west, Poland strenuously worked to integrate with pan-European institutions -- the EUand NATO -- the cornerstone of its post-communist period foreign policy. Ostpolitik. Poland has sought to encouragedemocratization of Belarus and Ukraine not only on principle, but also for the practical reason thatdoing so should improve Poland's security by establishing a buffer zone between itself and Russia. Belarus. Recent relations between Warsaw and Minskhave been tense. Poland criticized the conduct of Belarus' October 2004 parliamentary elections andreferendum permitting strongman Alexander Lukashenko to serve a third presidential term. Warsawalso urged Belarus "to drop authoritarian practices that are inconsistent with the main Europeanvalues of all modern democratic countries." The official Belarusian press bureau accused the Polishmedia of "tendentiousness" in covering the October votes. Poland's recent approach to Belarus hasstressed maintaining some low-level ties as well as links to civil society, while shunning high-levelgovernment-to-government contacts. Key issues for Warsaw include border security and the statusof the ethnic Polish minority in Belarus. President Kwasniewski characterized Polish policy towardBelarus as one of "determination and delicacy." (21) Ukraine. Poland has for years encouraged Ukraineto integrate with the West and thereby wean itself from Russian influence. Poland played a key rolein helping defuse Ukraine's 2004 political crisis. On October 31, Ukraine held presidential elections,and a runoff vote was held on November 21. Giant protests erupted after it became clear that thevotes had been far from free and fair. Poland -- including the parliament, the government, andprivate citizens -- became involved at the outset. In October, the Sejm passed a measure urging theUkrainian government to "respect democratic standards." (22) Later, thousands of Poles demonstrated throughout their countryin support of Ukraine's "orange revolution." After the first runoff, former Ukrainian PresidentKuchma contacted Kwasniewski and asked him to help negotiate a peaceful settlement. Kwasniewski served as a mediator, along with Lithuanian President Vladas Adamkus and by JavierSolana, head of the EU foreign policy office. These negotiations led to a new vote, in whichdemocratic reformer Viktor Yushchenko was elected. Some EU governments seeking good relationswith Moscow initially opposed the EU aiding Ukraine out of concern of offending Moscow; westernEuropean diplomats state that it was Poland that persuaded the EU to assist Ukraine. Russia. During the current decade, Poland hasattempted to normalize its ties with Russia, which were strained after the expulsion in 2000 of nineRussian diplomats on charges of spying, among other issues. During his inaugural address inOctober 2001, Prime Minister Miller said that Poland would seek to carve out a role as the linkbetween the West and the countries of the former Soviet Union. The following month, PresidentKwasniewski indicated that Poland could act as a go-between for the West and Russia. (23) Poland has had severalconcerns with Russia over the past couple of years, however. First of all, it has had to contend withRussian resentment over its efforts to build ties with -- and inculcate democracy in -- Ukraine andBelarus. In addition, Russian President Putin was reportedly angry over the manner in which thePolish media covered the terrorist incident in Beslan, as well as the ongoing conflict in Chechnya. At the same time, Poland has tried to placate Russia for economic as well as geopolitical reasons:Russia is its chief supplier of oil and natural gas. During a December interview with a journalist, Kwasniewski faulted Russia's interventionin the Ukrainian elections, concluding that "[e]very major international power would rather seeRussia without Ukraine." (24) The remark drew a sharp response from Russian President Putin,who attacked Kwasniewski's motives and essentially told him to mind his own business ("I thinkPoland has enough problems of its own that need solving.") The spat was quickly patched over, butit revealed a sensitivity over the opposing roles played by the former allies in the Ukrainian politicaldrama. European Union. In May 2004, as noted above,Poland fulfilled a long-term foreign policy goal when it joined nine other countries in becoming amember of the European Union. Poland has reaped tangible economic benefits from membership,and has been an active political player in the EU. Warsaw was not reluctant to assert itself beforejoining the EU and will likely be even less hesitant to do so now that it is a member. On severalissues, Poland staked out positions intended to advance its interests and values: EU Security Policy. Poland's initial skepticism aboutthe European Security and Defense Policy has changed to "cautious enthusiasm," according to oneobserver. Poland supports the development of an EU military capability, but not at the cost ofweakening NATO. In a February 2005 interview, Defense Minister Szmajdzinski was insistent thatany EU defense structure should "complement and not ... compete with NATO." This is in line withU.S. policy. Poland also announced that it would join the newly-created European military police,a 900-strong force intended for international deployment. (25) Christian Heritage. Poland, joined by Italy and severalother mostly Roman Catholic countries, called for the preamble of the EU "constitution" to refer tothe Christian heritage shared by a majority of EU citizens. The measure was voted down by otherEU members, but Pope John Paul II lauded Poland for its efforts. Some observers have commentedthat, like the United States but unlike many of its more secular fellow European countries, Polandexhibits a relatively strong concern for religious values. (26) Turkey. Despite its call for EU recognition ofEurope's Christian heritage, Poland has "vigorously" supported Turkey's ambition to join the EU. Former Polish Foreign Minister Cimoszewicz argued that Turkey should belong because it "is proofthat the fundamental values of Western democracy can also be applied in Islamic countries." Analysts also argue that Poland's support is based on its belief that the inclusion of Turkey,traditionally a strong U.S. ally, would strengthen the transatlantic link. Finally, Warsaw reportedlybelieves that Turkish membership would improve the prospects of Ukraine being invited to join --a major Polish foreign policy goal. (27) Taxes. Poland and other countries have objected toFrance's proposal to reduce EU structural funds to member states that maintain below-averagecorporate tax rates. Critics charge that the practice, known as "fiscal dumping," is used to attractforeign investment; they argue that countries that maintain low tax rates should not be compensatedby EU subsidies. Poland opposes France and Germany's proposal for a minimum, EU-widecorporate income tax, noting that, for example, its value-added tax is relatively high. (28) Bilateral Issues. Poland also has crossed swords withindividual players within the EU; over the past year, Warsaw has had differences with Germany,France, and Spain on both EU and other matters. Polish-German relations were strained in 2004 byissues that harked back to World War II. The contretemps began when a German group (thePrussian Claims Society) demanded that the Polish government make compensatory payments to thefamilies of ethnic Germans who had been expelled from Polish territory in 1945-46. The claimcaused an uproar in Poland, and some members of the Sejm called for Germany to pay reparationsfor Poland's World War II losses. In November, the two governments agreed to dismiss such claims. Poland also has dueled with France (its biggest foreign investor) over Iraq, tax policy, and EU votingrights, and with Spain over the distribution of EU structural funds. (29) Since the collapse of communism, Poland has conducted active and independent domesticand foreign policies. Successive governments have advanced economic reforms that generally haveresulted in a successful transformation to a market economy. Corruption remains a serious problem,but the print and broadcast media have increasingly put a spotlight on corruption cases, a practicethat some analysts believe should result in reduced public tolerance and an increase in legal prosecutions. Despite reports of graft, foreign investors have continued to enter Polish markets,helping fuel steady economic growth. Poland has had a dynamic political life as well, with each ofthe post-1989 elections resulting in a change in government from left to right or vice versa. Pollssuggest that this pattern may continue with the next parliamentary elections, scheduled for lateSeptember 2005. Poland's external relations, deeply influenced by its history, have also been dynamic. Warsaw has integrated into the NATO and EU, and has proactively promoted its perceived nationalinterests in those institutions, as well as bilaterally with neighboring states. In addition to joiningthe alliance, Poland has looked to its security by modernizing its military; it has been acquiring newweapons systems and reorganizing and downsizing its armed forces. To the east, Poland has soughtto promote democracy in Ukraine and to normalize relations with Belarus and Russia. To the west,Poland has shown a willingness to confront its new EU partners on issues of national importance. Poland's relations with the United States have been positive, particularly since 9/11. Warsaw hassupported U.S. policies in the global war on terrorism, in Afghanistan and in Iraq -- where it assumeda leading role. But over the past year, Poles have increasingly expressed disillusionment with theIraq mission and disappointment that the United States has not rewarded their country's loyalty andsacrifices. The government has announced a phased troop withdrawal. Some analysts argue that, if it continues on its current path, Poland may well emerge as aleading nation in Europe. Although most analysts do not anticipate major changes in Polish foreignpolicy in the near future, some believe that it is inevitable that Poland will draw closer to the EUover the long term.

Poland and the United States have enjoyed close relations, particularly since the terroristattacks of September 11, 2001. Warsaw has been a reliable supporter and ally in the global war onterrorism and has contributed troops to the U.S.-led coalitions in Afghanistan and in Iraq -- whereit assumed a leading role. Over the past year, however, many Poles have concluded that theircountry's involvement in Iraq has increasingly become a political liability, particularly on thedomestic front. With elections scheduled for September 2005, the government has announced aphased troop withdrawal. Some Poles have argued that, despite the human casualties and financialcosts their country has borne, their loyalty to the United States has gone unrewarded. Many hopethat the Bush Administration will respond favorably by providing increased military assistance, byawarding Iraq reconstruction contracts to Polish firms, and by changing its visa policy. Poland has had an eventful political scene in recent years. Since 2001, two prime ministershave fallen. Many attribute these turnovers to a series of high-profile scandals. Although the currentgovernment has steered the nation into the EU and nurtured a strong, export-based economy, pollsindicate that it may be replaced in the next elections. However, regardless of which parties form thenext government, Poland's foreign policy will not likely undergo drastic changes. Poland'sexport-dependent economy has performed relatively well in recent years; the agricultural sector inparticular has responded positively to EU membership. A NATO member since 1999, Poland has been restructuring and modernizing its military toenable it to respond to out-of-area missions -- an alliance priority. Poland has sought to nurturedemocracy in Ukraine and Belarus, and to normalize ties with Russia. Poland has been an activemember of NATO and, since May 2004, the European Union. Poland was not reluctant to assertitself in a number of issue areas before joining the EU and will likely be even less hesitant to do sonow that it is a member. Some analysts argue that, if it continues on its current path, Poland maywell emerge as a leading nation in Europe. Although most analysts do not anticipate major changesin Polish foreign policy in the near future, some believe that it is inevitable that Poland will drawcloser to the EU over the long term. This report provides political and economic background on Poland and evaluates currentissues in U.S.-Polish and Polish-European relations. This report will be updated after Poland's 2005elections. For additional information, see CRS Report RL32967 , Poland: Foreign Policy Trends ,by [author name scrubbed].

The current budget situation has prompted Congress to examine a variety of revenue raising options. Repealing or modifying some or all of the long list of so-called tax expenditures is often included as part of those options. The exclusion from income of the interest paid on state and local government debt is one such tax expenditure. There are three primary types of proposals that include changes to state and local government bonds--capping the preference, eliminating the preference, and changing the preference to a direct issuer subsidy. These three types can be seen in the following proposals. The President's FY2013 budget proposal would include partial elimination of the tax preference by capping the preference at the 28% marginal tax rate. The Simpson-Bowles (SB) deficit reduction plan proposes complete elimination of the tax preference. The Congressional Budget Office (CBO) "Revenue Options" report proposes changing the tax exclusion for investors to a direct tax subsidy to issuers . One of the cited reasons for the elimination (or at least modification) of the tax exclusion for interest on state and local government bonds (tax-exempt bonds) is that the preference is a financially and economically inefficient tool for inducing public capital investment. In short, the federal revenue loss is greater than the subsidy to state and local governments. Thus, modifying, eliminating, or reducing the tax preference could generate federal revenue and make the federal tax code more economically efficient. Policymakers must weigh a variety of competing concerns when evaluating these proposals to modify tax-exempt bonds. Issuers, such as governments and certain private entities, benefit from lower cost of borrowing and relatively high-income investors benefit from the resulting tax-free income. With the proposals presented here, issuers would likely encounter higher borrowing costs and relative wealthy investors would lose a significant tax preference. In particular, the top 10% of all earners realize more than 77% of the total reported tax-exempt interest income. The reduced benefits accruing to issuers and these investors, however, should be weighed against the benefit of a potentially more efficient (and to some, equitable) federal income tax. The impact of changes to the tax treatment of the interest on state and local government debt can be assessed from three perspectives to analyze: the size of the tax expenditure, the distribution of the tax-exempt interest income, and the value of the tax-exemption to issuers. The size of the tax subsidy is significant. The Administration's 2013 budget includes a tax expenditure estimate of $227.5 billion for the 2013 to 2017 budget window for public purpose state and local government bonds ( Table 1 ). The 2013 budget also estimates that non-governmental tax-exempt bonds (so-called qualified private activity bonds) will generate an additional $78.7 billion in revenue losses over the same time frame. The single largest non-governmental tax expenditure for tax-exempt bonds is for non-profit hospital bonds ($26.9 billion). The column identified "Rank" in Table 1 is the position of the provision in the list of all 173 federal tax expenditures contained in the 2013 budget. How this tax subsidy is distributed across taxpayers underlies the analysis of the potential impact of tax reform proposals. The President's 2013 budget would cap the exclusion of interest income from tax-exempt bonds at 28%. The Simpson-Bowles (SB) plan would eliminate the income exclusion entirely and lower marginal tax rates. The CBO deficit reduction options report proposes to replace the interest exclusion for tax-exempt bonds with a direct payment to issuers. The distribution of tax-exempt interest is skewed to higher income taxpayers because the marginal income tax rates provide a higher after-tax rate of return for these taxpayers. Consequently, proposals that change the tax rules for tax-exempt bonds will have a greater impact on higher-income taxpayers. The Internal Revenue Service, Statistics of Income Division (SOI), publishes annual summaries of the composition of income for all tax returns. Relatively few returns report earning tax-exempt interest income. In 2009, approximately 4.5% of all returns (6.3 million) reported tax-exempt interest income. As income increases, however, the percentage of returns reporting tax-exempt interest income rises significantly. Almost two-thirds (64.1%) of returns with adjusted gross income (AGI) over $1 million included tax-exempt interest income. Table 2 presents the distribution of interest income by AGI with a break at the $200,000 income threshold. The $200,000 income level roughly approximates the income threshold at which policymakers have discussed reducing preferences in the tax code--as in the FY2013 budget proposal. In 2009, 80.6% of returns reported AGI under $200,000. These returns with AGI of less than $200,000 accounted for just 50.5% ($37.2 billion) of tax-exempt interest income. The remaining 19.4% of returns with AGI above $200,000 reported 49.5% ($36.4 billion) of tax-exempt interest income. The data by broad AGI groups presented in IRS published reports provides a reasonable assessment of the distribution of tax-exempt interest income. The IRS also releases data for public use that can be organized to address different policy questions. For example, Figure 1 reports the portion of tax-exempt interest reported by tax return decile for the 2007 tax year. The deciles for the figure are created by sorting all returns by AGI from lowest to highest. The first decile is the first 10% of returns and includes many returns with "negative" income. Each successive decile represents the next 10%. The deciles provide a smoother climb up through the range of AGI. The tenth or highest decile, returns with AGI above $113,400, reported over 77% of all tax-exempt interest income and exceeded total AGI for the cohort. Interestingly, the bottom decile, with negative aggregate AGI, actually claimed 2.0% of the interest income and was the only other cohort with tax-exempt interest income that exceeded aggregate AGI. This income cohort likely includes filers that in previous years had been in higher income cohorts and are temporarily in this lowest cohort. This cohort also includes retired taxpayers that do not earn wage and salary income. Within the top decile, tax-exempt interest income is even further concentrated in the top one percent of AGI. In 2007, the top one percent of returns all reported AGI over $407,500 and earned 49.0% of all tax-exempt interest income. Clearly, the benefit of the tax exclusion is concentrated in the upper income groups. Thus, modification of the tax preference will impact this income cohort the most. Generally, the interest rate on tax-exempt bonds is considered the "cost of capital" for the issuing entity. If the interest rate on state and local government bonds is lower than the comparable taxable interest rate for private borrowers, then the issuing government is receiving a federal subsidy, reducing the cost of capital. Thus, the relative difference between taxable bonds and tax-exempt bonds (or spread) is a straightforward way to evaluate or quantify the value of the interest exclusion to issuers. The next section reviews selected proposals that would modify the tax preferences for tax-exempt bonds. The 2013 budget proposal, the Simpson-Bowles deficit reduction proposal, and the Congressional Budget Revenue Option, would all impact tax-exempt bonds directly if enacted. As discussed above, three types of proposals are examined here. The first, capping the benefit of the tax-exemption to the 28% marginal tax rate, was included in the President's 2013 budget. The second, eliminating the tax-exemption while broadening the income tax base and lowering rates, was included in the Simpson-Bowles Deficit Commission Report. The third, replacing the tax-exemption for investors with a direct payment to the issuer, was proposed in the Congressional Budget Office publication, "Revenue Options." Variants of this last proposal include so-called tax credit bonds where the issuer or investor receives a tax credit rather than a tax exclusion. For example, the President's FY2013 budget includes reinstating one type of tax credit bond, the Build America Bond (BAB), which expired December 31, 2010. One proposal is to cap the benefit of tax-exempt interest at the 28% marginal tax rate. The plan would allow taxpayers over $200,000 ($250,000 for joint filers) an exclusion only up to the equivalent of a 28% marginal income tax rate. The impact on investors will be greater the higher the marginal tax rate. Generally, the taxpayers in tax brackets at or above the 33% rate will encounter the largest effect as more of their tax-exempt earnings would be subject to some tax under this proposal. Investors evaluate the attractiveness of a tax-exempt bond investment through comparison to a taxable alternative. More generally, the market interest rate where the after-tax rate of return on a taxable bond matches the tax-exempt rate is commonly called the "market clearing rate." If some of the interest on a tax-exempt bond becomes taxable, then the market clearing rate will increase. The change in the market clearing rate is a rough gauge of the relative impact of the proposed modification to the tax treatment of interest paid on tax-exempt bonds. In Table 3 , the column labeled "Hypothetical Taxable Bond Rate" is a taxable investment that serves as an investment alternative to tax-exempt bonds. Under current law (the third column), higher income investors would be willing to accept ever lower tax-exempt bond returns because the after-tax return to taxable bonds, the alternative, declines with the marginal tax rate. For example, a taxpayer in the 35.0% marginal tax bracket would earn a 3.90% after-tax rate of return on a taxable bond with a hypothetical 6% pre-tax rate of return. Thus, any tax-exempt bond that pays interest that is greater than 3.90% would provide a higher after-tax rate of return. Under the proposed cap the tax benefit is capped at the 28% marginal tax bracket. As a result, previously tax-exempt interest would be taxed for those in tax brackets above 28%. The higher required yield for the tax-exempt bond under this policy reflects the higher marginal tax rate which exceeds the proposed cap. The after-tax rate of return for partially tax-exempt bonds under the proposal for taxpayers in the 35.0% marginal tax bracket would rise to 4.19%, a 0.29% "premium" when compared to current law for a taxable investment with a 6% pre-tax return. The size of the premium would move with prevailing market interest rates. The higher the market interest rate, the larger the value of the premium. The market clearing rate for a tax-exempt security is the following if the taxpayer's marginal tax rate exceeds the cap: where the t i is the individuals tax rate and the policy tax rate cap is t cap . If the tax rate were less than the cap, then the clearing rate is simply: The link between a taxpayers marginal tax rate and the value of investing in tax-exempt bonds complicates the investment decision for taxpayers. Generally, the tax cap would reduce the attractiveness of tax-exempt bonds for taxpayers in tax brackets above the 28% threshold. The decrease in demand would likely increase the borrowing costs for state and local governments. The concentration of tax-exempt interest income in the higher income ranges implies that a significant share of taxpayers receiving tax-exempt interest will be affected by such a policy shift. The response to the changing tax status of tax-exempt bonds by investors as proposed by the cap, however, may be muted. Most tax-exempt bonds would still provide a greater after-tax return than comparable taxable investments. The array of marginal tax rates in the first column of Table 3 are a mix of current law rates and rates as proposed in the President's FY2013 budget. Specifically, the top two rates, 36.0% and 39.6%, would apply to taxpayers filing joint returns with taxable income over $250,000 and single taxpayers with taxable income over $200,000 in 2013 if current law is not extended. For example, a taxpayer in the 33% tax bracket who holds a $100,000 taxable bond with a 6% coupon payment would receive $6,000 each year. Investors then determine tax implications to arrive at the after-tax return of investments. Under current law, the taxes would amount to 33% of that amount or $1,980. After paying this tax, the investor would have $4,020. Thus, a tax-exempt bond investment would need to offer at least 4.02% to lure this investor under current law. In contrast, under the proposal, the investor would need a 4.23% return on a tax-exempt bond because some of the interest would be taxed. The last column of Table 3 provides a relative measure for "tax premium" on tax-exempt bonds for the selected tax rates given a 6% market interest rate on taxable bonds. Note that for the highest rate investors, the premium approaches 50 basis points or almost one-half a percent. The number of taxpayers in the top two brackets comprise just 1.9% of all returns in 2007, but 35.2% of all tax-exempt interest or $25.6 billion (see Table 4 ). If the 28% proposal were in effect, these taxpayers would pay some tax on these earnings. Assuming the hypothetical 6% market rate and no change in taxpayer behavior, then the additional revenue would be $70.3 million for this cohort. As discussed earlier, for the 33.0% marginal tax rate investors, taxes would be owed at the 5% rate difference between the cap amount and marginal tax rate (7% for the 35% marginal tax bracket). Even with the premium imposed by this proposal, there is still a significant subsidy for these taxpayers. The reduced after tax rate of return would still likely be greater than the taxable investment alternative for most taxpayers, particularly for those in the 35% bracket. The impact on issuers is difficult to predict because the response of investors is uncertain and is a critical element in evaluating issuer impact. And, as noted above, the magnitude of investor response is unclear. Some have suggested that the retroactive application of the proposed tax cap could introduce a tax-risk premium to all tax-exempt bonds. The tax-risk premium would be passed on to issuers through higher interest costs. The impact on issuers will depend on the extent to which a premium exists and how much is passed on to the issuer. The Simpson-Bowles (SB) deficit reduction committee plan recommended eliminating the exclusion of interest on state and local government debt paired with a reduction in marginal tax rates. Specifically, the SB plan would repeal the tax-exemption for all newly issued state and local government bonds. The tax rate on these bonds would be the proposed individual income tax brackets contained in the proposal ( Table 5 ). Thus, under the SB plan, interest payments from new bonds issued by state and local governments would be treated like all other income. Investment in tax-exempt bonds would no longer receive a tax preference if SB were to become law. Current high-income investors would no longer prefer tax-exempt bonds to taxable alternatives and would likely adjust their portfolios accordingly. The reduction in demand from this segment of the bond market, however, may be partly mitigated by an increase in demand from entities that previously did not invest in tax-exempt bonds. This group would include international investors and U.S. pension funds. These new investors, who do not pay U.S. taxes, place no value on the tax exclusion. The increased demand of these two types of investors combined would have positive impact on the tax-exempt bond market and a generally negative impact on the taxable bond (or similar taxable asset) market. This effect, however, will likely be minimal. As with the income tax cap, the impact of the SB proposal would be concentrated in the top two current marginal tax rates. For the top two rate brackets, tax-exempt interest would shift from generating a tax savings of 33% or 35% to a tax liability of 28%. Table 4 shows that almost 40% of tax-exempt interest ($29.8 billion) was earned by taxpayers in these two marginal rate brackets in 2007. An additional impact would be on the secondary market for outstanding tax-exempt debt. Assuming the tax treatment of outstanding tax-exempt bonds would not change, the supply of these bonds would shrink, increasing the price offered to current holders. The windfall gain to current tax-exempt bond holders may be significant. The cost of tax-exempt bond-financed investment would likely increase under the SB plan absent the federal tax preference. Proponents of preserving tax-exempt bonds claim that If eliminated, the interest rates on what would now amount to taxable bonds would rise dramatically, almost certainly resulting in a period of stagnation within state and local governments. Important infrastructure, education, health care, and community amenity projects would be delayed, scaled back, or altogether eliminated. This claim, though likely overstated, is the primary reason cited for preserving the tax exemption. Eliminating the tax-exempt bond market for new issues as under SB would also eliminate the tilt of the federal preference to riskier projects. Under current law, the tax preference applies to all projects regardless of relative risk. Thus, the absolute value of the tax preference (and federal revenue loss) is greater for projects with a greater risk profile. This arises because the interest rate premium on those projects is greater (i.e., the interest rate is higher). Returning to Table 3 , the hypothetical comparative taxable bond was assumed to be 6.0% and an investor in the 35% bracket needed a tax-exempt return of at least 3.9% to invest in the tax-exempt bond. If the project were deemed riskier, then the rate on a taxable bond of like risk could be as high as 8.0% (the higher rate is the so-called "risk premium"). This implies the tax-exempt interest rate would need to be at least 5.2% to justify investment in the riskier project. Under SB, issuers of riskier bonds would not receive more federal assistance as the risk premium increases. The elimination of the exclusion of interest on state and local government debt would also have a differential impact across states. States that rely more on debt will realize a greater increase in the cost of debt than states less reliant on debt. And, within states, relatively debt reliant local governments would also be relatively worse off. In FY2009, state and local governments in Massachusetts, New York, and Kentucky all had debt outstanding exceeding 25% of state gross domestic product (GDP). In contrast, governments in Iowa, Idaho, and Wyoming had debt to GDP ratios of less than 12%. From this, one could conclude that elimination of the tax-exemption would have roughly twice the impact in the most debt reliant states compared to the least debt reliant states. The Congressional Budget Office (CBO) provided several options to reduce the deficit and one was to replace the "tax exclusion for interest income on state and local government bonds with a direct subsidy to the issuer." This option is estimated to increase revenues $142.7 billion over the 2012 to 2021 budget window. In addition to raising revenue, the proposal would also increase the economic efficiency of the tax preference for non-federal government borrowing. Under current law, the tax exclusion provides a disproportionately greater benefit to high-income taxpayers. This proposal would replace the tax bracket dependent preference (see the column labeled "Current Law" in Table 3 ) with a subsidy payment to the issuer. The proposed payment amount, 15% of the issuer coupon payment, is lower than the estimated rate that would equate a direct pay bond to traditional tax-exempt bonds. This option is similar to the now expired Build America Bond (BAB), though the subsidy payment was significantly higher, 35%. Similar to the CBO proposal, the President's 2013 budget proposes making permanent an expanded version of the BAB financing tool for state and local governments issuers as well as non-profit issuers (hospitals and universities). The new BAB program would carry a subsidy rate of 30% for 2013, dropping to 28% thereafter. The subsidy rates in the President's budget are intended to be revenue neutral though are still estimated to reduce revenues $1.1 billion over the 2013 to 2022 budget window. There are three types of investors to consider when assessing the impact of the CBO proposal: (1) high marginal tax bracket investors, (2) current holders of bonds, and (3) potential new investors in taxable state and local government debt. If the CBO proposal were to become law, high marginal tax rate tax-exempt bond investors would lose a tax preference. In 2009, $73.6 billion in tax-exempt interest income was reported (see Table 2 ). Current holders of tax-exempt bonds would likely see a windfall gain with the now limited stock of tax favored bonds (if the tax status of existing bonds were grandfathered). There would likely be a negative impact on the market for existing taxable bonds. If potential investors rebalanced portfolios by reducing their holdings of other taxable bonds, then prices for those securities would decline. New investors that are not subject to federal income taxes, such as pension funds and international investors, would likely buy state and local government bonds. The additional investment option for these investors would likely be a welcome change from current law and could be viewed as a positive impact for investors. The issuers would have a higher interest cost because the 15% subsidy rate would not match the savings with tax-exempt bonds. Nevertheless, the subsidy would flow directly to the issuer and still provide a federal tax benefit. The subsidy would also be more economically efficient than the current subsidy delivered with the tax exclusion as investors in higher marginal tax brackets would not receive the previously explained windfall gain. Under current law, there is a significant transfer of federal tax revenue to tax-exempt bond issuers and investors. Investors benefit from the exclusion of interest on the bonds from taxable income and the above market rate of return offered by most tax-exempt bonds. State and local governments, non-profit hospitals, educational institutions, and a variety of other entities all benefit from lower interest rates than otherwise would be the case. Importantly, the federal revenue loss to the federal government exceeds the benefit received by the issuer. The three proposals reviewed here would all reduce the benefit received by issuers and investors while increasing revenues for the federal government. As a result, under these proposals, issuers will face higher borrowing costs and investors will lose one option for earning tax-free income. The proposals do differ in the relative impact on investors and issuers. The FY2013 budget proposal to cap the benefit to the 28% tax bracket would be felt relatively equally between issuers and investors and would not address the inefficiency of using tax-exempt bonds to encourage investment in public capital. The SB tax reform plan would eliminate the tax preference thereby eliminating the economic inefficiency generated by the current tax preference, but would also eliminate the relative benefit of tax-exempt bonds for both issuers and investors. The CBO proposal also eliminates the tax preference for investors, but would preserve the issuer preference albeit at a lower level. The economic inefficiency arising from the current tax preference would also be eliminated by the CBO proposal. The CBO proposal can be modified to yield a roughly equivalent subsidy to the current tax-exempt bond preference for issuers. Balancing the loss of tax preferences for issuers and investors against the benefit of a more economically efficient tax code and a smaller deficit is the critical challenge for Congress.

Under current law, interest income from bonds issued by state and local governments is exempt from federal income taxes. In addition, interest on bonds issued by certain nonprofit entities and authorities is also exempt from federal income taxes. Together, these tax preferences are estimated to generate a federal revenue loss of $309.9 billion over the 2012 to 2016 budget window. Along with this direct "cost," economic theory holds that tax-exempt bonds distort investment decisions (leading to over-investment in this sector). As with many other tax preferences, the income exclusion is being examined as part of fundamental tax reform. Generally, the tax preference directly benefits two groups: issuers and investors. Issuers, principally state and local governments (but also certain nonprofits and qualified private entities) benefit from a current lower cost of borrowing. Investors, particularly those in the top tax brackets, benefit from mostly tax-free income. In particular, the top 10% of all earners realize more than 77% of the total reported tax-exempt interest income. This report first explains the tax preference and the distribution of the receipt of tax-exempt interest. An analysis of the impact of several different proposals then follows. Included in this analysis are proposals to (1) cap the benefit at a specific income tax rate (as offered in the FY2013 budget), (2) eliminate the tax preference and lower overall rates (as proposed in the Simpson-Bowles (SB) deficit reduction plan), and (3) change the current tax exclusion for investors to a tax credit (or subsidy) for issuers (as proposed in the Congressional Budget Office (CBO) Revenue Options report). The proposals differ in the relative impact on investors and issuers. The proposal in the President's FY2013 budget would be felt relatively equally by issuers and investors and would not address the economic inefficiency of using tax-exempt bonds to encourage investment in public capital. The SB tax reform plan would eliminate the tax preference thereby eliminating the economic inefficiency generated by the current tax preference, but would also eliminate the relative benefit of tax-exempt bonds for both issuers and investors. The CBO proposal also eliminates the tax preference for investors, but would preserve the issuer preference albeit at a lower level. The economic inefficiency arising from the current tax preference would also be eliminated by the CBO proposal. The CBO proposal can be modified to yield a roughly equivalent subsidy to the current tax-exempt bond preference for issuers. This report will be updated as significant new proposals or legislative events warrant.

The United States is the largest foreign direct investor in the world and also the largest recipient of foreign direct investment. By year-end 2011, foreign direct investment in the United States had reached $2.6 trillion and U.S. direct investment abroad had reached $4.1 trillion. This dual role means that globalization, or the spread of economic activity by firms across national borders, has become a prominent feature of the U.S. economy and that through direct investment the U.S. economy has become highly enmeshed with the broader global economy. The globalization of the economy also means that the United States has important economic, political, and social interests at stake in the development of international policies regarding direct investment. With some exceptions for national security, the United States has established domestic policies that treat foreign investors no less favorably than U.S. firms. In addition, the United States has led efforts over the past 50 years to negotiate internationally for reduced restrictions on foreign direct investment, for greater controls over incentives offered to foreign investors, and for equal treatment under law of foreign and domestic investors. In light of the terrorist attacks on the United States on September 11, 2001, however, some Members have questioned this open-door policy and have argued for greater consideration of the long-term impact of foreign direct investment on the structure and the industrial capacity of the economy, and on the ability of the economy to meet the needs of U.S. defense and security interests. Arguably the most important, and most controversial, activities related to foreign direct investment are the reviews and investigation of foreign investments in the United States by the Committee on Foreign Investment in the United States (CFIUS). The Committee is an interagency organization that serves the President in overseeing the national security implications of foreign investment in the economy. Originally established by an Executive Order of President Ford in 1975, the committee has operated until recently in relative obscurity. CFIUS has "the primary continuing responsibility within the Executive Branch for monitoring the impact of foreign investment in the United States, both direct and portfolio, and for coordinating the implementation of United States policy on such investment." Following its creation by Executive Order, the Committee met infrequently and played a low-profile role in monitoring foreign investment in the economy until 1988, when Congress approved the Exon-Florio provision. The Exon-Florio provision grants the President broad discretionary authority to take what action he considers to be "appropriate" to suspend or prohibit proposed or pending foreign acquisitions, mergers, or takeovers which "threaten to impair the national security." Congress directed that before this authority can be invoked the President must conclude that (1) other U.S. laws are inadequate or inappropriate to protect the national security; and (2) that he must have "credible evidence" that the foreign investment will impair the national security. As a result, if CFIUS determines that it does not have credible evidence that an investment will impair the national security it is not required to undertake a full 45-day investigation, even if the foreign entity is owned or controlled by a foreign government. After considering the two conditions listed above (other laws are inadequate or inappropriate, and he has credible evidence that a foreign transaction will impair national security), the President is granted almost unlimited authority to take " such action for such time as the President considers appropriate to suspend or prohibit any covered transaction that threatens to impair the national security of the United States ." In addition, such determinations by the President are not subject to judicial review. In the Exon-Florio provision (and the subsequent P.L. 110-49 ), national security was not defined, but was meant to be interpreted broadly. Nevertheless, regulations developed by the Treasury Department to implement the law direct the members of CFIUS to focus their reviews of foreign investments exclusively on those transactions that involve "products or key technologies essential to the U.S. defense industrial base," and not to consider economic concerns more broadly. CFIUS also indicated that in order to assure an unimpeded inflow of foreign investment it would implement the statute "only insofar as necessary to protect the national security," and "in a manner fully consistent with the international obligations of the United States." When Congress adopted the Exon-Florio provision, many Members were concerned that the United States could not prevent foreign takeovers of U.S. firms unless the President declared a national emergency or regulators invoked federal antitrust, environmental, or securities laws. Through the Exon-Florio provision, Congress attempted to strengthen the President's hand in conducting foreign investment policy, while limiting its own role as a means of emphasizing that, as much as possible, the commercial nature of investment transactions should be free from political considerations. Congress also attempted to balance public concerns about the economic impact of certain types of foreign investment with the nation's long-standing international commitment to maintaining an open and receptive environment for foreign investment. While CFIUS's activities often seem to be quite opaque, the Committee is not free to establish an independent approach to reviewing foreign investment transactions, but operates under the authority of the President and reflects his attitudes and policies. As a result, any discretion CFIUS uses to review and to investigate foreign investment cases reflects policy guidance from the President. Foreign investors are also constrained by legislation that bars foreign direct investment in such industries as maritime, aircraft, banking, resources and power. Generally, these sectors were closed to foreign investors prior to passage of the Exon-Florio provision in order to prevent public services and public interest activities from falling under foreign control, primarily for national defense purposes. The Exon-Florio process is comprised of three different steps for reviewing proposed or pending foreign "mergers, acquisitions, or takeovers" of "persons engaged in interstate commerce in the United States" to determine if the transaction "threatens to impair the national security." CFIUS has 30 days to conduct a review, 45 days to conduct an investigation, and then the President has 15 days to make his determination. The President is the only officer with the authority to suspend or prohibit mergers, acquisitions, and takeovers. Neither Congress nor the Administration has attempted to define the term national security as it appears in the Exon-Florio statute. Treasury Department officials have indicated, however, that during a review or investigation each member of CFIUS is expected to apply that definition of national security that is consistent with the representative agency's specific legislative mandate. For instance, over time and through a series of Executive Orders, the Department of Defense has developed the National Industrial Security Program (NISP) through which it has adopted various provisions under the term, "Foreign Ownership, Control, or Influence (FOCI)." These provisions attempt to prevent foreign firms from gaining unauthorized access to "critical technology, classified information, and special classes of classified information" through an acquisition of U.S. firms that it could not gain access to through an export control license. This type of review is run independently of and parallel to a CFIUS review. In 2007, Congress changed the way foreign direct investments are reviewed through P.L. 110-49 , the Foreign Investment and National security Act of 2007. Through P.L. 110-49 , Congress strengthened its role in two fundamental ways. First, Congress enhanced its oversight capabilities by requiring greater reporting to Congress by CFIUS on the Committee's actions either during or after it completes reviews and investigations and by increasing reporting requirements on CFIUS. Second, Congress fundamentally altered the meaning of national security in the Exon-Florio provision by including critical infrastructure and homeland security as areas of concern comparable to national security. The law also requires the Director of National Intelligence to conduct reviews of any investment that poses a threat to the national security. The law provides for additional factors the President and CFIUS are required to use in assessing foreign investments, including the implications for the nation's critical infrastructure. In another change, P.L. 110-49 requires CFIUS to investigate all foreign investment transactions in which the foreign entity is owned or controlled by a foreign government, regardless of the nature of the business. Some foreign investors have regarded this approach as a change in policy by the United States toward foreign investment. Prior to this change, foreign investment transactions were reviewed in a way that presumed that the transactions contributed positively to the economy. Consequently, the burden of proof was on the members of CFIUS to prove during a review that a particular transaction threatened to impair national security. P.L. 110-49 , however, shifted the burden onto firms that are owned or controlled by a foreign government to prove that they are not a threat to national security. In any given year, the number of investment transactions in which the foreign investor is associated with a foreign government likely is small compared with the total number of foreign investment transactions. The number of such transactions, however, has grown as some foreign governments experienced a surge in their foreign exchange reserves and they established sovereign wealth funds and invested their reserve funds abroad in an array of activities, including in U.S. businesses. In 2012, the growing number of investments by Chinese firms sparked concerns by a number of groups over the economic and security impact of the investments, similar to concerns about Japanese investment in the United States in the 1980s. In particular, on October 8, 2012, the House Permanent Select Committee on Intelligence published a report on the "the counterintelligence and security threat posed by Chinese telecommunications companies doing business in the United States." The report offered a number of policy recommendations affecting CFIUS, including The Committee on Foreign Investment in the United States (CFIUS) must block acquisitions, takeovers, or mergers involving Huawei and ZTE given the threat to U.S. national security interests. Legislative proposals seeking to expand CFIUS to include purchasing agreements should receive thorough consideration by relevant Congressional committees. Committees of jurisdiction in the U.S. Congress should consider potential legislation to better address the risk posed by telecommunications companies with nation-state ties or otherwise not clearly trusted to build critical infrastructure. Such legislation could include increasing information sharing among private sector entities, and an expanded role for the CFIUS process to include purchasing agreements. In addition, in November 2012, the U.S.-China Economic and Security Review Commission issued a report that detailed concerns over Chinese investments by U.S. industries, lawmakers, and government officials about the ''potential economic distortions and national security concerns arising from China's system of state-supported and state-led economic growth." In particular, some observers argued that economic concerns focused on the possibility that state-backed Chinese companies choose to invest ''based on strategic rather than market-based considerations,'' and are free from the constraints of market forces because of generous state subsidies. The report proffered a number of recommendations for amending the CFIUS statute: Congress examine foreign direct investment from China to the United States and assess whether there is a need to amend the underlying statute (50 U.S.C. app 2170) for the Committee on Foreign Investment in the United States (CFIUS) to (1) require a mandatory review of all controlling transactions by Chinese state-owned and state-controlled companies investing in the United States; (2) add a net economic benefit test to the existing national security test that CFIUS administers; and (3) prohibit investment in a U.S. industry by a foreign company whose government prohibits foreign investment in that same industry. Legislation creating the Committee on Foreign Investment in the United States (CFIUS) could be amended to add a test of ''economic benefit'' of a Chinese investment in the United States. CFIUS's jurisdiction be extended to include ''greenfield'' investments, or investments in new industrial plants and facilities. In 2012, two investments by Chinese firms attracted public and congressional attention: an investment by the Chinese firm Sany Group in a wind farm project, known as the Butter Creek Projects, in Oregon by Ralls Corp.; and Wanxiang's acquisition of battery-maker A123 Systems Inc. In March 2012, Ralls acquired the wind farm assets from Terna Energy SA, an Athens, Greece-based company, without reporting the transaction to CFIUS. In June, 2012, CFIUs contacted Ralls and requested the firm file a voluntary notification to have its investment retroactively reviewed. After reviewing the acquisition, CFIUS recommended that Ralls stop operations until a complete investigation could be completed as a result of objections by the U.S. Navy over the placement of wind turbines by Ralls near or within restricted Naval Weapons Systems Training Facility airspace where drones (unmanned aerial vehicles) are tested. After a full investigation, CFIUS recommended that President Obama block the investment by ordering a divestment of the transaction and imposed other requirements on Ralls to remove equipment it had installed. On September 28, 2012, President Obama issued an executive order that argued that there was credible evidence that the Ralls acquisition threatened to impair U.S. national security and ordered Ralls to divest itself of the Oregon wind farm project. In response, the Ralls Corporation filed a suit on October 1, 2012 challenging the Obama Administration's authority to block the investment. On February 22, 2013, the United States District Court for the District of Columbia dismissed the suit by ruling that the court lacked jurisdiction, since the CFIUS statute states that the President's decisions are not subject to judicial review, known as a finality provision. Ralls argued that the President was authorized only to "suspend of prohibit" a transaction, not to order a removal of equipment or a divesture. The court ruled, however that the statute grants the President broad authority by authorizing him to take "such action for such time" as he considers appropriate. The suit also argued that Ralls was treated unfairly under the Due Process Clause of the Fifth Amendment, but the court ruled that it lacked jurisdiction on this motion by the CFIUS statute, nevertheless, the court indicated that its ruling allowed Ralls' due process claim to proceed. The Ralls' due process claim apparently focused on whether the President and/or CFIUS should be required to provide companies that proceed through the CFIUS review and investigation process with an opportunity to review, respond to, and rebut any evidence used to make a Presidential Determination. One issue involved in requiring access to such information is the fact that CFIUS' analysis for any particular transaction is based on classified information generally not available to the public. Ralls has appealed the case. In addition, China's Wanxiang Group received approval in January 2013 from CFIUS to acquire electric car battery maker A123 Systems. Wanxiang outbid other potential buyers by offering to pay $257 million for the U.S. company. Some Members of Congress and the Strategic Materials Advisory Council argued against the acquisitions on the grounds that it could jeopardize the nation's energy security. Others opposed the acquisition because A123 Systems had received nearly $250 million in a federal grant to support clean energy, although half of the grant was never released. A123 Systems manufactures lithium-ion batteries for Fisker Automotive, BMW hybrid 3- and 5-Series cars, and the all-electric Chevrolet Spark. Arguably, the terrorist attacks of September 11, 2001, and a dissatisfaction among some Members over a perceived lack of responsiveness by the administration reshaped Congressional attitudes toward the Exon-Florio provision. This changed perception became apparent in 2006 as a result of the public disclosure that Dubai Ports World was attempting to purchase the British-owned P&O Ports, with operations in various U.S. ports. After the September 11 terrorist attacks Congress passed and President Bush signed the USA PATRIOT Act of 2001 (Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism). In this act, Congress provided for special support for "critical infrastructure," which it defined as systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters. This broad definition is enhanced to some degree by other provisions of the act, which specifically identify sectors of the economy that Congress considered as elements in the critical infrastructure of the nation. These sectors include telecommunications, energy, financial services, water, transportation sectors, and the "cyber and physical infrastructure services critical to maintaining the national defense, continuity of government, economic prosperity, and quality of life in the United States." The following year, Congress transferred the responsibility for identifying critical infrastructure to the Department of Homeland Security (DHS) through the Homeland Security Act of 2002. In addition, the Homeland Security Act added key resources to the list of critical infrastructure (CI/KR) and defined those resources as: "publicly or privately controlled resources essential to the minimal operations of the economy and government." Through a series of Directives, the Department of Homeland Security identified 17 sectors of the economy as falling within the definition of critical infrastructure/key resources and assigned primary responsibility for those sectors to various Federal departments and agencies, which are designated as Sector-Specific Agencies (SSAs). On March 3, 2008, Homeland Security Secretary Chertoff signed an internal DHS memo designating Critical Manufacturing as the 18 th sector on the CI/KR list. The broad sweep of industrial sectors in the economy that fall within the terms "critical infrastructure," "homeland security," and "key resources" reflects a fundamental change in the way some in Congress view national economic security. From this viewpoint, economic activities are a separately identifiable component of national security and, therefore, should be protected from foreign investment that transfers control to foreigners or shifts technological leadership abroad. This viewpoint, however, has not been shared by some policymakers, who argue that including critical infrastructure and homeland security in P.L. 110-49 did not alter the overriding focus of the Exon-Florio provision on investments that directly affect U.S. national defense security. As a result, Congress and the Bush Administration sparred at times over transactions that CFIUS had approved over the objections of various Members of Congress. This clash of views essentially revolved around three long-standing issues: a) what constitutes foreign control of a U.S. firm?; b) how should national security be defined?; and c) which types of economic activities should be targeted for a CFIUS review? Some Members also perceive greater risks to the economy arising from foreign investments by firms that are owned or controlled by foreign governments as a result of the terrorist attacks. The Dubai Ports World case, in particular, demonstrated that there was a difference between the post-September 11, 2001, expectations held by many in Congress about the role of foreign investment in the economy and of economic infrastructure issues as a component of national security. For some Members of Congress, CFIUS seemed to be out of touch with the post-September 11, 2001, view of national security, because it remained founded in the late 1980s orientation of the Exon-Florio provision, which viewed national security primarily in terms of national defense and downplayed or even excluded a broader notion of economic national security. These and other concerns about foreign investment underscore the significant differences that remained between Congress and the Bush Administration over the operations of CFIUS and over the economic and security objectives the Committee should be pursuing. In early 2011, some Members of Congress had requested that the Obama Administration support a recommendation by CFIUS that the President block a proposed acquisition of 3Leaf Systems by Huawei Technologies over national security concerns. Instead, Huawei discontinued its efforts to acquire the U.S. firm. On June 20, 2011, the Obama Administration issued a formal statement on foreign investment declaring the countries' commitment to an open investment policy. The proposed acquisition of P&O by Dubai Ports World sparked a broader set of concerns and a wide-ranging discussion between Congress and the Administration over a working set of parameters that establishes a functional definition of the national economic security implications of foreign direct investment. In part, this issue reflects differing assessments of the economic impact of foreign investment on the U.S. economy and differing political and philosophical convictions among Members and between the Congress and various administrations.

The President is generally seen as exercising broad discretionary authority over developing and implementing U.S. direct investment policy, including the authority to suspend or block investments that "threaten to impair the national security." Congress is also directly involved in formulating the scope and direction of U.S. foreign investment policy. At times, some Members have urged the President to be more aggressive in blocking certain types of foreign investments. Such confrontations reflect vastly different philosophical and political views between Members of Congress and between Congress and the Administration over the role foreign investment plays in the economy and the role that economic activities should play in the context of U.S. national security policy. In July 2007, Congress asserted its own role in making and conducting foreign investment policy when it adopted and the President signed P.L. 110-49, the Foreign Investment and National Security Act of 2007. This law broadens Congress's oversight role, and it explicitly includes the areas of homeland security and critical infrastructure as separately identifiable components of national security that the President must consider when evaluating the national security implications of a foreign investment transaction. At times, the act has drawn Congress into a greater dialogue over the role of foreign investment in the economy, and conflicts with the Administration over efforts to define the limits of the broad rubric of national economic security.

Democratic Conference: The conference is the caucus of all Democratic Senators and serves as the central coordinating body. It operates through the Democratic leader's office and is responsible for communicating the party's message. The Democratic leader serves as chair of the conference, which is also led by a vice-chair and a secretary. Democratic Policy Committee: The policy committee is responsible for the formulation of overall legislative policy. It provides background and analysis of pending legislation, and organizes briefings and strategy meetings for Democratic Members and staff. The policy committee is led by a chair, appointed by the Democratic leader and includes regional chairs and members. Democratic Steering and Outreach Committee: Often referred to as the steering committee, this group maintains liaison between the Democratic leadership and Democratic elected officials around the country. It also is responsible for making committee assignment recommendations. It is led by a chair, appointed by the Democratic leader, who is assisted by an executive committee. Democratic Committee on Committee Outreach: This group provides a voice in the Democratic leadership for committee chairs. An appointed chair and vice-chair coordinate the committee work. Democratic Committee on Rural Outreach: This group guides rural outreach and tries to find new ways to reach rural, suburban, and ex-urban communities. It is led by an appointed chair. Democratic Senatorial Campaign Committee: This panel is the fund-raising arm of the Senate Democrats that provides financial and research assistance to Democratic Senators seeking reelection and to non-incumbent Democratic Senate nominees. It is led by a chair appointed by the Democratic leader, vice-chair, treasurer, and a board of trustees. Republican Conference: The Republican Conference is the organizational vehicle for Republican Members and their staff. It hosts periodic meetings of Senate Republicans and is the primary vehicle for communicating the party's message. The conference is led by an elected chair and vice-chair. Republican Policy Committee: The policy committee assists Senate leaders and committee chairs in designing, developing, and executing policy ideas. The policy committee hosts a weekly lunch meeting of Republican Senators and provides summaries of major bills and amendments, prepares analyses of rollcall votes, and distributes issue papers. It is led by an elected chair, and comprises members of the party leadership, the chairs of selected committees, and members designated by the Republican leader to serve on an executive committee. Republican Steering Committee: The steering committee is responsible for making committee assignment recommendations. It is led by a chair appointed by the Republican leader and an executive committee. Republican Senatorial Committee: The campaign committee oversees the political and fund-raising efforts of Senate Republicans. It is led by a chair appointed by the Republican leader and an executive committee.

Each Congress, Senators meet to organize the chamber and select their party leaders. In addition to the majority and minority leaders and party whips are numerous entities created by the party to assist with the work of the party.

The differences between the Sunni and Shiite Islamic sects are rooted in disagreements over the succession to the Prophet Muhammad, who died in 632 AD, and over the nature of leadership in the Muslim community. The historic debate centered on whether to award leadership to a qualified, pious individual who would follow the customs of the Prophet or to transmit leadership exclusively through the Prophet's bloodline. The question was settled initially when community leaders elected a companion of the Prophet's named Abu Bakr to become the first c aliph (Arabic for "successor"). Although most Muslims accepted this decision, some supported the candidacy of Ali ibn Abi Talib, the Prophet's cousin and son-in-law, husband of the Prophet's daughter Fatima. Ali had played a prominent role during the Prophet's lifetime, but he lacked seniority within the Arabian tribal system and was bypassed. This situation was unacceptable to some of Ali's followers, who considered Abu Bakr and the two succeeding caliphs (Umar and Uthman) to be illegitimate. Ali's followers believed that the Prophet Muhammad himself had named Ali as successor and that the status quo was a violation of divine order. A few of Ali's partisans orchestrated the murder of the third caliph Uthman in 656 AD, and Ali was named caliph. Ali, in turn, was assassinated in 661 AD, and his son Hussein (680 AD) died in battle against forces of the Sunni caliph. Ali's eldest son Hassan (d. 670 AD) is also revered by Shiite Muslims, some of who claim he was poisoned by the Sunni caliph Muawiyah. Those who supported Ali's ascendancy became later known as "Shi'a," a word stemming from the term " shi ' at Ali," meaning "supporters" or "helpers of Ali." Others respected and accepted the legitimacy of his caliphate but opposed political succession based on bloodline to the Prophet. This group, who constituted the majority of Muslims, came to be known in time as "Sunni," meaning "followers of [the Prophet's] customs [ sunna ]." The caliphate declined as a religious and political institution after the 13 th century, although the term "caliph" continued to be used by some Muslim leaders until it was abolished in 1924 by Turkey's first President Mustafa Kemal Ataturk. The decline and abolition of the caliphate became a powerful religious and political symbol to some Sunni Islamist activists during the 19 th and 20 th centuries. These activists argued that leaders in the Islamic world had undermined the caliphate by abandoning the "true path" of Islam. Inspired by these figures, some contemporary Sunni Islamist extremists, such as Osama bin Laden and others, advocate the restoration of a new caliphate based on "pure" Islamic principles. The religious, ethnic, linguistic, and socioeconomic diversity that exists within the global Muslim community presents significant challenges to the reemergence of centralized, pan-sectarian, and widely recognized Islamic religious leadership. Islamic theology and sectarian considerations are rarely sufficient explanations for instances of terrorism and political violence involving Muslims or taking place in the contemporary Muslim world. Political, social, and economic factors often determine whether a given dispute reflects sectarian identities or transcends them. The use of violence by members of a given religious sect may be motivated by secular political goals or individual factors. Sunni and Shiite organizations and governments often collaborate when they perceive that their interests overlap. In other instances, theological differences can directly fuel sectarian hatred and violence and undermine calls for cross-sectarian cooperation. Members and supporters of terrorist organizations like Al Qaeda and its affiliates exhibit regional and theological diversity that makes it difficult to identify universally shared motives that can be linked to specific religious doctrines. However, many Sunni and Shiite Muslims refer to members and supporters of Al Qaeda and similar groups simply as takfiris (Arabic for "those who accuse others of apostasy") because of Al Qaeda supporters' habit of denouncing Muslim and non-Muslim individuals who don't accept their narrow interpretation of Sunni Islam as non-believers and legitimate targets. Although there are considerable differences between Sunni and Shiite Islam, the two Islamic sects share common traditions, beliefs, and doctrines. All Muslims believe that the Prophet Muhammad was the messenger of Allah (the Arabic word for God). All believe that they must abide by the revelations given to the Prophet by Allah (as recorded in the Quran) and by the hadith (sayings of the Prophet and his companions). The concepts of piety, striving for goodness, and social justice are fundamental to Islamic belief and practice. Additionally, all Muslims are expected to live in accordance with the five pillars of Islam: (1) shahada --recital of the creed "There is no God but Allah, and Muhammad is His Prophet"; (2) salat --five obligatory prayers in a day; (3) zakat --giving alms to the poor; (4) sawm --fasting from sunrise to sunset during the month of Ramadan; and (5) hajj --making a pilgrimage to Mecca once during a lifetime if one is physically and financially able. The basic sources for Islamic jurisprudence, be it Sunni or Shiite, are the Quran, the sunna (customs of the Prophet Muhammad) as relayed in the hadith (collected accounts of the Prophets sayings), qiyas (interpretive analogy), ijma ' (scholarly consensus), and ijtihad (individual reasoning). The primary function of learned religious leaders in the Islamic faith is the interpretation of Islamic law ( shari ' a ). There are no codified laws in either Sunni or Shiite Islam. Rather, there are sources for the interpretation of law outlined above, and these sources are similar among Shiites and Sunnis. Shiite hadith differ from Sunni hadith , mainly in that they include the sayings of the Shiite imams who are considered to have been divinely inspired. Shiite legal interpretation also allows more space for human reasoning than Sunni interpretation does. The majority of Muslims today are Sunnis. They accept the first four caliphs (including Ali) as the "rightly guided" rulers who followed the Prophet. In theory, Sunnis believe that the leader ( imam ) of the Muslim community should be selected on the basis of communal consensus, on the existing political order, and on a leader's individual merits. This premise has been inconsistently practiced within the Sunni Muslim community throughout history. Sunni Muslims do not bestow upon human beings the exalted status given only to prophets in the Quran, in contrast to the Shiite veneration of imams. Sunnis have a less elaborate and arguably less powerful religious hierarchy than Shiites. In contrast to Shiites, Sunni religious teachers historically have been under state control. At the same time, Sunni Islam tends to be more flexible in allowing lay persons to serve as prayer leaders and preachers. In their day-to-day practices, Sunnis and Shiites exhibit subtle differences in the performance of their obligatory prayers. Both groups share a similar understanding of basic Islamic beliefs. Within Sunni Islam, there are four schools of jurisprudence that offer alternative interpretations of legal decisions affecting the lives of Muslims. The four schools of jurisprudence rely mostly on analogy as a way to formulate legal rulings, and they also give different weight to the sayings of the Prophet and his companions ( hadith ) within their decisions. In some secular countries, such as Turkey, the opinions issued by religious scholars represent moral and social guidelines for how Muslims should practice their religion and are not considered legally binding. The four legal schools, which vary on certain issues from strict to broad legal interpretations, are the (1) Hanafi: this is the oldest school of law. It was founded in Iraq by Abu Hanifa (d. 767 AD). It is prevalent in Turkey, Central Asia, the Balkans, Iraq, Syria, Lebanon, Jordan, Afghanistan, Pakistan, India, and Bangladesh; (2) Maliki: this was founded in the Arabian Peninsula by Malik ibn Anas (d. 795 AD). It is prevalent in North Africa, Mauritania, Kuwait, and Bahrain; (3) Shaf ' i: this school was founded by Muhammad ibn Idris al Shafi'i (d. 819 AD). It is prevalent in Egypt, Sudan, Ethiopia, Somalia, parts of Yemen, Indonesia, and Malaysia; and (4) Hanbali: this was founded by Ahmad Hanbal (d. 855). It is prevalent in Saudi Arabia, Qatar, parts of Oman, and the United Arab Emirates. Sunni Islam has had less prominent sectarian divisions than Shiite Islam. The Ibadi sect, which is centered mostly in Oman, East Africa, and in parts of Algeria, Libya, and Tunisia, has been sometimes misrepresented as a Sunni sect. Ibadi religious and political dogma generally resembles basic Sunni doctrine, although the Ibadis are neither Sunni nor Shiite. Ibadis believe strongly in the existence of a just Muslim society and argue that religious leaders should be chosen by community leaders for their knowledge and piety, without regard to race or lineage. The Sunni puritanical movements referred to as " Salafism " and " Wahhabism " have become well known in the West in recent years and are highly active in many countries around the world. "Salafism" refers to a broad subset of Sunni revivalist movements that seek to purify contemporary Islamic religious practices and societies by encouraging the application of practices and views associated with the earliest days of the Islamic faith. The world's Salafist movements hold a range of positions on political, social, and theological questions and include both politically quietist and violent extremist groups. The terms "Wahhabism" and "Wahhabi" are often applied to groups and individuals who espouse a particular brand of Salafist thought commonly associated with the religious establishment of the kingdom of Saudi Arabia. In its original context, "Wahhabism" refers to a movement founded in Arabia by the scholar Muhammad ibn Abd al Wahhab (1703-1791 AD) as an offshoot of the Hanbali school of Islamic legal interpretation. Abd al Wahhab encouraged a return to the orthodox practice of the "fundamentals" of Islam, as embodied in the Quran and in the life of the Prophet Muhammad. In the 18 th century, Muhammad ibn Saud, founder of the modern-day Saudi dynasty, formed an alliance with Abd al Wahhab and unified the disparate tribes in the Arabian Peninsula. From that point forward, there has been a close relationship between the Saudi ruling family and the local Wahhabi religious establishment. The most conservative interpretations of Wahhabist Sunni Islam view Shiites and other non-Wahhabi Muslims as dissident heretics. Following the 1979 Soviet invasion of Afghanistan and Shiite Islamic revolution in Iran, Saudi Arabia's ruling Sunni royal family began allowing their clerics and citizens to more actively promote Saudi religious doctrine abroad, and Saudi individuals and organizations since have financed the construction of mosques, religious schools, and Islamic centers in dozens of countries. The content of Saudi-funded religious programs ranges from apolitical to activist depending on its sources and sponsors within the kingdom. However, in host societies many observers refer to Saudi funded or supported religious centers and clerics as "Wahhabi." Similarly, although significant differences may exist between the religious views and actions of Saudi Arabia's domestic religious establishment and those of specific Salafists active outside of the kingdom, non-Saudi Salafis frequently are identified as "Wahhabi" by other Muslims and non-Muslims who perceive them to be ideologically similar to their Saudi counterparts or believe that they receive financial support from Saudi Arabia or other Sunni Gulf states. Initially, the Shiite movement gained a wide following in areas that now include Iraq, Iran, Yemen, and parts of Central and South Asia. In most of the world, Shiites would continue as a minority. Today, according to some estimates, Shiite Islam is practiced among approximately 10% to 15% of the world's Muslim population. For Shiites, the first true leader of the Muslim community is Ali, who is considered an imam , a term used among Shiites not only to indicate leadership abilities but also to signify blood relations to the Prophet Muhammad. As Ali's descendants took over leadership of the Shiite community, the functions of an imam became more clearly defined. Each imam chose a successor and, according to Shiite beliefs, he passed down a type of spiritual knowledge to the next leader. Imams served as both spiritual and political leaders. But as Shiites increasingly lost their political battles with Sunni Muslim rulers, imams focused on developing a spirituality that would serve as the core of Shiite religious practices and beliefs. Shiites believe that when the line of imams descended from Ali ended, religious leaders, known as mujtahid s, gained the right to interpret religious, mystical, and legal knowledge to the broader community. The most learned among these teachers are known as ayatollah s (lit. the "sign of God"). Shiite religious practice centers around the remembrance of Ali's younger son, Hussein, who was martyred near the town of Karbala in Iraq by Sunni forces in 680. His death is commemorated each year on the 10 th day of the Islamic month of Muharram in a somber and sometimes violent ritualistic remembrance known as "Ashura," marked among some Shiites by the ritual of self-flagellation. As a minority that was often persecuted by Sunnis, Shiites found solace in the Ashura ritual, the telling of the martyrdom of Hussein and the moral lessons to be learned from it, which reinforced Shiite religious traditions and practices. Twelver Shiism--the most common form of Shiism today--is pervasive in Iran, Iraq, Lebanon, and Bahrain. Twelvers accept a line of 12 infallible imams descendent from Ali and believe them to have been divinely appointed from birth. The 12 imams are viewed as harbors of the faith and as the designated interpreters of law and theology. Twelvers believe that the 12 th and last of these imams "disappeared" in the late ninth century. This "hidden imam" is expected to return to lead the community. Following the 12 th imam's disappearance, as one scholar notes, a "pacifist" trend emerged among Twelvers who "chose to withdraw from politics and quietly await his coming." In the 20 th century, changes in the political landscape of the Middle East led to a new competing "activist" trend among Twelver groups in Iran and Lebanon, typified by the late Iranian religious leader Ayatollah Khomeini. Although most Shiites agree on the basic premise that Ali was the first rightful imam, they disagree on his successors. The Ismailis, who are the second-largest Shiite sect, broke off in the eighth century, recognizing only the first seven imams (the seventh was named Ismail, hence the names "Ismaili" and "Sevener"). Historically and at least until the 16 th century, the Ismailis were far more disposed than the Twelvers to pursuing military and territorial power. In the past, they established powerful ruling states, which played significant roles in the development of Islamic history. Today, Ismailis are scattered throughout the world but are prominent in Afghanistan (under the Naderi clan), in India, and in Pakistan. There are also Ismaili communities in East and South Africa. The Zaydis , who acknowledge the first five imams and differ over the identity of the fifth, are a minority sect of Shiite Islam, mostly found in Yemen. The Zaydis reject the concepts of the imams' infallibility and of a "hidden imam." Other sects, such as the Alawites and Druzes, are generally considered to be derived from Shiite Islam, although their religious practices are secretive, and some do not regard their adherents as Muslims. Alawites exist mostly in Syria and Lebanon. The Asad family that effectively has ruled Syria since 1971 are Alawite. Many Alawites interpret the pillars (duties) of Islam as symbolic rather than applied, and celebrate an eclectic group of Christian and Islamic holidays. In Turkey, the Alevi s are an offshoot group of Shiite Islam that has been often confused with Syrian Alawites or other Shiites. Most Alevis are well-integrated into Turkish society and speak both Turkish and Kurdish. The Druze community was an 11 th -century offshoot of Ismaili Shiite Islam and is concentrated in Lebanon, Jordan, Syria, and Israel. Today, the Druze faith differs considerably from mainstream Shiite Islam.

The majority of the world's Muslim population follows the Sunni branch of Islam, and approximately 10%-15% of all Muslims follow the Shiite (Shi'ite, Shi'a, Shia) branch. Shiite populations constitute a majority in Iran, Iraq, Bahrain, and Azerbaijan. There are also significant Shiite populations in Afghanistan, Kuwait, Lebanon, Pakistan, Saudi Arabia, Syria, and Yemen. Sunnis and Shiites share most basic religious tenets. However, their differences sometimes have been the basis for religious intolerance, political infighting, and sectarian violence. This report includes a historical background of the Sunni-Shiite split and discusses the differences in religious beliefs and practices between and within each Islamic sect as well as their similarities. The report also relates Sunni and Shiite religious beliefs to discussions of terrorism and sectarian violence that may be of interest to Congress. Also see CRS Report RS21695, The Islamic Traditions of Wahhabism and Salafiyya, by [author name scrubbed].

The Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 ), the 2008 farm bill, reauthorizes almost all existing conservation programs, modifies several programs, and creates various new conservation programs. These changes address eligibility requirements, program definitions, enrollment and payment limits, contract terms, evaluation and application ranking criteria, among other administrative issues. In general, the conservation title includes specific changes that expand eligibility and delivery of technical assistance under most programs to cover more broadly, for example, forested and managed lands, pollinator habitat and protection, and identified natural resource areas, among other expansions. Producer coverage across most programs is also expanded to include beginning, limited resource, and socially disadvantaged producers; speciality crop producers; and producers transitioning to organic production. The enacted bill also creates new conservation programs to address emerging issues and priority resource areas, and also new subprograms under existing programs. Estimated new spending on the 2008 farm bill's conservation title--not including estimated conservation-related revenue and cost-offset provisions in the bill--is projected to increase by $2.7 billion over 5 years and $4.0 billion over 10 years. Total mandatory spending for the title is projected at $24.3 billion over 5 years (FY2008-FY2012) and $55.2 billion over 10 years (FY2008-FY2017). Agricultural conservation became a significant and visible policy focus in the Food Security Act of 1985. Since then, questions and concerns about conservation program funding, policy objectives, individual program effectiveness, comparative geographic emphasis, and the structure of federal assistance have been recurring issues in the debate shaping each successive omnibus farm bill. The 2008 farm bill is no exception. These long-standing issues arguably became even more apparent in this farm bill as they found their way into many individual program changes. This result may be a continuation of the more active profile taken by many conservation groups and their supporters in the 2002 farm bill. Unlike commodity programs, conservation program participation tends to be well represented by small and mid-size farming operations, according to the United States Department of Agriculture's (USDA) Economic Research Service. The programs also enjoy wider public support. In an environment of pronounced domestic budget constraint, however, conservation groups and producers found themselves competing with other farming interests for the necessary resources to expand and continue many conservation programs. Budget concerns aside, several other issues emerged in the debate leading to enactment of the 2008 farm bill: funding priorities and payment structure, geographic targeting, program complexity, the importance of large-scale conservation efforts, and measurement of costs and effectiveness. These general policy issues--in various forms--raised questions central to the deliberations and outcomes in the enacted conservation title of the farm bill. Among the questions raised were: Should payment limits be program-specific, or for some combination of conservation programs? Would the imposition of payment limits change patterns of participation and effectiveness of conservation programs? What are the potential differences in saving under different payment limit options? Where should savings be allocated? Should each conservation program have the same payment limit? How will funding levels affect the existing backlog of interest in program participation that cannot be met? Because agricultural production is concentrated in specific regions of the United States, agricultural conservation and environmental issues are not randomly distributed. Some areas and some natural resources reveal greater environmental impact from agricultural activities--actual and potential--than others. For example, pressures on farmland development from urban sprawl are more pronounced on the East and West Coasts. Although many areas of the United States have water quality/quantity concerns or air quality issues, the deterioration of certain watersheds and certain air sheds is more advanced in some places than in others. How is it determined where federal conservation spending would be most effective? Should certain locations (states, regions, or watersheds) be targeted? Does targeting particular producer groups provide an effective strategy in resource management? Should some types of agricultural production or resource concerns receive higher priority in evaluating applications? Members of Congress, conservation groups, the Administration, and individual producers raised questions about the desirability of proliferating conservation programs and the complexity of adhering to various regulations that govern the programs. Some producers might have some acreage under one program and other acreage under another program. On-farm wetland management may be regulated by one program, while the environmental management plan of retired acreage is under another program. The question arises whether there is avoidable duplication or other inefficiencies that significantly limit conservation and resource management effectiveness. Could existing programs be combined in certain ways? Would a consolidated effort targeting a few specific resource issues reduce the complexity? Along with the perceived complexity of agricultural conservation programs is the related issue of the effectiveness of program delivery. Does the conservation delivery capacity of USDA agencies need to be further supplemented through partnerships, relationships with other organizations, or expansion of the technical assistance provider system? What opportunities and problems would result if a large portion of staff in the responsible agencies retired in a short time period? Does USDA currently have the staff needed to administer conservation programs if they were all fully funded? How might more market-based solutions to resource conservation improve delivery efficiency and program effectiveness? Local planning and implementation of conservation programs through locally constituted councils is an important aspect of conservation management and a long-standing characteristic of U.S. local-federal relations. A significant question raised by conservation groups, however, is the extent to which conservation efforts would be more effective and more efficient if they took place at larger scales, for example, through regional or multistate resource planning and multistate conservation planning. Because the conservation programs are voluntary, concern was voiced that participation could decline if producers felt that conservation programs were more remote from local planning input. Using watersheds or river basin drainage areas as policy targets, for example, could reduce the planning control of any single area jurisdiction. The trade-off is seen in the efficiencies that potentially stem from pooling financial and planning resources and targeting particular resource issues affecting most if not all producers. The Chesapeake Bay region, the Great Lakes, and specific river basins with significant agricultural impacts are examples where larger scale planning may hold particular advantages. How effective are federal conservation programs in improving environmental management of natural resources? Evaluation is an essential part of effective conservation management. Yet, developing practical and reliable indicators that can be used across programs and with different producers and different resources has been a challenge. Policymakers and stakeholders generally agree that conservation measures have been effective in reducing the environmental impact of agricultural activities, but at what cost, in what locations, and under what specific circumstances are much more difficult questions to answer. The recognized importance of establishing valid indicators has been an ongoing issue in environmental management. Research has advanced considerably in the area, to the point that integrating those findings within the structure of current programs is viewed by many to be more feasible than it was in the past. The 2008 farm bill reauthorizes almost all current conservation programs, modifies several current programs, and creates various new conservation programs. The various conservation programs administered by USDA can be broadly grouped into land retirement and easement programs and so-called "working lands" programs. In general, land retirement and easement programs take land out of crop production and provide for program rental payments and cost-sharing to establish longer term conservation coverage, in order to convert the land back into forests, grasslands, or wetlands. Working lands programs provide technical and financial assistance to assist agricultural producers in improving natural resource conservation and management practices on their productive lands. The enacted 2008 farm bill also creates several new conservation programs under the bill's conservation and other titles. The following sections provide brief overviews of the Title II changes to agricultural conservation programs. Major land retirement and easement programs include the Conservation Reserve Program (CRP), the Wetlands Reserve Program (WRP), the Grasslands Reserve Program (GRP), the Farmland Protection Program (FPP), among other programs. The Conservation Reserve Program (CRP) is a voluntary program that allows producers to enter into 10-15 year contracts that provide annual rental payments and financial assistance to install certain conservation practices and maintain vegetative or tree covers. Its purpose is to conserve and improve soil, water, and wildlife resources by converting highly erodible and other environmentally sensitive acreage to a long-term vegetative cover. CRP is the largest conservation program in terms of total annual funding. It is administered by USDA's Farm Service Agency (FSA) and is funded through the Department of Agriculture's (USDA) Commodity Credit Corporation (CCC). CRP also has several subprograms, one of which is the Conservation Reserve Enhancement Program (CREP), that are designated to support state and federal partnerships through incentive payments for installing specific conservation practices that help protect environmentally sensitive land, decrease erosion, restore wildlife habitat, and safeguard ground and surface water. The enacted 2008 farm bill (Secs. 2101-2111) caps CRP enrollment at 32 million acres, down from its current cap of 39.2 million acres. The managers report on the conference agreement states this reduction is "not ... an indicator of declining or reduced support for CRP"; however, in other sections of the report USDA is encouraged to assist producers who are transitioning from land retirement to working lands conservation. The farm bill makes certain program changes, including allowing USDA to address state, regional, and national conservation initiatives; providing incentives for beginning and socially disadvantaged farmers/ranchers to purchase CRP land from retiring farmers; allowing certain types of managed haying and grazing and installation of wind turbines on enrolled lands (but at reduced rental rates); requiring that program participants manage lands according to a conservation plan; requiring USDA to survey annually the per-acre estimates of county cash rents paid to CRP contract holders; clarifying the status of alfalfa grown as part of a rotation practice; and establishing cost-sharing rates for certain types of conservation structures. The bill also amends the pilot program for wetland and buffer acres in CRP. Each state can enroll up to 100,000 acres up to a national maximum of one million acres. This maximum may be raised to 200,000 in each state following a review of the program. Eligible lands for the program include (1) wetlands that have been cropped three of the immediately preceding 10 crop years; (2) land on which a constructed wetland is to be developed to manage fertilizer runoff; and (3) land that has been devoted to commercial pond-raised aquaculture. Conditions under which managed haying and grazing on CRP acreage may occur have been modified. The farm bill allows managed harvesting and grazing in response to drought and routine grazing to control invasive species. Where routine harvesting is permitted, state technical committees are required to coordinate to ensure appropriate environmental management. In addition to managed harvesting, the installation of wind turbines on enrolled land is now permitted activity. Any of these permitted uses on CRP acreage will result in a rental payment reduction commensurate with the economic value of the authorized activity. The enacted farm bill permits 50% cost share payments on land used for hardwood trees, windbreaks, shelterbelts, and wildlife corridors for contracts entered into after November 1990. Contracts extend from a minimum of two years up to four years. Funding of $100 million also is authorized to cover cost sharing for the thinning of trees to improve the management of natural resources on the land. The 2008 farm bill modifies the criteria for evaluating CRP contract applications. Evaluation criteria include the extent to which a CRP contract application would improve soil resources, water quality, or wildlife habitat. The bill also allows the Secretary to establish different criteria in various states or regions that lead to improvements in soil quality or wildlife habitat. Preference in new CRP contracts will be given to land owners and operators who are residents of the county or a contiguous county in which the land is located. The farm bill also establishes incentives to increase the participation of beginning and socially disadvantaged farmers and ranchers. It authorizes CRP contract modifications to assist these producers in leasing or purchasing land under a CRP contract from a retired or retiring farm owner or operator. The provision authorizes $25 million for assistance in making these land transfers. Other enacted modifications to CRP include redefining the Chesapeake Bay region as a priority area without limiting the region to the states of Pennsylvania, Maryland, and Virginia. While the new program apples to all watersheds draining into the Chesapeake Bay, the Susquehanna, Shenandoah, Potomac, and Patuxent Rivers will get funding priority. A provision in the Trade and Tax Provisions Title (Section 15301) will permit retired or disabled farmers and ranchers to exclude CRP payments from self-employment taxes beginning January 2008. The Wetlands Reserve Program (WRP) provides long-term technical and financial assistance to landowners with the opportunity to protect, restore, and enhance wetlands on their property, and to establish wildlife practices and protection. It is a voluntary program administered by USDA's Natural Resources Conservation Service (NRCS). The enacted 2008 farm bill (Secs. 2201-2210) increases the WRP maximum enrollment cap to over 3.014 million acres (up from an existing cap of 2.275 million acres), and expands eligible lands to include certain types of private and tribal wetlands, croplands, and grasslands, as well as lands that meet the habitat needs of specific wildlife species. The farm bill authorizes a new Wetlands Reserve Enhancement Program, to establish agreements with states similar to that for CREP, which includes a Reserved Rights Pilot program to explore whether reserving grazing rights is compatible within WRP. The bill makes certain program changes, including changing the payment schedule for easements; limiting wetland restoration payments; specifying criteria for ranking program applications; requiring that USDA conduct an annual survey of the Prairie Pothole Region starting with FY2008; and requiring USDA to submit a report to Congress on long-term conservation easements under the program. GRP is a voluntary program administered by USDA's Farm Services Agency (FSA) that helps landowners restore and protect grassland, rangeland, pastureland, and shrubland and provides assistance for rehabilitating grasslands. The enacted 2008 farm bill (Sec. 2403) adopts a new acreage enrollment goal of an additional 1.22 million acres by 2012, with 40% of funds for rental contracts (10-, 15-, and 20-year duration) and 60% for permanent easements. Requirements for cooperative agreements similar to those under the Farmland Protection Program are also authorized for GRP easements. The farm bill modifies the terms and conditions of GRP contracts and easements to permit fire presuppression and the addition of grazing-related activities, such as fencing and livestock watering. Priority for enrollment is also given to certain expiring CRP lands, and tribal lands are made eligible. The bill does not include a Grassland Reserve Enhancement provision, as proposed in the House. FFP is a voluntary program administered by USDA's NRCS that provides matching funds to help purchase development rights for eligible farmlands to keep productive farm and ranchland in agricultural uses. USDA partners with state, tribal, or local governments and nongovernmental organizations to acquire conservation easements or other interests in land from landowners, and provides up to 50% of the fair market easement value of the conservation easement. The enacted 2008 farm bill changes the program's purpose from protecting topsoil to protecting the land's agricultural use by limiting nonagricultural uses and including lands that promote state and local farmland protection (Sec. 2401). The federal share of easement costs are capped at 50%, with the land owner contributing 25% of the costs. The program is also restructured to emphasize longer term and renewable cooperative agreements. The bill also makes other technical changes to the program covering the program's administrative requirements, appraisal methodology, and terms and conditions, among other issues. It does not rename the program the Farm and Ranchland Protection Program, as the program is often referred to by USDA. The bill provides additional budget authority for FPP of $743 million. Major working lands programs include the Environmental Quality Incentives Program (EQIP), the (renamed) Conservation Stewardship Program (CSP), the Agricultural Management Assistance (AMA) program, and the Wildlife Habitat Incentives Program (WHIP), among others. EQIP and CSP are the two largest working lands programs, and received additional budget authority over five years under the 2008 farm bill of $3.4 billion for EQIP and $1.1. billion for CSP. The enacted farm bill did not include a Senate proposal that would have closely coordinated CSP and EQIP under the so-called Comprehensive Stewardship Incentives Program. EQIP is administered by USDA's NRCS and provides technical and cost-share assistance to farmers and ranchers for promoting agricultural production and environmental quality by supporting the installation or implementation of structural and management practices on eligible agricultural land. EQIP includes a number of subprograms, including the Colorado River Basin Salinity Control, Conservation Innovation Grants, the Ground and Surface Water Conservation Program, and the Klamath River Basin. The enacted 2008 farm bill (Secs. 2501-2510) expands the program to cover practices that enhance soil, surface and ground water, air quality, and conserve energy; it also covers grazing land, forestland, wetlands, and other types of land and natural resources that support wildlife. In evaluating applications, cost-effectiveness and comprehensive treatment of resource issues are given priority. The bill sets aside 5% of the EQIP spending for beginning farmers and ranchers and 5% for socially disadvantaged farmers and ranchers, providing up to 90% of the costs of implementing an EQIP plan for these farmers. It also provides payments to assist tribal or native corporation members, and producers transitioning to organic production. The 2008 farm bill lowers the EQIP payment limit to $300,000 (down from $450,000) in any 6-year period per entity, except in cases of special environmental significance including projects involving methane digesters, as determined by USDA. Projects with organic production benefits are capped at $20,000 annually or $80,000 in any six-year period. The enacted bill retains the requirement that 60% of funds be made available for cost-sharing to livestock producers, including an incentive payments for producers who develop a comprehensive nutrient management plan. The bill reserves $37.5 million of annual EQIP funds for the Conservation Innovation Grants program and modifies the grants to cover air quality concerns associated with agriculture (including greenhouse gas emissions). It also replaces the Ground and Surface Water Conservation Program within EQIP with a new Agricultural Water Enhancement Program (AWEP) to address water quality and quantity concerns on agricultural land, highlighting certain priority areas and providing additional mandatory funds for the program. The manager's report accompanying the farm bill suggests priority areas under the programs to include the Eastern Snake Plain Aquifer region, Puget Sound, the Ogallala Aquifer, the Sacramento River watershed, the Upper Mississippi River Basin, the Red River of the North Basin, and the Everglades. AWEP prioritizes assistance to areas experiencing significant drought. The bill provides a total of $280 million through FY2012 for AWEP activities. Funding for EQIP is authorized at $1.2 billion (FY2008), $1.337 billion (FY2009), $1.45 billion (FY2010), $1.588 billion (FY2011), and $1.75 billion (FY2012). The pre-existing Conservation Security Program is a voluntary program administered by NRCS that provides financial and technical assistance to promote the conservation and improvement of soil, water, air, energy, plant and animal life, and other conservation purposes on tribal and private working lands. However, the 2008 farm bill (Sec. 2301) phases this program out (except for existing contracts) and replaces it with a new and renamed Conservation Stewardship Program (CSP). The new CSP, beginning in 2009, will continue to encourage conservation practices on working lands, but will be different from the former program. It eliminates the three-tier approach, establishes 5-year rather than 10-year contracts, and requires direct attribution of payments, among other changes, thus requiring that USDA promulgate new rules for the program. More than $2 billion in funding is made available for existing contracts under the former CSP program. Rather than the three-tier payment system, payments for new CSP contracts will be based on meeting or exceeding a stewardship threshold--the level of resource conservation and environmental management required to improve and conserve the quality and condition of at least one resource concern. The stewardship threshold also must be met for at least one priority resource concern identified at the state level as a priority for a particular watershed or area of the state. Payments are based on the actual costs of installing conservation measures, any foregone income, and the value of the expected environmental outcomes. The CSP reserves 5% of the funds each for beginning farmers and ranchers and disadvantaged farmers and ranchers (Sec. 2704). Monitoring and evaluation of the stewardship plan to assess the environmental effectiveness is also an element of the new CSP. The bill sets a target of enrolling 12.8 million acres annually under the new CSP. Individual producer payments are limited to $200,000 in any 5-year period per entity. Rather than annual sign-ups for the program, CSP enrollment will be contracted on a continuous basis. The type of eligible lands is expanded to include priority resource concerns, as identified by states; certain private agricultural and forested lands; and also some nonindustrial private forest lands (limited to not more than 10% of total annual acres under the program). Technical assistance will also be provided to specialty crop and organic producers, along with a pilot testing of producers who engage in innovative new technologies or participate in on-site conservation research. Producers may also receive supplemental payments for resource-conserving crop rotations that provide specific environmental benefits such as improving soil fertility, thus reducing the need for irrigation. Program payments may not be used for the design, construction, or maintenance of animal waste storage or treatment facilities or associated waste transport or transfer devices. WHIP is a voluntary program designed for the development and improvement of habitat primarily on private land. Through WHIP, USDA's Natural Resources Conservation Service provides both technical assistance and up to 75% cost-share assistance to establish and improve fish and wildlife habitat. The terms of WHIP agreements between NRCS and the participant generally are from 5 to 10 years from the date the agreement is signed. The 2008 farm bill (Sec. 2602) reauthorizes WHIP at current funding levels, but limits program eligibility to focus on "the development of wildlife habitat on private agricultural land, nonindustrial private forest land, and tribal lands," thus potentially excluding some previously covered areas (i.e., non-agricultural lands). It also allows USDA to provide priority to projects that address issues raised by state, regional, and national conservation initiatives. The manager's report emphasizes that the program address various specific wildlife initiatives at state and local levels. The 2008 farm bill provides $425 million (FY2008-FY2012) and also increases the limit on cost-share payments to 25% for long-term projects. Payments to an individual entity are limited to $50,000 per year. The 2008 farm bill also authorizes a $15 million increase in funding to $20 million annually for FY2008-FY2012 for the Grassroots Source Water Protection Program (Sec. 2603). Funding is also increased to $100 million (FY2009) for the Small Watershed Rehabilitation Program, to remain available until expended (Sec. 2803). The Grassroots Source Water Protection Program, a partnership between the Farm Service Agency (FSA) and the National Rural Water Association, is designed to help keep surface and groundwater water pollution from affecting drinking water. The Small Watershed Rehabilitation Program is administered by NRCS and works to rehabilitate older community dams. The farm bill (Sec. 2801) also provides additional mandatory funding ($15 million annually, FY2008-FY2012) for the Agricultural Management Assistance Program (AMA) and includes Hawaii as an eligible state under that program. AMA provides cost share assistance to agricultural producers to voluntarily address issues such as water management, water quality, and erosion control by incorporating conservation into their farming operations. The enacted bill amends the Resource Conservation and Development Program (RC&D) to emphasize locally led planning processes and to provide assistance for implementing area plans (Sec. 2805). The RC&D program designates RC&D areas and assists the capability of elected and civic leaders to plan and carry out projects for resource conservation and community development. Also reauthorized through FY2012 is the Farm Viability Program (Sec. 2402). The Farm Viability Program, as authorized in the 2002 farm bill, provides authority for USDA to provide grants to eligible entities for the purpose of carrying out farm viability programs. To date, Congress has not appropriated funds to implement the program. The Great Lakes Basin Program for Soil Erosion and Sediment Control is a federal-state partnership providing demonstration and technical assistance projects throughout the Great Lakes region. The program is coordinated by the Great Lakes Commission in partnership with the NRCS, the Environmental Protection Agency and the U.S. Army Corps of Engineers. The enacted bill modifies the program to implement the recommendations of the Great Lakes Regional Collaboration Strategy (Sec. 2604). Site-specific technical assistance (TA) is provided for producers and landowners in constructing and installing conservation and natural resource management technologies. Producers often need TA in designing and implementing appropriate conservation strategies. The enacted 2008 farm bill makes changes in the TA component of various conservation programs to respond to these producer needs and clarifies the purposes of TA. The bill also requires a review of conservation practice standards and includes specific provisions to ensure that speciality crops, organic producers, and precision agricultural producers receive adequate conservation TA. Although NRCS provides TA directly, the enacted bill also authorizes a national certification process for third-party providers, including non-federal providers (Sec. 2706). In addition, the bill creates an Agriculture Conservation Experienced Services (ACES) Program to make use of the talents and skills of older, non-USDA employees (Sec. 2710). The bill further establishes state TA committees composed of various state conservation officials and agricultural producers for each state to assist in the implementation and technical aspects of conservation programs (Sec. 2711). The bill authorizes a new Cooperative Conservation Partnership Initiative (CCPI) (Section 2707) as a component of the Conservation Technical Assistance program. It is authorized to target technical and financial resources on conservation priorities on agricultural and nonindustrial private forest land on a state, local, multistate, and regional basis. The manager's report especially encourages locally developed projects. Eligible CCPI programs include EQIP, CSP, WHIP, Great Lakes Basin Sediment Control, Conservation of Private Grazing Land, Chesapeake Bay Region, and Grassroots Water Conservation. The provision reserves 6% of the funding for these programs for initiatives under the CCPI and establishes criteria for prioritization of projects, including projects that provide innovative conservation methods. The enacted 2008 farm bill directs USDA to prepare a number of statistical and evaluation reports regarding various conservation programs: (1) an annual report on conservation program enrollments and payments--those greater than $250,000--under the Wetlands Reserve Program, Farmland Protection Program, Grassland Reserve Program, and the Environmental Quality Incentives Program (for land having special environmental significance). The bill also requires a report on the new Agricultural Water Enhancement Program (Sec. 2705). Other required reports include one on the long term implications of conservation easements (Sec. 2210), an annual report on average county cash rental rates (Sec. 2110), and an appraisal of soil and water conservation programs (Sec. 2804). In addition to the changes made to existing agricultural conservation programs, the enacted 2008 farm bill also expands the range of USDA conservation activities by creating several new programs, including a program expanding conservation activities in the Chesapeake Bay region, a new state grants program, a provision to limit production on native sod, and a provision promoting market-based approaches to conservation. This program (Sec. 2605) is targeted at conserving and protecting the Chesapeake Bay and the water sources that make up the watershed. It applies to all tributaries, backwaters, and side channels, including watersheds, draining into the Chesapeake Bay, but gives priority to the Susquehanna, Shenandoah, Potomac, and Patuxent Rivers. The bill authorizes $188 million in mandatory funding (FY2009-FY2012) and $438 million over 10 years (FY2009-FY2018). Also referred to as the "Open Fields" program, this program authorizes state grants to encourage land-owners to provide public access for wildlife-dependent recreation, subject to a 25% reduction for the total grant amount if the opening dates for migratory bird hunting in the state are not consistent for residents and non-residents. The bill provides $50 million in mandatory funds (FY2009-FY2012) for the program. This 2008 farm bill provision (Sec. 12020) makes producers that plant an insurable crop (over 5 acres) on native sod ineligible for crop insurance and the noninsured crop disaster assistance (NAP) program for the first five years of planting. The conference agreement states that this provision may apply to virgin prairie converted to cropland in the Prairie Pothole National Priority Area, if elected by the state. This new conservation provision (Sec. 2709) is intended to facilitate the participation of farmers and landowners in emerging environmental services markets, such as water and air quality, habitat protection, and carbon storage. The farm bill directs USDA to establish a framework for developing consistent standards and processes for quantifying environmental services from the agriculture and forestry sectors, but does not authorize funding for this effort. The enacted farm bill also includes changes to several additional programs. The Colorado River Basin Salinity Control Act makes funding available to support resource management activities targeting sources of salinity in the Colorado River (e.g., leaking wells, irrigation, industrial sources). The enacted farm bill establishes a Basin States Program for salinity control activities upstream of the Imperial Dam (sec. 2806). The 2002 farm bill authorized that mandatory spending of $200 million be transferred to the Bureau of Reclamation to provide water to at-risk natural desert terminal lakes. Section 2807 of the enacted bill provides $175 million for desert terminal lakes, but also designates that part of this funding be used for land and water purchases in the Walker River Basin. The basin lies on California's eastern border with Nevada. A provision in the Credit title of the enacted 2008 bill (Sec. 5002) establishes a new loan and loan guarantee program to assist producers in financing the cost to the producer for applying for needed conservation installations. The manager's report states that the loan program is only a complement to the assistance provided through the various conservation programs. The bill gives priority for these loans to beginning and socially disadvantaged farmers and ranchers, those converting to organic systems, and producers who need conservation assistance to address various compliance requirements. The majority of agriculture and farmland conservation groups have responded favorably to the expanded provisions and increased funding for programs in the Conservation Title of the 2008 farm bill. Since enactment, a few national wildlife groups have expressed concern about changes to some provisions during the conference negotiations, which are perceived as providing fewer benefits to the protection of wildlife and wildlife habitat. Among the concerns expressed by these groups are the reduction in the CRP acreage enrollment cap reduction, easing of the requirements under the "sodsaver" provision, limitations on the types of lands eligible under Wildlife Habitat Incentives Program, and the new permanent disaster fund, which could encourage marginal land plantings, among other concerns.

The 2008 enacted farm bill (Food, Conservation, and Energy Act of 2008, P.L. 110-246) reauthorizes almost all existing conservation programs, modifies several programs, and creates various new conservation programs. A new Conservation Stewardship program replaces the existing Conservation Security Program and a new Agricultural Water Enhancement Program under the Environmental Quality Incentives Program is also authorized with mandatory funding. Other new programs include the Chesapeake Bay Watershed Program and a "Sodsaver" provision to help preserve native sod, including virgin prairie in the Prairie Pothole National Priority Area. Significant modifications to existing programs include a reduction of the maximum enrolled acreage under the Conservation Reserve Program to 32 million acres and an increase in the cap for the Wetlands Reserve Program to over 3 million acres. Other changes in the enacted bill include modifications to address eligibility requirements, program definitions, enrollment and payment limits, contract terms, evaluation and application ranking criteria, among other administrative issues. Eligibility is expanded for many programs and technical assistance under most programs is broadened to cover forested and managed lands, pollinator habitat and protection, and identified natural resource areas. Beginning, limited resource, and socially disadvantaged producers, specialty crop producers, and producers transitioning to organic production are also targeted for special consideration in many existing programs. Estimated new spending on the conservation title--not including estimated conservation-related revenue and cost-offset provisions in the bill--is projected to increase by $2.7 billion over 5 years and $4.0 billion over 10 years. Total mandatory spending for the conservation title is projected at $24.3 billion over 5 years (FY2008-FY2012) and $55.2 billion over 10 years (FY2008-FY2017). A comparison of conservation provisions in the enacted 2008 farm bill with existing law and the House and Senate farm bills is provided in the Appendix. This report will not be updated.

In the 1970s, a series of lawsuits began challenging the funding disparities among school districts within the states. Schools in the U.S., which typically receive some federal and state financial assistance, generally derive a substantial percentage of their funding from local property taxes, which, at least in the early days of education finance litigation, generated significantly different levels of funding depending on how much the property in a given district was worth. Spurred by concerns that such disparities discriminated against students in poor school districts or resulted in an inadequate education, school finance plaintiffs began filing lawsuits in federal and state courts based on theories involving educational equity or adequacy. In the most prominent federal case on school financing, San Antonio Independent School District v. Rodriguez , the Supreme Court rejected a legal challenge to Texas's system of public financing for its elementary and secondary schools, holding that the state finance system did not violate equal protection or interfere with a fundamental right. Ultimately, the Rodriguez case, which clarified that school funding disparities were not a federal issue, foreclosed school finance claims based on the U.S. Constitution and prompted plaintiffs to file lawsuits based on state constitutional claims, thereby transforming education finance litigation into an issue of state law. This report discusses the Rodriguez case and the resulting flurry of state education finance litigation, including the dominant legal theories of equity and adequacy and the leading cases in each of these areas. In Rodriguez , the original plaintiffs in the case challenged the Texas state system of public financing for elementary and secondary schools, which they claimed to be a violation of the Equal Protection Clause of the Fourteenth Amendment because funding under the system, which was based on local property taxes, discriminated against students in less affluent school districts and interfered with the students' fundamental right to education. The Supreme Court rejected both of these arguments, holding that the state finance system did not violate equal protection or interfere with a fundamental right. Under the Supreme Court's equal protection jurisprudence, "the general rule is that legislation is presumed to be valid and will be sustained if the classification drawn by the statute is rationally related to a legitimate state interest," although laws that are based on suspect classifications such as race or gender or that interfere with a fundamental right typically receive heightened scrutiny and require a stronger, if not compelling, state interest to justify the classification or infringement. The Rodriguez Court, however, concluded that the Texas financing system did not discriminate against any definable category of poor people or result in the absolute deprivation of education and therefore held that there was no impermissible classification based on wealth and no discrimination against a suspect class. Likewise, the Court found that the Constitution did not explicitly or implicitly guarantee a right to education and that there was no evidence that the Texas financing system resulted in an education so inadequate that it interfered with the ability to exercise other fundamental constitutional rights. The Court's holding that there was no discrimination against a suspect class and no interference with a fundamental right was important because it determined the degree of judicial scrutiny that the Texas financing system received. Had the Court found a violation of equal protection or infringement of a fundamental right, then the Texas school funding system would have been subject to strict scrutiny and the state would have been required to offer a compelling state interest as justification for the system. In the absence of such a finding, however, the Texas financing system was subject to rational basis review. Under that standard, the Court upheld the state funding system as rationally related to the legitimate state interest of maintaining local control over matters involving education and taxation. As noted above, the Rodriguez case foreclosed school finance claims based on the federal constitution and prompted plaintiffs to file lawsuits based on state constitutional claims instead, thereby transforming education finance litigation into an issue of state law. This section discusses the two major legal theories involved in state education finance litigation--equity and adequacy--as well as leading cases in these areas. Initially, litigants in school finance cases focused on the issue of equity. Arguing that the funding disparities among school districts were inequitable, the plaintiffs in these cases contended that such inequities were unconstitutional and should be remedied by equalizing funding among all school districts. Although the U.S. Supreme Court had rejected arguments based on the Equal Protection Clause of the U.S. Constitution, advocates for school financing reform typically based their new legal claims on equal protection provisions found within the constitutions of individual states. For example, in Serrano v. Priest , which is the most prominent example of an equity-based education finance claim, the Supreme Court of California held that the state finance system for public schools violated the equal protection provisions in the California constitution because "discrimination in educational opportunity on the basis of district wealth involves a suspect classification, and ... education is a fundamental interest." Although an equity-based litigation strategy was effective in some of the early cases: [The] difficulties of actually achieving equal educational opportunity through the fiscal neutrality principle, as well as political resistance to judicial attempts to enforce court orders in the initial fiscal equity cases, seem to have dissuaded other state courts from venturing down this path. Despite an initial flurry of pro-plaintiff decisions in the mid-1970s, by the mid-1980's, the pendulum had decisively swung the other way: plaintiffs won only two decisions in the early '80s, and, as of 1988 ... 15 of the State Supreme Courts had denied any relief to the plaintiffs ... compared to the seven states in which plaintiffs had prevailed. In part, this shift may have occurred because state courts and legislatures experienced implementation difficulties when attempting to equalize funding among school districts and because court decisions that required equal resources did not necessarily ensure equal or adequate educational opportunities. As a result of this diminished success with equity-based claims, plaintiffs in school financing cases began bringing school finance claims based on adequacy theories instead. Although state courts continued to analyze education finance cases in terms of equal protection, the courts gradually began to examine other considerations, notably arguments regarding educational adequacy. Specifically, rather than rely on the argument that school funding disparities were a violation of equal protection, some plaintiffs began arguing that inadequate funding levels resulted in a violation of state constitutional provisions that guaranteed an adequate education. Most of these claims were based on provisions found in virtually all state constitutions that require states to establish a system of free public schools and provide students with a "thorough," "efficient," or "adequate" education. For example, in the early case Robinson v. Cahill , the Supreme Court of New Jersey interpreted a state constitutional provision that required the legislature to provide for "a thorough and efficient system of free public schools," and the court concluded that "we do not doubt than an equal educational opportunity for children was precisely in mind" and "the obligation is the State's to rectify." As a result, the court ruled that the New Jersey school finance system was unconstitutional but left it to the legislature to devise a solution that would compel localities to provide equal educational opportunities to their students. In another significant adequacy case, Rose v. Council for Better Education , the Supreme Court of Kentucky evaluated the claim that the state education financing scheme was inadequate and therefore a violation of a state constitutional provision that requires the legislature to "provide for an efficient system of common schools." The court not only found such a violation, but held that "Kentucky's entire system of common schools is unconstitutional" because the entire system is "underfunded and inadequate" and "fraught with inequalities and inequities." The court then held that every child "must be provided with an equal opportunity to have an adequate education" and set forth educational standards to define what constitutes an adequate education. Currently, state education finance litigation typically involves adequacy-based claims. As one commentator notes, "Adequacy has become the predominant theme of the recent wave of state court decisions because the adequacy approach resolves many of the legal problems that had arisen in the early fiscal equity cases and because it provides the courts judicially manageable standards for implementing effective remedies." Regardless of whether such lawsuits involve equity or adequacy theories, education finance litigation has thus far been brought in 45 out of 50 states.

Over the past several decades, a series of lawsuits have challenged funding disparities that exist among school districts within the states. Spurred by concerns that such disparities discriminated against students in poor school districts or resulted in an inadequate education, school finance plaintiffs began filing lawsuits in federal and state courts based on theories involving educational equity or adequacy. This report provides an analysis of litigation regarding school financing, including an overview of the legal issues involved in such litigation and a description of the leading school finance cases at both the federal and state level.

This is an outline of the Electronic Communications Privacy Act (ECPA). ECPA consists of three parts. The first, sometimes referred to as Title III, outlaws the unauthorized interception of wire, oral, or electronic communications. It also establishes a judicial supervised procedure to permit such interceptions for law enforcement purposes. The second, the Stored Communications Act, focuses on the privacy of, and government access to, stored electronic communications. The third creates a procedure for governmental installation and use of pen registers as well as trap and trace devices. It also outlaws such installation or use except for law enforcement and foreign intelligence investigations. Prohibitions : In Title III, ECPA begins the proposition that unless provided otherwise, it is a federal crime to engage in wiretapping or electronic eavesdropping; to possess wiretapping or electronic eavesdropping equipment; to use or disclose information obtained through illegal wiretapping or electronic eavesdropping; or to disclose information secured through court-ordered wiretapping or electronic eavesdropping, in order to obstruct justice. Wiretapping : First among these is the ban on illegal wiretapping and electronic eavesdropping that covers: (1) any person who (2) intentionally (3) intercepts, or endeavors to intercept (4) wire, oral, or electronic communications (5) by using an electronic, mechanical or other device, (6) unless the conduct is specifically authorized or expressly not covered, e.g. (a) one of the parties to the conversation has consent to the interception, (b) the interception occurs in compliance with a statutorily authorized (and ordinarily judicially supervised) law enforcement or foreign intelligence gathering interception, (c) the interception occurs as part of providing or regulating communication services, (d) certain radio broadcasts, and (e) in some places, spousal wiretappers. Unlawful Disclosure : Title III has three disclosure offenses. The first is a general prohibition focused on the products of an unlawful interception: (1) any person [who] (2) intentionally (3) discloses or endeavors to disclose to another person (4) the contents of any wire, oral, or electronic communication (5) having reason to know (6) that the information was obtained through the interception of a wire, oral, or electronic communication (7) in violation of 18 U.S.C. 2511(1), (8) is subject to the same sanctions and remedies as the wiretapper or electronic eavesdropper. When the illegally secured information relates to a matter of usual public concern, the First Amendment precludes a prosecution for disclosure under SS2511(c). Moreover, the legislative history indicates that Congress did not intend to punish the disclosure of intercepted information that is public knowledge. Finally, the results of electronic eavesdropping authorized under Title III may be disclosed and used for law enforcement purposes and for testimonial purposes. Title III makes it a federal crime to disclose intercepted communications under two other circumstances. It is a federal crime to disclose, with an intent to obstruct criminal justice, any information derived from lawful police wiretapping or electronic eavesdropping. A third disclosure proscription applies only to electronic communications service providers "who intentionally divulge the contents of the communication while in transmission" to anyone other than sender and intended recipient. Violators would presumably be exposed to criminal liability under the general disclosure proscription and to civil liability. Unlawful Use : The prohibition on the use of information secured from illegal wiretapping or electronic eavesdropping mirrors its disclosure counterpart: (1) any person [who] (2) intentionally (3) uses or endeavors to use to another person (4) the contents of any wire, oral, or electronic communication (5) having reason to know (6) that the information was obtained through the interception of a wire, oral, or electronic communication (7) in violation of 18 U.S.C. 2511(1), (8) is subject to the same sanctions and remedies as the wiretapper or electronic eavesdropper. The criminal and civil liability that attend unlawful use of intercepted communications in violation of paragraph 2511(1)(d) are the same as for unlawful disclosure in violation of paragraphs 2511(1)(c) or 2511(1)(e), or for unlawful interception under paragraphs 2511(1)(a) or 2511(1)(b). Possession of Intercept Devices : The proscriptions for possession and trafficking in wiretapping and eavesdropping devices are even more demanding than those that apply to the predicate offense itself. There are exemptions for service providers, government officials and those under contract with the government, but there is no exemption for equipment designed to be used by private individuals, lawfully but surreptitiously. Government Access : Title III exempts federal and state law enforcement officials from its prohibitions on the interception of wire, oral, and electronic communications under three circumstances: (1) pursuant to or in anticipation of a court order, (2) with the consent of one of the parties to the communication; and (3) with respect to the communications of an intruder within an electronic communications system. To secure a Title III interception order as part of a federal criminal investigation, a senior Justice Department official must approve the application for the court order authorizing the interception of wire or oral communications. The procedure is only available where there is probable cause to believe that the wiretap or electronic eavesdropping will produce evidence of one of a long, but not exhaustive, list of federal crimes, or of the whereabouts of a "fugitive from justice" fleeing from prosecution of one of the offenses on the predicate offense list. Any federal prosecutor may approve an application for a court order under section 2518 authorizing the interception of email or other electronic communications and the authority extends to any federal felony rather than more limited list of federal felonies upon which a wiretap or bug must be predicated. At the state level, the principal prosecuting attorney of a state or any of its political subdivisions may approve an application for an order authorizing wiretapping or electronic eavesdropping based upon probable cause to believe that it will produce evidence of a felony under the state laws covering murder, kidnaping, gambling, robbery, bribery, extortion, drug trafficking, or any other crime dangerous to life, limb or property. State applications, court orders and other procedures must at a minimum be as demanding as federal requirements. Applications for a court order authorizing wiretapping and electronic surveillance must include the identity of the applicant and the official who authorized the application; a full and complete statement of the facts including details of the crime; a particular description of the nature, location and place where the interception is to occur, a particular description of the communications to be intercepted, the identities (if known) of the person committing the offense and of the persons whose communications are to be intercepted; a full and complete statement of the alternative investigative techniques used or an explanation of why they would be futile or dangerous; a statement of the period of time for which the interception is to be maintained and if it will not terminate upon seizure of the communications sought, a probable cause demonstration that further similar communications are likely to occur; a full and complete history of previous interception applications or efforts involving the same parties or places; in the case of an extension, the results to date or explanation for the want of results; and any additional information the judge may require. Before issuing an order authorizing interception, the court must find: probable cause to believe that an individual is, has or is about to commit one or more of the predicate offenses; probable cause to believe that the particular communications concerning the crime will be seized as a result of the interception requested; that normal investigative procedures have been or are likely to be futile or too dangerous; and probable cause to believe that the facilities from which, or the place where, the wire, oral, or electronic communications are to be intercepted are being used, or are about to be used, in connection with the commission of such offense, or are leased to, listed in the name of, or commonly used by such person. Subsections 2518(4) and (5) demand that any interception order include the identity (if known) of the persons whose conversations are to be intercepted; the nature and location of facilities and place covered by the order; a particular description of the type of communication to be intercepted and an indication of the crime to which it relates; the individual approving the application and the agency executing the order; the period of time during which the interception may be conducted and an indication of whether it may continue after the communication sought has been seized; an instruction that the order shall be executed; as soon as practicable, and so as to minimize the extent of innocent communication seized; and upon request, a direction for the cooperation of communications providers and others necessary or useful for the execution of the order. The court orders remain in effect only as long as required but not more than 30 days. After 30 days, the court may grant 30 day extensions subject to the procedures required for issuance of the original order. During that time the court may require progress reports at such intervals as it considers appropriate. Intercepted communications are to be recorded and the evidence secured and placed under seal (with the possibility of copies for authorized law enforcement disclosure and use) along with the application and the court's order. Within 90 days of the expiration of the order, those whose communications have been intercepted are entitled to notice, and evidence secured through the intercept may be introduced into evidence with 10 days' advance notice to the parties. Title III also describes conditions under which information derived from a court ordered interception may be disclosed or otherwise used. It permits disclosure and use for official purposes by: other law enforcement officials including foreign officials; federal intelligence officers to the extent that it involves foreign intelligence information; other American or foreign government officials to the extent that it involves the threat of hostile acts by foreign powers, their agents, or international terrorists. It also allows witnesses testifying in federal or state proceedings to reveal the results of a Title III tap, provided the intercepted conversation or other communication is not privileged. Consequences of a Violation : Criminal Penalties : Interception, use, or disclosure in violation of Title III is generally punishable by imprisonment for not more than five years and/or a fine of not more than $250,000 for individuals and not more than $500,000 for organizations. In addition to exemptions previously mentioned, Title III provides a defense to criminal liability based on good faith. Civil Liability : Victims of a violation of Title III may be entitled to equitable relief, damages (equal to the greater of actual damages, $100 per day of violation, or $10,000), punitive damages, reasonable attorney's fees and reasonable litigation costs. A majority of federal courts hold that governmental entities other than the United States may be liable for violations of SS2520 and that law enforcement officers enjoy a qualified immunity from suit under SS2520. The cause of action created in SS2520 is subject to a good faith defense. Efforts to claim the defense by anyone other than government officials or someone working at their direction have been largely unsuccessful. Finally, the USA PATRIOT Act authorizes a cause of action against the United States for willful violations of Title III, the Foreign Intelligence Surveillance Act, or the provisions governing stored communications in 18 U.S.C. 2701-2712. Successful plaintiffs are entitled to the greater of $10,000 or actual damages, and reasonable litigation costs. Administrative and Professional Disciplinary Action: Upon a judicial or administrative finding of a Title III violation suggesting possible intentional or willful misconduct on the part of a federal officer or employee, the federal agency or department involved may institute disciplinary action. It is required to explain to its Inspector General's office if it declines to do so. Attorneys who engage in unlawful wiretapping or electronic eavesdropping remain subject to professional discipline in every jurisdiction. Courts and bar associations have had varied reactions to lawful wiretapping or electronic eavesdropping by members of the bar. Exclusion of Evidence : When the Title III prohibits disclosure, the information is inadmissible as evidence before any federal, state, or local tribunal or authority. Individuals whose conversations have been intercepted or against whom the interception was directed have standing to claim the benefits of the SS2515 exclusionary rule through a motion to suppress. Section 2518(10)(a) bars admission as long as the evidence is the product of (1) an unlawful interception, (2) an interception authorized by a facially insufficient court order, or (3) an interception executed in manner substantially contrary to the order authorizing the interception. Mere technical noncompliance is not enough; the defect must be of a nature that substantially undermines the regime of court-supervised interception for law enforcement purposes. Prohibitions : The SCA has two sets of proscriptions: a general prohibition and a second applicable to only certain communications providers. The general proscription makes it a federal crime to: (1) intentionally (2) either (a) access without authorization or (b) exceed an authorization to access (3) a facility through which an electronic communication service is provided (4) and thereby obtain, alter, or prevent authorized access to a wire or electronic communication while it is in electronic storage in such system. Section 2701's prohibitions yield to several exceptions and defenses. First, the section itself declares that: Subsection (a) of this section does not apply with respect to conduct authorized--(1) by the person or entity providing a wire or electronic communications service; (2) by a user of that service with respect to a communication of or intended for that user; or (3) in section 2703 [requirements for government access], 2704 [backup preservation] or 2518 [court ordered wiretapping or electronic eavesdropping] of this title. Second, there are the good faith defenses provided by section 2707. Third, there is the general immunity from civil liability afforded providers under subsection 2703(e). A second set of prohibitions appears in section 2702 and supplements those in section 2701. Section 2702 bans the disclosure of the content of electronic communications and records relating to them by those who provide the public with electronic communication service or remote computing service. The section forbids providers to disclose the content of certain communications to anyone or to disclose related records to governmental entities. Section 2702 comes with its own set of exceptions which permit disclosure of the contents of a communication: (1) to an addressee or intended recipient of such communication or an agent of such addressee or intended recipient; (2) as otherwise authorized in section 2517 [relating to disclosures permitted under Title III], 2511(2)(a)[relating to provider disclosures permitted under Title III for protection of provider property or incidental to service], or 2703 [relating to required provider disclosures pursuant to governmental authority] of this title; (3) with the lawful consent of the originator or an addressee or intended recipient of such communication, or the subscriber in the case of remote computing service; (4) to a person employed or authorized or whose facilities are used to forward such communication to its destination; (5) as may be necessarily incident to the rendition of the service or to the protection of the rights or property of the provider of that service; (6) to the National Center for Missing and Exploited Children, in connection with a report submitted thereto under section 227 of the Victims of Child Abuse Act of 1990; (7) to a law enforcement agency--(A) if the contents--(i) were inadvertently obtained by the service provider; and (ii) appear to pertain to the commission of a crime; or (8) to a federal, state, or local government entity, if the provider, in good faith, believes that an emergency involving danger of death or serious physical injury to any person requires disclosure without delay of communications relating to the emergency. The record disclosure exceptions are similar. Government Access : The circumstances and procedural requirements for law enforcement access to stored wire or electronic communications and transactional records are less demanding than those under Title III. They deal with two kinds of information--often in the custody of the communications service provider rather than of any of the parties to the communication--communications records and the content of electronic or wire communications. The Stored Communications Act provides two primary avenues for law enforcement access: permissible provider disclosure (section 2702) and required provided access (section 2703). As noted earlier in the general discussion of section 2702, a public electronic communication service (ECS) provider or a public remote computing service (RCS) provider may disclose the content of a customer's communication without the consent of a communicating party to a law enforcement agency in the case of inadvertent discovery of information relating to commission of a crime, or to any government entity in an emergency situation. ECS and RCS providers may also disclose communications records to any governmental entity in an emergency situation. Federal, state, and local agencies, regardless of the nature of their missions, all qualify as governmental entities for purposes of section 2702. Section 2702 authorizes voluntary disclosure. Section 2703 speaks to the circumstances under which ECS and RCS providers may be required to disclose communications content and related records. Section 2703 distinguishes between recent communications and those that have been in electronic storage for more than 180 days. The section insists that government entities resort to a search warrant to compel providers to supply the content of wire or electronic communications held in electronic storage for less than 180 days. It permits them to use a warrant, subpoena, or a court order authorized in subsection 2703(d) to force content disclosure with respect to communications held for more than 180 days. A subsection 2703(d) court order may be issued by a federal magistrate or by a judge qualified to issue an order under Title III. It need not be issued in the district in which the provider is located. The person whose communication is disclosed is entitled to notice, unless the court authorizes delayed notification because contemporaneous notice might have an adverse impact. Government supervisory officials may certify the need for delayed notification in the case of a subpoena. Subsection 2703(d) authorizes issuance of an order when the governmental entity has presented specific and articulable facts sufficient to establish reasonable grounds to believe that the contents are relevant and material to an ongoing criminal investigation. Some courts have held that this "reasonable grounds" standard is a Terry standard, a less demanding standard than "probable cause," and that under some circumstances this standard may be constitutionally insufficient to justify government access to provider held email. A Sixth Circuit panel has held that the Fourth Amendment precludes government access to the content of stored communications (email) held by service providers in the absence of a warrant, subscriber consent, or some other indication that the subscriber has waived his or her expectation of privacy. Where the government instead secures access through a subpoena or court order as section 2703 permits, the evidence may be subject to both the Fourth Amendment exclusionary rule and the exceptions to the rule. The SCA has two provisions which require providers to save customer communications at the government's request. One is found in subsection 2703(f). It requires ECS and RCS providers to preserve "records and other evidence in its possession," at the request of a governmental entity pending receipt of a warrant, court order, or subpoena. Whether providers are bound to preserve emails and other communications that come into their possession both before and after receipt of the request is unclear. The second preservation provision is more detailed. It permits a governmental entity to insist that providers preserve backup copies of the communications covered by a subpoena or subsection 2703(d) court order. It gives subscribers the right to challenge the relevancy of the information sought. It might also be read to require the preservation of the content of communications received by the provider both before and after receipt of the order, but the requirement that copies be made within two days of receipt of the order seems to preclude such an interpretation. Section 2703 provides greater protection to communication content than to provider records relating to those communications. Under subsection 2703(c), a governmental entity may require a ECS or RCS provider to disclose records or information pertaining to a customer or subscriber--other than the content of a communication--under a warrant, a court order under subsection 2703(d), or with the consent of the subject of the information. An administrative, grand jury or trial subpoena is sufficient, however, for a limited range of customer or subscriber related information. The customer or subscriber need not be notified of the record disclosure in either case. The district courts have been divided for some time over the question of what standard applies when the government seeks cell phone location information from a provider, either current or historical. The Third Circuit has held that while issuance of an order under subsection 2703(d) does not require a showing of probable cause as a general rule, the circumstances of a given case may require it. In United States v. J ones , five members of the Supreme Court seemed to suggest that a driver has a reasonable expectation that authorities must comply with the demands of the Fourth Amendment before acquiring access to information that discloses the travel patterns of his car over an extended period of time. There, the Court unanimously agreed that the agents' attachment of a tracking device to Jones' car and long-term capture of the resulting information constituted a Fourth Amendment search. For four Justices, placement of the device constituted a physical intrusion upon a constitutionally protected area. For four others, long term tracking constituted a breach of Jones' reasonable expectation of privacy. For the ninth Justice, the activity constituted a Fourth Amendment search under either rationale. It remains to be seen whether the Supreme Court's decision in Jones will contribute to resolution of the issue. Consequences : Breaches of the unauthorized access prohibitions of section 2701 expose offenders to possible criminal, civil, and administrative sanctions. Violations committed for malicious, mercenary, tortious or criminal purposes are punishable by imprisonment for not more than five years (not more than 10 years for a subsequent conviction) and/or a fine of not more than $250,000 (not more than $500,000 for organizations); lesser transgressions, by imprisonment for not more than one year (not more than five years for a subsequent conviction) and/or a fine of not more than $100,000. Victims of a violation of subsection 2701(a) have a cause of action for equitable relief, reasonable attorneys' fees and costs, and damages equal to the amount of any offender profits added to the total of the victim's losses (but not less than $1,000 in any event). Violations by the United States may give rise to a cause of action and may result in disciplinary action against offending officials or employees under the same provisions that apply to U.S. violations of Title III, Unlike violations of Title III, however, there is no statutory prohibition on disclosure or use of the information through a violation of section 2701; nor is there a statutory rule for the exclusion of evidence as a consequence of a violation. Yet, violations of SCA, which also constitute violations of the Fourth Amendment, will trigger both the Fourth Amendment exclusionary rule and the exceptions to that rule. No criminal penalties attend a violation of voluntary provider disclosure prohibitions of section 2702. Yet, ECS and RCS providers--unable to claim the benefit of one of the section's exceptions, of the good faith defense under subsection 2707(e), or of the immunity available under subsection 2703(e)--may be liable for civil damages, costs and attorneys' fees under section 2707 for any violation of section 2702. Prohibitions : A trap and trace device identifies the source of incoming calls, and a pen register indicates the numbers called from a particular instrument. Since they did not allowed the user to overhear the "contents" of the phone conversation or to otherwise capture the content of a communication, they were not considered interceptions within the reach of Title III prior to the enactment of ECPA. Although Congress elected to expand the definition of interception, it chose to regulate these devices beyond the boundaries of Title III for most purposes. Nevertheless, the Title III wiretap provisions apply when, due to the nature of advances in telecommunications technology, pen registers and trap and trace devices are able to capture wire communication "content." Subsection 3121(a) outlaws installation or use of a pen register or trap and trace device, except under one of seven circumstances: (1) pursuant to a court order issued under sections 3121-3127; (2) pursuant to a Foreign Intelligence Surveillance Act (FISA) court order; (3) with the consent of the user; (4) when incidental to service; (5) when necessary to protect users from abuse of service; (6) when necessary to protect providers from abuse of service; or (7) in an emergency situation. Government Access : Federal government attorneys and state and local police officers may apply for a court order authorizing the installation and use of a pen register and/or a trap and trace device upon certification that the information that it will provide is relevant to a pending criminal investigation. The order may be issued by a judge of "competent jurisdiction" over the offense under investigation, including a federal magistrate judge. Senior Justice Department or state prosecutors may approve the installation and use of a pen register or trap and trace device prior to the issuance of court authorization in emergency cases that involve either an organized crime conspiracy, an immediate danger of death or serious injury, a threat to national security, or a serious attack on a "protected computer." Emergency use must end within 48 hours, or sooner if an application for court approval is denied. Federal authorities have applied for court orders, under the Stored Communications Act (18 U.S.C. 2701-2712) and the trap and trace authority of 18 U.S.C. 3121-3127, seeking to direct communications providers to supply them with the information necessary to track cell phone users in conjunction with an ongoing criminal investigation. Thus far, their efforts have met with mixed success. Consequences : The use or installation of pen registers or trap and trace devices by anyone other than the telephone company, service provider, or those acting under judicial authority is a federal crime, punishable by imprisonment for not more than a year and/or a fine of not more than $100,000 ($200,000 for an organization). Subsection 3124(e) creates a good faith defense for reliance upon a court order under subsection 3123(b), an emergency request under subsection 3125(a), "a legislative authorization, or a statutory authorization." There is no accompanying exclusionary rule, and consequently a violation of section 3121 will not serve as a basis to suppress any resulting evidence. Moreover, unlike violations of Title III, there is no requirement that the target of an order be notified upon the expiration of the order; nor is there a separate federal private cause of action for victims of a pen register or trap and trace device violation. One court, in order to avoid First Amendment concerns, has held that the statute precludes imposing permanent gag orders upon providers. Nevertheless permitting providers to disclose the existence of an order to a target does not require them to do so. Some of the states have established a separate criminal offense for unlawful use of a pen register or trap and trace device, yet most of these seem to follow the federal lead and have not established a separate private cause of action for unlawful installation or use of the devices.

This report provides an overview of federal law governing wiretapping and electronic eavesdropping under the Electronic Communications Privacy Act (ECPA). It is a federal crime to wiretap or to use a machine to capture the communications of others without court approval, unless one of the parties has given his prior consent. It is likewise a federal crime to use or disclose any information acquired by illegal wiretapping or electronic eavesdropping. Violations can result in imprisonment for not more than five years; fines up to $250,000 (up to $500,000 for organizations); civil liability for damages, attorneys' fees and possibly punitive damages; disciplinary action against any attorneys involved; and suppression of any derivative evidence. Congress has created separate, but comparable, protective schemes for electronic communications (e.g., email) and against the surreptitious use of telephone call monitoring practices such as pen registers and trap and trace devices. Each of these protective schemes comes with a procedural mechanism to afford limited law enforcement access to private communications and communications records under conditions consistent with the dictates of the Fourth Amendment. The government has been given narrowly confined authority to engage in electronic surveillance, conduct physical searches, and install and use pen registers and trap and trace devices for law enforcement purposes under ECPA and for purposes of foreign intelligence gathering under the Foreign Intelligence Surveillance Act. This report is an abridged version of CRS Report R41733, Privacy: An Overview of the Electronic Communications Privacy Act, by [author name scrubbed], without the footnotes, quotations, attributions of authority, or appendixes found there. The longer report also serves as the first section of CRS Report 98-326, Privacy: An Overview of Federal Statutes Governing Wiretapping and Electronic Eavesdropping, by [author name scrubbed] and [author name scrubbed], which examines both ECPA and the Foreign Intelligence Surveillance Act (FISA). It too is available in abridged form as CRS Report 98-327, Privacy: An Abbreviated Outline of Federal Statutes Governing Wiretapping and Electronic Eavesdropping, by [author name scrubbed] and [author name scrubbed].

Most civilian federal employees participate in one of two federal retirement systems. In general, employees hired before 1984 are covered by the Civil Service Retirement System (CSRS) and those who were hired in 1984 or later are covered by the Federal Employees' Retirement System (FERS). Employees enrolled in CSRS do not pay Social Security taxes and do not earn Social Security benefits based on their employment in the federal government. Employees enrolled in FERS pay Social Security taxes and earn Social Security benefits. Employees in either system can contribute to the Thrift Savings Plan (TSP), but only employees enrolled in FERS receive employer matching contributions. As governmental plans, CSRS and FERS are not subject to the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406 ), which governs many aspects of employer-sponsored retirement plans in the private sector. ERISA establishes certain rights for the spouses and former spouses of participants in private-sector plans. To protect spouses and former spouses, ERISA requires that the default form of benefit in a defined benefit pension plan must be a joint and survivor annuity with at least a 50% survivor benefit; a retirement plan must comply with the terms of a qualified domestic relations order (QDRO) issued by a state court that divides retirement benefits between the parties to a divorce; the written consent of both spouses must be secured in order for a married participant in a defined contribution plan to name anyone other than his or her spouse as the beneficiary if the participant were to die; and the default form of annuity in a defined contribution plan that offers this form of benefit must be a joint and survivor annuity. Retirement benefits for federal employees are governed by chapters 83 (CSRS) and 84 (FERS) of Title 5 of the United States Code. These chapters establish rights of the spouse or former spouse of a current or former federal employee that are similar in many respects to those established by ERISA for private-sector plans; however, there are a few important differences. For example, like ERISA, Title 5 requires the default form of benefit under CSRS and FERS to be a joint and survivor annuity, and both ERISA and Title 5 require the written consent of the participant and spouse in order to waive the survivor annuity. On the other hand, while both ERISA and Title 5 allow a pension to be divided between the parties to a divorce, the laws differ with respect to when pension payments to the former spouse can begin. Under ERISA, a court can require a plan to begin paying benefits to the former spouse when the plan participant has reached the earliest retirement age under the plan, regardless of whether the participant has yet retired. In contrast, even if a state court decree of divorce or annulment has awarded a share of a federal employee's retirement annuity to a former spouse, Title 5 prohibits payment of any part of a CSRS or FERS annuity to a former spouse until the employee has separated from federal service, is eligible to receive a CSRS or FERS annuity, and has applied for an annuity. Another difference between ERISA and Title 5 is in the designation of beneficiaries in defined contribution plans. ERISA requires a married participant in a defined contribution plan to secure the written consent of his or her spouse in order to name anyone other than the spouse as the plan beneficiary in the event of the participant's death. In contrast, federal regulations allow a participant in the Thrift Savings Plan for federal employees to name anyone as the plan beneficiary in the event of the participant's death "without the knowledge or consent of any person, including his or her spouse." A state court decree of divorce, annulment, or legal separation can award a former spouse of a federal employee either a share of the employee's retirement annuity, a survivor annuity, or both types of annuity. To award a former spouse both a share of the employee's retirement annuity and a survivor annuity, the court order must specify both benefits. The Office of Personnel Management (OPM) will pay only the benefits that are specified in the court order. Section 8346 of Title 5 generally exempts CSRS from the proceedings of state courts. However, Section 8345 of Title 5 allows a former spouse of a federal employee to be awarded a share of the employee's CSRS retirement annuity in accordance with the terms of a state court decree of divorce, annulment, or legal separation or a property settlement pursuant to such decree. OPM will divide the retired employee's monthly annuity as directed by the court order and pay the specified share to the former spouse. Only payments made after OPM receives the court order will be divided between the employee and his or her former spouse. OPM will not execute a court order dividing a federal employee's retirement annuity until the employee has separated from federal service, is eligible for an annuity, and has applied for an annuity. The right of a former spouse to receive a share of a retired federal employee's retirement annuity terminates when the retired employee dies. For the former spouse to receive a survivor annuity, either the retiree must have elected a survivor annuity for the former spouse or a court order must specify that the former spouse is to receive a survivor annuity. A former spouse of a deceased federal employee may receive a CSRS survivor annuity if the employee elected a survivor annuity for the former spouse or if a state court decree of divorce, annulment, or separation requires a survivor annuity. A CSRS survivor annuity is 55% of the single-life annuity that the retired worker would have received. To fund the joint and survivor annuity, the retired worker's annual pension is reduced by 2.5% of the first $3,600 plus 10% of the annuity above that amount. This entitles the worker's spouse or former spouse to a survivor annuity equal to 55% of the worker's full annuity before the reduction for survivor benefit is taken into account. The sum of CSRS survivor annuities paid to the employee's spouse at the time of death and all former spouses cannot exceed 55% of the single-life annuity to which the annuitant was entitled. If the full amount of a survivor annuity has been awarded to a former spouse through a court order, the employee's current spouse is not entitled to receive a survivor annuity unless the former spouse has died or remarried before the age of 55. A survivor annuity paid to a former spouse of a federal employee terminates when the former spouse dies or if he or she remarries before the age of 55. There is an exception to the termination of a survivor annuity paid to a former spouse in the case of remarriage prior to age 55 if the former spouse's marriage to the employee lasted at least 30 years (applicable to remarriages that have occurred on or after January 1, 1995). If the remarriage ends in death, divorce, or annulment, the annuity restarts in the same amount. An employee's election to provide a survivor annuity, or a court order awarding a survivor annuity to a former spouse, can be modified only before the employee retires or dies. A court order awarding a survivor annuity to a former spouse of an employee will not be honored by OPM if the former spouse previously waived his or her right to a survivor annuity. If an employee separating from federal service elects to receive a refund of his or her contributions to the retirement system, he or she forfeits the right to receive a CSRS annuity. Section 8342 of Title 5 allows a state court to block payment of a refund if a former spouse has been awarded a share of the employee's annuity or a survivor annuity. Section 8470 of Title 5 generally exempts FERS from the proceedings of state courts. However, Section 8467 allows a FERS retirement annuity to be divided between a federal annuitant and a former spouse, pursuant to a state court decree of divorce, annulment, or legal separation. OPM will divide the retired employee's monthly annuity as directed by the court order and pay the specified share to the former spouse. Only payments made after OPM receives the court order will be divided between the employee and his or her former spouse. OPM will not execute a court order dividing a federal employee's retirement annuity until the employee has separated from federal service, is eligible for an annuity, and has applied for an annuity. The right of a former spouse to receive a share of a retired federal employee's retirement annuity terminates when the retiree dies. For the former spouse to receive a survivor annuity, either the retiree must have elected a survivor annuity for the former spouse or a court order must specify that the former spouse is to receive a survivor annuity. Section 8445 of Title 5 allows a federal employee to elect a FERS survivor annuity for a former spouse, and it permits a state court to award a former spouse of a federal employee a survivor annuity in the event that the employee predeceases the former spouse. A survivor annuity under FERS is equal to 50% of the single-life annuity to which the retired worker would have been entitled. The joint and survivor annuity is funded by reducing the retiree's single-life annuity amount by 10%. In return for this reduction, the worker's spouse or former spouse is entitled to a survivor annuity equal to 50% of the worker's full annuity before the reduction is taken into account. An employee may provide for the equivalent of no more than one FERS spouse survivor annuity. The sum of FERS survivor annuities paid to the employee's spouse at the time of death and all former spouses cannot exceed 50% of the single-life annuity to which the annuitant was entitled. If the full amount of a survivor annuity has been awarded to a former spouse through a court order, the employee's current spouse is not entitled to receive a survivor annuity unless the former spouse has died or remarried before the age of 55. A survivor annuity terminates when the spouse or former spouse dies or if he or she remarries before the age of 55. In the case of remarriage prior to age 55, there is an exception to the termination of a survivor annuity paid to a former spouse if the former spouse's marriage to the employee lasted at least 30 years (this exception applies to remarriages that have occurred on or after January 1, 1995). If the remarriage ends in death, divorce, or annulment, the annuity restarts in the same amount. An election to provide a FERS survivor annuity or a court order awarding a FERS survivor annuity to a former spouse can be modified only before the employee retires or dies. A court order awarding a survivor annuity to a former spouse of an employee will not be honored by OPM if the former spouse previously waived his or her right to a survivor annuity. If an employee participating in FERS dies after having completed at least 18 months of service, but fewer than 10 years of service, his or her spouse is eligible for a lump-sum survivor benefit equal to one-half of the employee's annual basic pay plus a lump-sum payment (approximately $31,786 in 2014). This lump-sum survivor benefit may be paid to a former spouse or divided between a current and former spouse, pursuant to a state court order. If an employee dies after completing at least 10 years of service, the surviving spouse (or former spouse, pursuant to a court order) receives a lump sum and an annuity equal to 50% of the annuity that the employee had earned at the time of his or her death. A separating employee who elects to receive a refund of contributions to the retirement system forfeits the right to receive a FERS annuity. A state court can block this refund if a former spouse has been awarded a share of the employee's FERS retirement annuity or a FERS survivor annuity. An employee or former employee can designate a beneficiary or beneficiaries who will receive his or her TSP account balance in the event of the participant's death. This must be done by filing Form TSP-3 with the Federal Retirement Thrift Investment Board. The Thrift Board is not authorized to recognize wills or other estate planning documents. A married participant is not required to designate his or her spouse as the beneficiary of the TSP account, nor is the spouse's consent required to designate someone other than the spouse as the beneficiary of the TSP account. A married FERS participant must obtain his or her spouse's written consent before receiving a loan from his or her TSP account, receiving an in-service distribution from the TSP, and withdrawing money from the TSP after leaving federal employment. CSRS participants are not required to obtain the spouse's written consent, but the spouse will be notified by the TSP before a loan is approved or in the event of an in-service or post-employment withdrawal from the TSP. The spouse of a married FERS participant is legally entitled to a joint and survivor annuity with 50% survivor benefit from the TSP. The participant's spouse must waive his or her right to that annuity in writing before the participant can withdraw money from the TSP. The TSP is authorized to recognize state court orders of divorce, annulment, or legal separation and property settlements pursuant to a court order. The TSP also is authorized to recognize state court orders respecting payment of alimony and child support. Federal employees enrolled in FERS participate in Social Security. The former spouse of a worker is eligible for a Social Security spouse's benefit at the age of 62 if the couple were married for at least 10 years, and if the worker is receiving, or is entitled to, Social Security benefits. If the former spouse of the worker remarries, he or she generally cannot collect benefits on the worker's record unless the marriage ends by death, divorce, or annulment. The divorced spouse of a worker insured by Social Security can receive widow or widower benefits if the couple were married at least 10 years. Survivor benefits terminate if the divorced spouse remarries before the age of 60 unless the later marriage ends, by death, divorce, or annulment. Remarriage does not affect Social Security survivor benefits being paid to the children of a deceased worker.

A former spouse of a federal employee may be entitled to a share of the employee's retirement annuity under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS) if this has been authorized by a state court decree of divorce, annulment, or legal separation. An employee also may voluntarily elect a survivor annuity for a former spouse. A state court can award a former spouse a share of the employee's retirement annuity, a survivor annuity, or both. A court also can award a former spouse of a federal employee a portion of the employee's Thrift Savings Plan (TSP) account balance as part of a divorce settlement.

Experts widely assess that Afghanistan will remain the world's primary source of opium poppy cultivation and opium and heroin production, as well as a major global source of cannabis resin, in the coming years (see Figure 1 below). In 2012, Afghanistan cultivated more than 94% of the world's opium poppy and produced approximately 95% of the world's opium, according to U.S. estimates. For its globally significant role in drug production and trafficking, the President has annually designated Afghanistan as a major illicit drug-producing or drug-transit country. In its 2014 International Narcotics Control Strategy Report , the U.S. Department of State described counternarcotics efforts in Afghanistan as "an uphill struggle and a long-term challenge." The potential consequences of Afghanistan's drug situation are wide ranging, with policy implications for economic and political development, as well as regional security priorities. Reports have long described a symbiotic link between narcotics trafficking in Afghanistan; corrupt government officials at the central, provincial, and district levels; ongoing insecurity; and lack of access to development opportunities. Elements of the insurgency, particularly the Taliban, are variously engaged in drug trafficking and the protection of fields, routes, and laboratories to finance operations. According to the U.S. Department of Defense (DOD), such insurgency involvement is "extensive and expanding." Although estimates vary significantly, the U.N. Security Council's Taliban Sanctions Monitoring Team reported that the Taliban generates an estimated $100 million to $155 million annually in illicit income from the drug trade--a sum that may represent more than a quarter of total Taliban funds. The government of Afghanistan continues to depend on foreign donors for assistance and cooperation in responding to the drug problem. Congress has contributed to counternarcotics responses through the continued appropriation of funds and oversight of civilian, military, and law enforcement programs in Afghanistan. The Special Inspector General for Afghanistan Reconstruction (SIGAR) estimates that the U.S. government has spent at least $7 billion in counternarcotics assistance to Afghanistan since the international community began reconstruction and stability operations in FY2002--including more than $4 billion through the State Department and upward of $3 billion through the Defense Department. As coalition combat operations in Afghanistan draw to a close in 2014 and as the full transition of security responsibilities to Afghan forces is achieved, some Members of the 113 th Congress have expressed concern regarding the future direction and policy prioritization of U.S. counternarcotics efforts in Afghanistan, in light of diminishing resources and an uncertain political and security environment in 2015 and beyond. In early 2014, the Senate Caucus on International Narcotics Control and the House Foreign Affairs Subcommittee on the Middle East and North Africa held hearings to discuss counternarcotics efforts in Afghanistan with witnesses from the Obama Administration. One of the most immediate challenges to counternarcotics efforts in Afghanistan is the upcoming end of coalition combat operations and the full transition of security responsibilities to Afghan forces in 2014. In President Barack Obama's Presidential Determination on Major Drug Transit or Major Illicit Drug Producing Countries for Fiscal Year 2014 , he summarized the key challenges facing Afghanistan's drug situation: As we approach the 2014 withdrawal of international forces from Afghanistan, the country requires continued international support. Even greater efforts are needed to bring counternarcotics programs into the mainstream of social and economic development strategies to successfully curb illegal drug cultivation and production of opium as well as the high use of opiates among the Afghan population. Some, including Special Inspector General for Afghanistan Reconstruction John F. Sopko, are concerned that the military transition, which also corresponds to a reduction in civilian and law enforcement personnel at U.S. Embassy Kabul, will result in a loss of "critical manpower at precisely the time that poppy cultivation and drug trafficking is expanding." Counternarcotics efforts to date have relied heavily on the coalition military presence in Afghanistan, raising concerns among some policy makers regarding the sustainability of U.S. counternarcotics efforts following the transition. The U.S. government updated its counternarcotics strategy for Afghanistan in late 2012 to address transition-oriented objectives. It describes the transition as involving "two simultaneous and parallel transfers of responsibility," which includes not only the transfer of security responsibility to Afghan forces, but also the transfer of counternarcotics responsibilities and law enforcement operational activities to the Afghan government. The U.S. strategy identifies two key priorities: (1) strengthening Afghan government capacity to conduct counternarcotics efforts and (2) countering links between drugs and the insurgency by disrupting drug-related funding to the insurgency through and beyond the security transition. Despite the U.S. strategy, detailed counternarcotics implementation plans beyond 2014 remain in flux as negotiations continue on the Afghanistan Bilateral Security Agreement. Several counternarcotics-related transition changes are, however, underway, including the following: North Atlantic Treaty Organization (NATO) Mission Change. At the end of 2014, the coalition's military mission in Afghanistan is expected to transition to a NATO-led training, advisory, and assistance mission named Resolute Support Mission (RSM). The NATO-led mission, however, will reportedly have a reduced capacity to support counternarcotics efforts at current levels. Military-L ed Counternarcotics Operations. In a November 2013 report to Congress, Progress Toward Security and Stability in Afghanistan , DOD acknowledged that fewer drug-related targets are being prioritized. As coalition forces draw down, it is widely anticipated that diminished military resources will affect the scope and frequency of U.S.-supported counternarcotics operations in 2014, particularly in Helmand and Kandahar provinces. Moreover, SIGAR reports that U.S. and coalition-provided support functions, including air transportation, security, and intelligence for counternarcotics operations, "cannot be replicated by Afghan forces." U.S. Drug Enforcement Administration (DEA) Staffing and Operations. Following the transition, DEA has reported that it will "transition its operational profile to correspond with traditional DEA overseas operations." DEA intends, however, to continue to periodically deploy members of its Foreign-deployed Advisory and Support Team (FAST) to Afghanistan. DEA further anticipates that it will be limited to counternarcotics activities based out of Kabul. Already, SIGAR reported that the coalition's drawdown has reduced security, intelligence, medical evacuation, and tactical air control support for DEA's high-risk operations in country. The transition has also already been linked with a sharp decline in the volume of drugs and precursor chemicals interdicted; the total number of counternarcotics operations between FY2012 and FY2013 declined by 26%. U.S. Department of State Programming. State Department-funded counternarcotics programs are in various stages of transition to full Afghan responsibility. Some are already fully implemented by the Afghan government (e.g., Governor-Led Eradication and the Good Performer's Initiative), while the transition timeline for other programs may span several more years. After 2014, the State Department does not plan to have a permanent counternarcotics presence outside Kabul. U.S. Agency for International Development (USAID) Field Presence. Although alternative development projects are implemented by contractors, some observers indicate that the transition could affect USAID's ability to conduct program monitoring and oversight. As the U.S. government's footprint in Afghanistan recedes, particularly at the provincial and district levels, so have the number of USAID field officers assigned to monitoring programs in Afghanistan. Creation of the Regional Narcotics and Analysis and Illicit Trafficking Task Force (RNAIT-TF ). In its Post-2014 Counternarcotics Strategy for Afghanistan , submitted to Congress in late 2013, DOD proposes the establishment, by the end of FY2014, of a new interagency and international coordination mechanism for counternarcotics-related threats, including counter-threat finance. According to DOD, it is intended to be a "bridge" between current counternarcotics activities inside Afghanistan and more regionally focused efforts following the transition and drawdown of U.S. and coalition forces from Afghanistan. In the context of a growing drug problem in Afghanistan and diminished coalition participation in counternarcotics operations, some observers have questioned whether the drug issue will be an Afghan policy priority following the transition--and whether the U.S. government will lose its ability to exert pressure for counternarcotics actions, including corruption investigations that target high-level officials. Others question whether policy makers are sufficiently prepared for the consequences that the transition may bring to counternarcotics efforts in Afghanistan, including a reduced security forces presence in key drug producing provinces and potentially declining resources for counternarcotics programming, such as alternative development. The transition may also reignite policy debates on the impact and consequences associated with previously controversial policy ideas, including aerial eradication of opium poppy crops, alternative development programming linked to eradication commitments, and the licensing of medical-grade opium production for legal export and sale. The following sections describe key U.S. counternarcotics programs in Afghanistan and identify related policy issues. Key programs discussed include (1) interdiction, (2) eradication, (3) the Good Performer's Initiative, (4) alternative development, (5) demand reduction, (6) public awareness, (7) counter-threat finance, (8) prosecution, (9) institutional development, and (10) international and regional cooperation. As the transition continues through 2014, counternarcotics plans and policy may continue to evolve. A core tenet of counternarcotics policy in Afghanistan has included efforts to disrupt drug trafficking through interdiction operations--a specialized law enforcement capacity that the NATO Training Mission Afghanistan (NTM-A) expects to transition to Afghan responsibility as part of the overall security transition (see Figure 2 below). With State Department, DOD, DEA, and other resources, the U.S. government has played a significant role in the development of Afghan capabilities to conduct successful interdictions through the Counter Narcotics Police of Afghanistan (CNPA), its specialized units, and border and customs enforcement units, as well as other security entities. U.S. interdiction assistance provides funding for the operation and maintenance of CNPA facilities and infrastructure, life support, operational mentoring and administrative capacity building, and salary supplements. In addition to the in-depth support for CNPA specialized units, including the Sensitive Investigative Unit (SIU), Technical Investigative Unit (TIU), and National Interdiction Unit (NIU), other notable interdiction-related programs have included DEA's Foreign-deployed Advisory Support Teams (FAST), a DEA-supported Judicial Wire Intercept Program (JWIP), a joint DOD-DEA Afghan Regional Training Team (RTT), the DOD-funded Afghan Special Mission Wing, a U.S. Embassy Kabul-led Border Management Task Force (BMTF), and specialized training and operational support conducted by the U.S. Department of Homeland Security's Customs and Border Protection (DHS/CBP). Interagency entities, including the Combined Joint Interagency Task Force-Nexus (JIATF-N) and the Interagency Operations Coordination Center (IOCC) have contributed to interdiction efforts by integrating law enforcement and military information in support of counternarcotics operations. Officials often point to the capture of narcotics kingpin Haji Bagcho in 2009, which was achieved with the support of DEA-mentored Afghan vetted units, as an example of U.S. success in developing Afghan counternarcotics capabilities. Beyond assistance to certain specialized counternarcotics units in Afghanistan, the State Department reported in March 2014 that the scope of U.S. support, particularly to the CNPA more broadly, is challenged by limited institutional capacity, corruption, and a lack of CNPA direct authority over its resources in the provinces. As the security transition continues, however, it is unlikely that the pace of interdiction operations programs previously funded by DOD can be sustained due to declines in staffing and regional presence. Compared to FY2011, the number of coalition-supported counternarcotics operations was down 17% in FY2013, heroin seizures were down 77%, and opium seizures were down 57%, according to SIGAR. Moreover, DOD has reported that the effectiveness of interdiction efforts are limited--contributing to "temporary dislocations" of narcotics networks and a "small, though significant, effect on overall insurgent profits from narcotics." Following the transition, some observers question whether interdiction can be a successful policy tool for disrupting major traffickers, particularly if U.S. assistance is limited to specialized counternarcotics units. SIGAR has further questioned whether the Afghan government is prepared to assume full responsibility for some interdiction-related programs, such as the Afghan Special Mission Wing--a program for which DOD and DEA have strongly advocated. In a major policy reversal in mid-2009, the late Special Representative for Afghanistan and Pakistan Richard Holbrooke concluded that western counternarcotics policies had resulted in "failure" in Afghanistan. Chief among his critiques of contemporary counternarcotics policy was the perception that U.S. involvement in opium poppy eradication--which included funding for a centrally directed Poppy Eradication Force (PEF)--had the perverse effect of bolstering the insurgency and undermining security and stability goals. As a result, the U.S. government ceased all direct support and involvement in eradication campaigns throughout Afghanistan. In its place, the U.S. government focused its supply reduction efforts on an Afghan-run program administered by the Ministry of Counter Narcotics (MCN) called the Governor-Led Eradication (GLE) program. Through GLE, the MCN has reimbursed provincial governors for expenses incurred for eradicating poppy fields. Pursuant to MCN strategic guidance, GLE is the only permissible eradication program in Afghanistan and eradication efforts may only be conducted using manual or mechanical, ground-based methods--and only in communities with access to alternative livelihoods. Governors are also prohibited from providing farmers with any financial compensation for destroyed farmland. State Department officials anticipate that GLE's scope would not change significantly following the transition, since the program is already MCN-led. The U.S.-Afghan memorandum of understanding for the GLE program has been renewed in one-year increments. Considering Afghanistan's continued prominence in opium poppy cultivation, many observers have continued to question whether eradication through the GLE program--which in 2013 resulted in 7,348 hectares eradicated (down from 9,672 hectares in 2012) while causing 143 fatalities and 93 injuries to eradication personnel--is a sufficient deterrent threat (see Figure 3 below). It is widely expected that eradication numbers in 2014 will decline, in part because security forces may be less available to support eradication efforts. Moreover, it is unclear whether GLE has had an effect on mitigating Holbrooke's original concern--that eradication efforts were strengthening the insurgency. DOD further reports that the GLE program "has yet to prove its utility in decreasing insurgent funding" and may strengthen links between opium cultivation and the insurgency as increased eradication often results in a shift of cultivation to areas beyond government control. Corruption within the GLE program, according to DOD, "often results in only the poppy fields that do not pay bribes being eradicated." Some policy makers have questioned whether U.S. resources may be better spent on other aspects of counternarcotics policy. In coordination with the GLE program, MCN has also implemented a U.S.-funded incentive program called the Good Performers Initiative (GPI). It is designed to reward provinces that successfully reduce poppy cultivation. As part of the initiative, the United Nations Office on Drugs and Crime (UNODC) verifies the amount of land eradicated and eligible provinces in turn receive funding for local development projects proposed by provincial development councils and governors' offices. In 2012, for example, 21 of 34 provinces were eligible for GPI funding (including 17 provinces that were poppy-free), which totaled $18.2 million. Previous development projects funded through GPI, which has been in existence since 2007, have included schools, transportation infrastructure, irrigation structures, hospitals, and drug treatment centers. State Department officials anticipate that the scope of the GPI program would not change significantly as the transition continues, since the program is already MCN-led. Although the program has been widely supported by provincial governors who qualify for the rewards, some observers have questioned whether the development projects provide a sufficient and sustainable incentive for farmers to switch to licit agricultural products and whether the projects contribute to alternative livelihood development. Local perceptions that funding for GPI projects is misallocated contribute to a sentiment that the program may not reward good governance. According to one observer: "Allocations that are not simply diverted for personal profit often amount to one isolated project here and there at best, rather than any robust rural development.... Promises of systematic rural development and robust alternative livelihoods made to poppy farmers are thus mostly unmet." Research indicates that opium poppy cultivation in Afghanistan is most prevalent in areas characterized by insecurity and a lack of alternative livelihoods, including agricultural assistance. Alternative development programming, long a pillar of U.S. counternarcotics strategies in Afghanistan, is intended to identify and implement interventions that will influence household decision making toward licit livelihood options and away from a reliance on opium poppy cultivation as a source of income. This has included programming that increases household income and employment opportunities while decreasing household expenditures and risk (e.g., by providing licit seeds, fertilizer, farming technology, and access to credit). Several alternative development projects funded by USAID are ending in 2014 and 2015, including the "Incentives-Driving Economic Alternatives-North, East, West in Afghanistan" (IDEA-NEW) program, the Commercial Horticulture and Agricultural Marketing Program (CHAMP), the Agricultural Development Fund (ADF), and the Agricultural Credit Enhancement (ACE) program. Between FY2008 and FY2012, USAID's alternative development programs have reportedly targeted 314,268 hectares of poppy cultivation with alternative crops, increased sales of licit farm and non-farm products, and created more than 190,000 full-time equivalent jobs sponsored by alternative development activities. Earlier efforts prioritized short term stabilization goals, including cash for work projects that have been criticized as distorting local economies rather than addressing the underlying drivers of opium farming. As new alternative development programs are developed and implemented, USAID anticipates that the programs' goals will shift from stabilization to long-term development (e.g., economic growth, job creation, and capacity building). One new alternative development program, the Kandahar Food Zone, builds on the experiences of a former British-led initiative in neighboring Helmand province called the Helmand Food Zone. The Kandahar Food Zone combines the work of USAID and the State Department's International Narcotics and Law Enforcement Affairs (INL) Bureau into four areas of counternarcotics programming: alternative development, GLE, demand reduction, and public awareness. The alternative development piece of the program is intended to be a two-year, $20 million initiative. The latter three areas are managed by the State Department and extend several existing national programs to Kandahar. Other new USAID-funded programs include a series of Regional Agricultural Development Projects (RADP), geographically focused on the south, north, west, east, and central parts of Afghanistan. Independently of U.S. assistance programs, Afghanistan has reportedly expanded the "food zone" model to several additional provinces, including Badakhshan, Farah, and Uruzgan. The International Narcotics Control Board (INCB) expects that such programs, combined with other alternative development measures, could "contribute to tangible progress in preventing and reducing illicit cultivation of opium poppy and cannabis plant in the country in the years to come." Despite these efforts, the INCB has warned that alternative development assistance is still not widely available in Afghanistan. In 2011, for example, surveys found that, of the 191,500 rural households reporting to be dependent on illicit crops for income, only 30% received agricultural assistance during the previous year. Even in areas where programming has contributed to a decline in opium cultivation, such as in the Helmand Food Zone, there are signs that progress may not necessarily be sustainable if alternative development programming were to be reduced, security were to disintegrate, or opium poppy prices were to increase in the coming years. According to surveys among households located within the Helmand Food Zone, some 30% of household income, on average, continued to be derived from ongoing opium cultivation. Additionally, observers have found that the Helmand Food Zone caused a sub-regional "balloon effect" in which poppy cultivation was pushed outside the Food Zone, often into insecure areas that remain under Taliban control. USAID has acknowledged several challenges in the implementation of its flagship alternative development and agriculture programs in Afghanistan, including ongoing insecurity, low crop production, and limited food processing opportunities. USAID implementers continue to be targeted by the insurgency; in March 2014, the Kabul residential compound for one of USAID's alternative development contractors, Roots of Peace, was attacked. SIGAR has in the past reported on USAID oversight problems in some alternative development projects related to equipment procurement and the distribution of cash-for-work payments to local Afghan workers. As domestic drug abuse rates have surged in Afghanistan, calls for improved responses to the problem through drug demand reduction, treatment, and rehabilitation have also grown. Beginning in 2003 from a virtually nonexistent policy platform, the Afghan government and international donors, particularly the U.S. government, have supported the development of a nationwide system of health services for specific populations (e.g., men, women, children, adolescents, and the homeless). Prevention programming includes school- and mosque-based interventions, as well as mobile exhibits, street theater initiatives, and community outreach. The number of treatment facilities in Afghanistan has more than doubled in the past five years, and treatment services now reach between 3% and 5% of estimated opiate users in the country, primarily in key population centers, such as Kabul. Wait lists for new patients are common. As many as 99% of Afghanistan's drug users have not received treatment, according to SIGAR. As part of its transition plans for demand reduction programming, which are slated to continue through at least 2017, the State Department has been working with the Afghan Ministry of Public Health to assume responsibility for staffing and paying for 76 drug treatment programs that INL had previously established and funded. Over the next several years, the State Department also aims to hand over responsibilities for the operations and maintenance of the facilities. INL supports a wide range of Afghan prevention programs and is also reportedly developing protocols to treat opium and heroin-addicted children in Afghanistan. Earlier, INL had funded a National Urban Drug Use Survey to measure the prevalence rate in urban populations; it is now funding a National Rural Drug Use Survey to provide a scientifically valid national prevalence rate. Demand reduction efforts, however, have continued to face several challenges, including a lack of basic data on national drug prevalence rates and treatment effectiveness, consistently applied evidence-based practices in all treatment facilities, licensing and certification mechanisms to identify qualified service providers, and accessible treatment options, particularly in high-risk areas. Although data remain limited, many of these problems may contribute to high relapse rates. Debate has also continued regarding the appropriate use of methadone to treat injecting opioid users in Afghanistan, which can be diverted into illicit channels and abused. A two-year pilot methadone maintenance treatment project was first implemented by a France-based nongovernmental organization in 2010 for high-risk injecting drug users in Kabul, with reportedly beneficial results; it was, however, challenged by difficulties associated with obtaining timely licenses to import methadone into the country. Another component of counternarcotics efforts in Afghanistan has involved the dissemination of public information programming, community engagement efforts, and media campaigns designed to inform, educate, deter, and dissuade the general population, as well as those identified as potential opium poppy farmers, from involvement in the drug trade. The State Department and other international donors contribute to counternarcotics public awareness programming in Afghanistan, as well as management support for the MCN as it develops the capacity to independently conduct national campaigns. Two such U.S.-funded programs include those implemented locally by Sayara Media Communications (e.g., the Counter Narcotics Community Engagement program) and the Aga Khan Foundation grant. The State Department took initial steps in April 2013 toward transitioning public awareness campaign programs to Afghan control by initiating an independent evaluation of MCN programming capabilities; gaps identified in the assessment are intended to provide the State Department with a blueprint for preparing MCN to assume full responsibility for the programs by April 2015. Assessments of the effectiveness of public awareness campaigns, however, are limited. Preliminary surveys indicate that exposure to awareness campaigns can influence, to some extent, household decisions to cultivate opium, although some early media campaigns were found to be generally ineffective. Evidence from the Helmand Food Zone also suggests that public awareness campaigns were a contributing factor to the program's successes. The U.S. government has been actively engaged in counter-threat finance operations in Afghanistan, which are designed to identify and disrupt the sources of insurgent and terrorist funding from the narcotics trade. The Afghanistan Threat Finance Cell (ATFC) has played a central role in such efforts. The ATFC has also facilitated the implementation of targeted financial sanctions and designations against narcotics traffickers pursuant to the Foreign Narcotics Kingpin Designation Act ( P.L. 106-120 ). This interagency effort, based in Kabul, was established in 2008 by the U.S. national security staff and led by DEA with deputies from the Defense and Treasury Departments. The ATFC reportedly played a significant role in revealing high-level corruption and illicit financial networks behind the Kabul Bank investigation. The unilateral and secretive nature of the program, whose activities remain largely classified, has at times caused friction with the Afghan government. Although security officials acknowledge that drug proceeds have played a key role in financing the insurgency, DOD in late 2013 assessed that overall insurgency funding in recent years has remained largely unchanged and that the Taliban is "showing a greater propensity" to participate in narcotics trafficking and production. The future of the ATFC has been in question as transition planning proceeds; staffing for the unit has already been reduced, and executive branch officials have been debating about whether to permanently close the unit or integrate it into existing organizational structures, such as the Interagency Operations Coordination Center (IOCC). Additionally, it remains unclear whether the Afghan government will have the political will or capacity to conduct complex financial investigations and analyses, equivalent to those conducted by the ATFC. According to early 2014 testimony, U.S. and Afghan authorities are in the process of developing a "cadre of Afghan financial investigators who can work independently of foreign mentorship." The Departments of State and Justice have supported the development of Afghan capacity to investigate and prosecute major narcotics and narcotics-related corruption cases through the mentoring of specialized investigators, prosecutors, and judges and the establishment of dedicated facilities at the Counter Narcotics Justice Center (CNJC) in Kabul, which includes a semi-autonomous forensics laboratory, narcotics-specific primary and appellate narcotics courts (Counter Narcotics Tribunal, or CNT), and a detention center. The investigators, prosecutors, and judges that are co-located at the CNJC encompass the Criminal Justice Task Force (CJTF). U.S. assistance has provided support to facilitate linkages between Kabul-based investigations and provincial justice centers. The importance of a functioning domestic counternarcotics justice response is further heightened due to the lack of a formal extradition or mutual legal assistance treaty with the United States. Although drug-related extraditions could be made pursuant to the 1988 U.N. Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, to which both the United States and Afghanistan are party, the State Department has reported that a 2013 domestic extradition law in Afghanistan has added "additional hurdles to any potential extradition process." Since the establishment of the CJTF in 2005 and the opening of the CNJC in 2009, the concept has emerged as a "model of excellence within the Afghan justice system," according to the State Department. In recent years, the CNT has heard upward of 700 cases annually and achieved conviction rates above 90%. One of these recent convictions was that of U.S. narcotics kingpin Haji Lal Jan Ishaqzai in 2013. Despite such progress, the Afghan justice system remains challenged by significant limitations in capacity and effectiveness. Lower-level drug cases that are not prosecuted through the CJTF suffer from the same challenges that hamper overall criminal justice reform in Afghanistan. High-level investigations are also allegedly thwarted by corruption. The highest ranking government official arrested on drug charges in Afghanistan was the provincial police chief of Nimroz, Mohammad Kabir Andarabi, arrested in late 2013. Ultimately, however, he was cleared of the drug corruption charges and instead convicted of obstruction of justice. Some have raised the possibility that some aspects of the CJTF and CNJC could change, including modifications to reduce the annual caseload, which has reportedly been increasing since 2009. Moreover, State Department officials report that the timeline for transitioning the operations and maintenance costs for the CNJC to Afghan control remains unclear. Beginning in late 2010, the State Department initiated an MCN capacity building project in which two dozen Afghan and international mentors and advisors are embedded at the Ministry. The program supports technical capacity building (e.g., information technology, human resources, and budget administration), procurement support and logistical needs, and policy development (e.g., internal training and provincial-level counternarcotics programming). Since this program is based in Kabul, it is anticipated that it would continue past the security transition in 2014. The program was most recently renewed for 18 months. In order to address the cross-border and regional implications of Afghanistan's drug production, the U.S. government has participated in a wide range of initiatives to enhance international and regional cooperation on counternarcotics issues. One such effort is the Central Asia Counternarcotics Initiative (CACI), launched in 2011 by the State Department. For FY2015, the State Department requested $4 million to continue providing specialized training, mentoring, and equipment to enhance regional law enforcement capacity and promote cooperation among counternarcotics units among Central Asian countries. DOD has also been supporting counternarcotics capacity building in the region with its own appropriated funds. Potentially enhancing DOD's support to the region following the transition in Afghanistan, DOD is in the process of establishing a Regional Narcotics and Analysis and Illicit Trafficking Task Force (RNAIT-TF). Other international and regional cooperation efforts include U.S. support for the work conducted by the UNODC, including the Central Asian Regional Information and Coordination Center; INCB (e.g., Project Cohesion on precursor chemical control, which Afghanistan joined in August 2013); Paris Pact Initiative, which launched its fourth phase to combat Afghan opium and heroin trafficking in June 2013; the Colombo Plan, an Asia-Pacific regional collective, which has conducted work on Afghan demand reduction; and the U.S.-Russia Bilateral Presidential Commission Working Group on Counternarcotics. Observers widely assess that international and regional cooperation will feature prominently in Afghanistan-related counternarcotics efforts following the transition. The INCB stressed in its 2013 annual report, released in April 2014, that the drug problem in Afghanistan, as well as in the region, "remains of grave concern" and that international cooperation to address the situation remains paramount. Some, including DOD, suggest that a more regional approach to combating Afghanistan's drug production may be beneficial, as it may provide "greater fidelity" on the illicit networks that operate throughout the region, including not only drug traffickers, but also weapons traffickers and money launderers. Some concern has been expressed that a counternarcotics approach that emphasizes regional cooperation, however, may also be fraught by high levels of corruption, low or mixed enforcement capacities, and political sensitivities. Illustrating such concerns, Ambassador William R. Brownfield, Assistant Secretary of State for International Narcotics and Law Enforcement Affairs, acknowledged in congressional testimony earlier in 2014 that CACI "has not yet been a resounding success" due to a lack of enthusiasm for counternarcotics cooperation among the Central Asian states as well as Russia. The Obama Administration acknowledges that the U.S. government's priorities and interests in Afghanistan will be "tested" in the coming years as security responsibility transitions to the government of Afghanistan, under new political rule, and military activity shifts its mission in the country and the region. For some, Afghanistan's continuing drug problem features prominently as a concern that could affect the country's future trajectory following transition. Most experts expect that drug cultivation and production in Afghanistan will increase, at least temporarily, in the coming years, and that its importance will also increase as a proportion of Afghanistan's overall economy. What is unknown, however, is whether and to what extent such trends will contribute to future political instability, change perceptions of the Afghan government's strength, and lead to the entrenchment of illicit actors at all levels of governance. SIGAR has called drug trafficking in Afghanistan "one of the most significant factors putting the entire U.S. and international-donor investment in the reconstruction of Afghanistan at risk" and identified narcotics as one of several "critical issues" for its activities related to U.S. reconstruction efforts in Afghanistan. Amid such broad ranging risks, some observers worry that international policy interests, resources, and priorities have shifted away from the drug problem in Afghanistan. Counternarcotics efforts in Afghanistan are resource-intensive, and the Afghan government remains dependent on international donors to fund such activities; yet, many question whether and for how long such funding will remain available--particularly in the context of a significantly reduced ability to monitor and oversee assistance programs following the U.S. military drawdown and security transition. The FY2014 omnibus appropriations for the State Department's foreign operations, for example, cut overall assistance for Afghanistan by 50% and directed the State Department and USAID to "prioritize" counternarcotics programs with a "record of success." The FY2014 appropriations ( P.L. 113-76 ) further emphasized the importance of adequate monitoring and oversight, stipulating, among other provisions, that Economic Support Fund (ESF) and International Narcotics Control and Law Enforcement (INCLE), two primary funding vehicles for counternarcotics assistance, may not be used to initiate new programs, projects, or activities for which regular oversight is not possible. As Congress continues to evaluate counternarcotics policy options and programs in Afghanistan, key questions for consideration include the following: How can the U.S. government preserve the counternarcotics gains it has achieved over the past 12 years in Afghanistan and prevent backsliding following transition to a reduced U.S. security presence? What is the risk and potential scale of increased cultivation and production of opium and heroin in Afghanistan in 2015 and beyond? How will the illicit narcotics industry affect overall economic growth and development in Afghanistan? Should the U.S. government remain one of Afghanistan's primary donors of counternarcotics assistance? If so, for how long and at what cost? How can U.S. counternarcotics programs in Afghanistan be appropriately monitored and evaluated, given security constraints on U.S. personnel mobility? What metrics and benchmarks should be used to evaluate success or failure of U.S. counternarcotics efforts in Afghanistan?

Afghanistan is the world's primary source of opium poppy cultivation and opium and heroin production, as well as a major global source of cannabis (marijuana) and cannabis resin (hashish). Drug trafficking, a long-standing feature of Afghanistan's post-Taliban political economy, is linked to corruption and insecurity, and provides a source of illicit finance for non-state armed groups. Based on recent production and trafficking trends, the drug problem in Afghanistan appears to be worsening--just as the U.S. government finalizes plans for its future relationship with the government of Afghanistan in 2015 and beyond and reduces its counternarcotics operational presence in the country to Kabul, the national capital. As coalition combat operations in Afghanistan draw to a close in 2014, and as the full transition of security responsibilities to Afghan forces is achieved, some Members of the 113th Congress have expressed concern regarding the future direction and policy prioritization of U.S. counternarcotics efforts in Afghanistan in light of diminishing resources and an uncertain political and security environment in 2015 and beyond. According to the U.S. Counternarcotics Strategy for Afghanistan, released in late 2012, the U.S. government envisions a counternarcotics policy future that results in "two simultaneous and parallel transfers of responsibility." Not only does it envision the transfer of security responsibility to Afghan forces, but also the transfer of counternarcotics programming responsibilities and law enforcement operational activities to the Afghan government. Assuming a reduced U.S. security presence and limited civilian mobility throughout the country, the U.S. government is also increasingly emphasizing a regional approach to combating Afghan drugs. Although some counternarcotics efforts, including eradication and alternative development programming, are already implemented by the government of Afghanistan or by local contractors, others may require a two- to five-year time horizon, or potentially longer, before a complete transition would be feasible, according to Administration officials. Some counternarcotics initiatives are only in their infancy, including the Defense Department's plans to establish a new Regional Narcotics Analysis and Illicit Trafficking Task Force (RNAIT-TF). Other activities, particularly those that required a significant presence at the local and provincial levels, are anticipated to be reduced or limited in scope. The 113th Congress continues to monitor drug trafficking trends in Afghanistan and evaluate U.S. policy responses. Both the U.S. Senate and House of Representatives held hearings on the topic in early 2014 and included provisions in FY2014 appropriations (P.L. 113-76) that limit the scope of and resources devoted to future counternarcotics efforts in Afghanistan. The Special Inspector General for Afghanistan Reconstruction (SIGAR) has also identified narcotics as a "critical issue" for policy makers. This report describes key U.S. counternarcotics programs in Afghanistan in the context of the 2014 transition and analyzes policy issues related to these programs for Congress to consider as policy makers examine the drug problem in Afghanistan. The report's Appendix contains historical figures and tables on trends in Afghan drug cultivation, production, and trafficking.

The devastation and displacement caused by Hurricane Katrina in the Gulf Coast region ofthe United States pose a host of environmental, human resource, and other public policy challenges. Caught in the web of this tragedy and its sweeping dilemmas are a unique subset ofimmigration-related issues. The loss of livelihood, habitat, and life itself has very specificimplications for foreign nationals who lived in the Gulf Coast region. Whether the noncitizen orforeign national is a legal permanent resident (LPR), a nonimmigrant (e.g., temporary resident sucha foreign student, intracompany transferee, or guest worker) or an unauthorized alien (i.e., illegalimmigrant) is a significant additional factor in how federal immigration and public welfare laws areapplied. In this context, the key question is whether Congress should relax any of these lawspertaining to foreign nationals who are victims of Hurricane Katrina . The total number of foreign nationals affected by Hurricane Katrina is not known. Surveydata from the U.S. Census Bureau estimate that over 270,000 foreign-born persons lived in Alabama,Louisiana, and Mississippi in 2004. (1) The Department of Homeland Security (DHS) estimates that34,242 naturalized citizens, 24,087 LPRs, and 71,992 nonimmigrants may be affected by HurricaneKatrina. (2) Jeffrey Passel,a demographer who specializes in unauthorized migration, estimates that at least an additional20,000 to 35,000 unauthorized aliens are victims of Hurricane Katrina. (3) This report focuses on four immigration policy implications of Hurricane Katrina. It openswith a discussion of employment verification and other documentary problems arising for those whohave lost their personal identification documents. It follows with an overview of the rules fornoncitizen eligibility for federal benefits. Issues pertaining to how the loss of life or livelihoodaffects eligibility for immigration visa benefits are discussed next. The report closes withbackground on relief from removal options for Katrina-affected aliens. Legislation addressing thesepolicy areas is discussed in the relevant sections. Many of the victims of Hurricane Katrina lack personal identification documents as a resultof being evacuated from their homes, loss or damage to personal items and records, and ongoingdisplacement in shelters and temporary housing. As a result of the widespread damage anddestruction to government facilities in the area affected by the hurricane, moreover, many victimswill be unable to have personal documents re-issued in the near future. Lack of adequate personalidentification documentation, a problem for all victims, has specific consequences under immigrationlaw, especially when it comes to employment. The Immigration and Nationality Act (INA) requires employers to verify employmenteligibility and establish identity through specified documents presented by the employee -- citizensand foreign nationals alike. Specifically, SS274(a)(1)(B) of the INA makes it illegal for an employerto hire any person -- citizen or alien -- without first verifying the person's authorization to work inthe United States. Employers (and recruiters and referrers for a fee) must examine documents andattest that they appear to be genuine and relate to the individual. If a document does not reasonablyappear on its face to be genuine and relate to the person presenting it, the employer may not acceptit. Under INA SS274(b), employers may not specify which document(s) the person must present. TheINA and applicable regulations provide for three categories of documents: (1) those that establishboth identity and employment eligibility; (2) those that establish identity only; and (3) those thatestablish work eligibility only. (4) Employers who fail to properly comply as required by law are subject to sanctions. Specifically, employers who fail to complete, retain, and/or present the proper form (known as theI-9) for inspection may be subject to a civil penalty for violations ranging from $110-$1,100 peremployee. For a violation of hiring unauthorized aliens, an employer can also face: $275-$2,200fine for each unauthorized individual; $2,200-$5,500 for each employee if the employer haspreviously been in violation; and, $3,300-$11,000 for each individual if the employer was subjectto more than one cease and desist order. (5) On September 6, 2005, DHS, the federal department responsible for enforcing theseprovisions of law, issued a statement that it would not bring sanction actions against employers forhiring individuals evacuated or displaced as a result of Hurricane Katrina. ... the Department of Homeland Security will refrainfrom initiating employer sanction enforcement actions for the next 45 days for civil violations, underSection 274A of the Immigration and Nationality Act, with regard to individuals who are currentlyunable to provide identity and eligibility documents as a result of the hurricane. Employers will stillneed to complete the Employment Eligibility Verification (I-9) Form as much as possible but shouldnote at this time that the documentation normally required is not available due to the eventsinvolving Hurricane Katrina. At the end of 45 days, the Department of Homeland Security willreview this policy and make further recommendations. (6) Given that the individuals affected by Hurricane Katrina are now scattered across the UnitedStates, this moratorium on sanctioning employers may have broad implications and is not withoutits critics. Representative Lamar Smith, for example, is quoted as saying: "Hurricane Katrina hascaused a situation unlike any we have ever had to endure, but that does not mean that the Departmentof Homeland Security has the authority to ignore important laws." Representative Smith, who sitson the House Committee on the Judiciary Subcommittee on Immigration, Border Security andClaims, continued, "the end result may be worthwhile, but that does not mean that federal agenciescan disregard statutes put in place to protect American jobs." (7) U.S. Citizenship and Immigration Services (USCIS) announced that the records in its NewOrleans office were not damaged and that field offices assisting hurricane victims in replacingofficial documentation. USCIS stated that it will be verifying identity and immigration status beforere-issuing any immigration related document and will be utilizing its electronic file data to performidentity verification where possible. (8) On September 21, 2005, the House of Representatives passed under suspension of the rules, H.R. 3827 , the Immigration Relief for Hurricane Katrina Victims Act of 2005. Amongother provisions, H.R. 3827 would amend the INA to authorize DHS to waive for not more than 90days employer attestation or verification requirements due to disaster-caused document loss (duringa major disaster-declaration period). The House-passed bill also would authorize DHS to replace orprovide temporary identity and employment authorization documents lost, stolen, or destroyed asa consequence of Hurricane Katrina. Lack of sufficient documentation to confirm eligibility for federal programs and assistanceis a core issue for all victims, not merely those who are noncitizens. The eligibility of noncitizensfor public assistance programs, moreover, is based on a complex set of rules that are determinedlargely by the type of noncitizen in question and the nature of services being offered. (9) The Personal Responsibilityand Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 ) is the key statute that spells outthe eligibility rules for noncitizens seeking federal assistance. As legislation to ease the federaleligibility rules for public assistance for Hurricane Katrina victims generally is under consideration,the question of whether to ease the specific rules for noncitizens has arisen (S. 1695). (10) Under current law, noncitizens' eligibility for the major federal means-tested benefitprograms largely depends on their immigration status and whether they arrived in the United States(or were on a program's rolls) before August 22, 1996, the enactment date of the PersonalResponsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 ). The basic rulesare as follows: Refugees and asylees are eligible for SSI benefits and Medicaid for seven yearsafter arrival, and for five years under TANF. (11) After this term, they generally are ineligible for SSI, but may beeligible, at state option, for Medicaid and TANF. LPRs with a substantial work history -- generally 10 years (40 quarters) ofwork documented by Social Security or other employment records -- or a military connection (activeduty military personnel, veterans, and their families) are eligible for the full range ofprograms. All aliens who have resided in the United States for five or more years as"qualified aliens" -- i.e., LPRs, refugees/asylees, and other non-temporary legal residents (such asCuban/Haitian entrants) are eligible for food stamps. LPRs receiving SSI as of August 22, 1996, continue to beeligible. Medicaid coverage is required for all otherwise qualified SSI recipients (theymust meet SSI noncitizen eligibility tests). Disabled LPRs who were legally resident as of August 22, 1996, are eligiblefor SSI. LPRs receiving government disability payments, so long as they pass anynoncitizen eligibility test established by the disability program (e.g., SSI recipients would have tomeet SSI noncitizen requirements in order to get food stamps) are eligible for food stamps. (12) LPRs who were elderly (65+) and legally resident as of August 22, 1996, areeligible for food stamps. LPRs who are children (under 18) are eligible for foodstamps. LPRs entering after August 22, 1996, are barred from TANF and Medicaid forfive years, after which their coverage becomes a state option. (13) For SSI, the five-year barfor new entrants is irrelevant because they generally are denied eligibility (without a timelimit). Several bills that would waive the categorical eligible requirements for various federalprograms in the case of Hurricane Katrina victims have been introduced, but most are silent on theissue of noncitizens. On September 13, however, legislation to provide the Secretary of Agriculturewith additional authority and funding to provide emergency relief to victims of Hurricane Katrina( S. 1695 ) was introduced, and, among other provisions, this bill would treat legalimmigrants in the United States who are victims of Hurricane Katrina as refugees for the purposesof food stamps. (14) The PRWOR of 1996 ( P.L. 104-193 ) also denies most federal benefits, regardless of whetherthey are means tested, to unauthorized aliens (often referred to as illegal aliens). The class ofbenefits denied is broad and covers: (1) grants, contracts, loans, and licenses; and (2) retirement,welfare, health, disability, housing, food, unemployment, postsecondary education, and similarbenefits. So defined, this bar covers many programs whose enabling statutes do not individuallymake citizenship or immigration status a criterion for participation. Thus, programs that previouslywere not individually restricted -- the earned income tax credit, social services block grants, andmigrant health centers, for example -- became unavailable to unauthorized aliens, unless they fallwithin the act's limited exceptions. These programmatic exceptions include treatment under Medicaid for emergency medical conditions (other than thoserelated to an organ transplant); (15) short-term, in-kind emergency disaster relief; (16) immunizations against immunizable diseases and testing for and treatment ofsymptoms of communicable diseases; services or assistance (such as soup kitchens, crisis counseling andintervention, and short-term shelters) designated by the Attorney General as: (i) delivering in-kindservices at the community level; (ii) providing assistance without individual determinations of each recipient's needs; and (iii) being necessary for the protection of life and safety; (17) and to the extent that an alien was receiving assistance on the date of enactment,programs administered by the Secretary of Housing and Urban Development, programs under TitleV of the Housing Act of 1949, and assistance under Section 306C of the Consolidated Farm andRural Development Act. (18) P.L. 104-193 also permits unauthorized aliens to receive Old Age, Survivors, and DisabilityInsurance benefits under Title II of the Social Security Act (SSA), if the benefits are protected by thattitle or by treaty or are paid under applications made before August 22, 1996. (19) Separately, the P.L.104-193 states that individuals who are eligible for free public education benefits under state andlocal law shall remain eligible to receive school lunch and school breakfast benefits. (The act itselfdoes not address a state's obligation to grant all aliens equal access to education under the SupremeCourt's decision in Plyler v. Doe , 457 U.S. 202 (1982).) P.L. 104-193 expressly bars unauthorizedaliens from most state and locally funded benefits. The restrictions on these benefits parallel therestrictions on federal benefits. As noted in the above discussion, noncitizens -- regardless of their immigration status -- arenot barred from short-term, in-kind emergency disaster relief and services or assistance that deliverin-kind services at the community level, provide assistance without individual determinations of eachrecipient's needs, and are necessary for the protection of life and safety. (20) Moreover, the Robert T.Stafford Disaster Relief and Emergency Assistance Act, (21) the authority under which the Federal Emergency ManagementAgency (FEMA) conducts disaster assistance efforts, requires nondiscrimination and equitabletreatment in disaster assistance: The President shall issue, and may alter and amend,such regulations as may be necessary for the guidance of personnel carrying out Federal assistancefunctions at the site of a major disaster or emergency. Such regulations shall include provisions forinsuring that the distribution of supplies, the processing of applications, and other relief andassistance activities shall be accomplished in an equitable and impartial manner, withoutdiscrimination on the grounds of race, color, religion, nationality, sex, age, or economic status. (22) FEMA assistance provided under the Stafford Act includes (but is not limited to) grants forimmediate temporary shelter, cash grants for uninsured emergency personal needs, temporaryhousing assistance, home repair grants, unemployment assistance due to the disaster, emergency foodsupplies, legal aid for low-income individuals, and crisis counseling. (23) Media accounts of aliens who are fearful of seeking emergency assistance followingHurricane Katrina infer that the reported reluctance is due more to the risk of deportation thanrestricted access to benefits. "We want to provide food, water, shelter and medical supplies toeveryone," stated DHS spokesperson Joanna Gonzalez. She further assured, "No one should beafraid to accept our offers to provide safety." According to Gonzalez, rescuers had not been askingpeople whether they are in the country legally when they are rescuing them. DHS initially did notissue a statement clarifying whether information that FEMA gathers on unauthorized aliens wouldbe shared with law enforcement agencies, most notably the DHS Immigration and CustomsEnforcement (ICE) bureau. (24) Subsequently, Gonzalez explained, "... as we move forward withthe response, we can't turn a blind eye to the law." (25) Immigration admissions are subject to a complex set of numerical limits and preferencecategories that give priority for admission on the basis of family relationships, needed skills, andgeographic diversity. There are very few immigration avenues based on self petitioning; mostrequire that aliens have a family member or employer who is eligible, able, and willing to sponsorthem. The loss of life, devastation of businesses, or depletion of personal assets directly affects visaqualifications for otherwise eligible aliens who are victims of Hurricane Katrina or the family ofvictims. It also affects nonimmigrants whose purposes for the temporary visas are disrupted by thehurricane and its aftermath. The largest number of immigrants is admitted because of a family relationship to a U.S.citizen or LPR. Specifically the family relationships are: immediate relatives of U.S. citizens; (26) the spouses and childrenof LPRs; the adult children of U.S. citizens; and, the siblings of adult U.S. citizens. (27) As of July 2005, mostrelatives of U.S. citizens and LPRs were waiting in backlogs for a visa to become available, with thebrothers and sisters of U.S. citizens waiting almost 12 years. (28) Married adult sons anddaughters of U.S. citizens who filed petitions seven years ago (February 1, 1998) were beingprocessed for visas in July. Prospective family-sponsored immigrants from the Philippines have themost substantial waiting times before a visa is scheduled to become available to them; consularofficers are now considering the petitions of the brothers and sisters of U.S. citizens from thePhilippines who filed 22 years ago. If the person in the United States who is petitioning for therelative dies while the alien is waiting for the visa, the prospective LPR is no longer eligible for theLPR visa. In terms of most employment-based LPRs, employers hiring prospective LPRs to work forthem petition with USCIS on behalf of the alien and submit applications with the Employment andTraining Administration in Department of Labor (DOL) to certify employment of the worker. Theprospective LPR must demonstrate that he or she meets the qualifications for the particular job aswell as the INA preference category. If DOL determines that a labor shortage exists in theoccupation for which the petition is filed, labor certification will be issued. (29) If the petitioning employerno longer can employ the worker, the prospective LPR is no longer eligible for an immigrant visa. The "Immigration Relief for Hurricane Katrina Victims Act of 2005" ( H.R. 3827 ) was introduced by the Hon. James Sensenbrenner, chairman of the House Committee on theJudiciary, and Hon. John Conyers, the ranking member of the House Committee on the Judiciary onSeptember 20,2005 and passed the House under suspension of the rules on September 21, 2005. Thisbill is comparable to the provisions in the USA PATRIOT Act ( P.L. 107-56 ) that providedimmigration relief for family members of those killed by the September 11, 2001 terrorist attacks H.R. 3827 would authorize DHS to provide special immigration status to an alien beneficiary of an immigration petition, nonimmigrant fiance or fianceeK-visa, or labor certification application filed on or before August 29, 2005 (Hurricane Katrina) ifthe petitioner, applicant, or beneficiary died, was disabled, or lost employment due to the damageor destruction of his or her workplace; an alien who as of such date was the spouse or child of such alien and wasaccompanying or following to join such alien by August 29, 2007; and an alien who is the grandparent of a child whose parents died as a consequenceof Hurricane Katrina, if at least one of the parents on August 29, 2005, was a U.S. citizen, national,or legal permanent resident. H.R. 3827 also would automatically extend legal nonimmigrant visa status in the UnitedStates for some nonimmigrant visa holders. This provision would cover those aliens who weredisabled due to Hurricane Katrina-related injury, or spouses and children of an alien who died or wasdisabled in Hurricane Katrina. In addition, H.R. 3827 would provide that an alien who, as of August 29, 2005,was the spouse or child of a refugee, asylee, or employment-based immigrant who died as aconsequence of Hurricane Katrina would have his or her respective refugee, asylee, or statusadjustment claim determined as if the death had not occurred. In these instances, the bill wouldwaive the public charge inadmissibility grounds. Similarly, the USA PATRIOT Act contained provisions designed to insure that certain aliensdid not lose immigration benefits due to circumstances resulting from the September 11, 2001terrorist attacks against the United States. The act granted immigration benefits to some survivingspouses, children, and in some cases, parents, of U.S. citizens or LPRs killed or disabled onSeptember 11, 2001. More specifically under SS421 of the Patriot Act, a surviving spouse, child, orfiance regained the chance to immigrate by self-petitioning for him or herself. The act also enableda grandparent of a child orphaned by the events of September 11 to self-petition, if the alien was thegrandparent of a child, both of whose parents died in the terrorist attacks. In addition, SS421 of the Patriot Act allowed prospective employment-based LPRs who werebeneficiaries of approved labor certifications that were revoked due to the disabling of the principalalien or the loss of his/her employment due to physical damage caused by the terrorist attacks ofSeptember 11 to pursue their visa petition. It also extended that opportunity to surviving spousesor children of aliens killed in the attacks who were employment-based LPR or who hademployment-based petitions pending on September 10, 2001. Finally, SS422 of the Patriot Act automatically extended legal nonimmigrant visa status in theUnited States for some nonimmigrant visa holders. This provision covers those aliens who weredisabled in the terrorist attacks of September 11, 2001, or spouses and children of an alien who diedor was disabled in those attacks. The grounds of inadmissibility are an important basis for denying foreign nationals admissionto the United States, and one of these grounds bars the admission of aliens who are considered likelyto become a public charge (e.g., indigent). (30) All aliens seeking LPR visas who are family-based immigrantsas well as employment-based immigrants who are sponsored by a relative must have bindingaffidavits of support signed by U.S. sponsors in order to show that they will not become publiccharges. (31) To qualifyas a sponsor, the individual must be a U.S. citizen or legal permanent resident who is at least 18years old, domiciled in the United States, and able to support both the sponsor's family and the alien'simmigrating family members at an annual income level equal to at least 125% of the federal povertyguideline. (32) Theaffidavit of support is a legally binding contract enforceable against the affiant (i.e., sponsor) if theimmigrant collects any means-tested benefit. (33) At issue is whether victims of Hurricane Katrina will be considered public charges in thecontext of admissibility for LPR visas if they or their sponsors cannot now support their family atan annual income level equal to at least 125% of the federal poverty guideline. (34) In 1999, the formerImmigration and Naturalization Service (INS) proposed a regulation that defined "public charge" tomean an individual who has become or who is likely to become "primarily dependent on thegovernment for subsistence, as demonstrated by either the receipt of public cash assistance forincome maintenance or institutionalization for long-term care at government expense." (35) At that same time, the INS also issued field guidance to alleviate "considerable publicconfusion about the relationship between the receipt of federal, state, and local public benefits" and"public charge" determinations in immigration law. (36) Among other policy pronouncements, this 1999 guidanceaddresses the following concerns: use of non-cash benefits by an immigrant (other than institutionalization forlong-term care at government expense) may not be considered during public charge determinations,nor may cash benefits be considered unless they are for purposes of incomemaintenance; use of cash benefits for income maintenance by an immigrant's family membersis not attributed to the immigrant when determining if the immigrant is likely to become a publiccharge unless the family relies on the benefits as its sole means of support;and an immigrant's use of cash public assistance for income maintenance orinstitutionalization for long-term care at government expense may be considered during publiccharge determinations. (37) Final regulations on this matter have not been promulgated. At various times in the past, the Attorney General has provided, under certain conditions,discretionary relief from deportation so that aliens who have not been legally admitted to the UnitedStates or whose temporary visa has expired nonetheless may remain in this country temporarily. Thestatutory authority cited for these discretionary procedures has generally been that portion ofimmigration law that confers on the Attorney General the authority for general enforcement and thesection of the law covering the authority for voluntary departure. (38) The Attorney General has provided blanket relief by means of the suspension of enforcementof the immigration laws against a particular group of individuals. In addition to TemporaryProtected Status (TPS) which may be provided by the Secretary of DHS, (39) the two most commondiscretionary procedures to provide relief from deportation have been deferred departure or deferredenforced departure (DED) and extended voluntary departure (EVD). Unlike TPS, aliens who benefitfrom EVD or DED do not necessarily register for the status with USCIS, but they trigger theprotection when they are identified for deportation. If, however, they wish to be employed in theUnited States, they must apply for a work authorization from USCIS. In 1992, the Administration of George H.W. Bush granted DED to about 80,000 Chinesefollowing the June 1989 Tiananmen Square massacre, and the Chinese retained DED throughJanuary 1994. The George H.W. Bush Administration also granted DED to what was then anestimated 190,000 Salvadorans through December 1994. On December 23, 1997, President WilliamClinton instructed the Attorney General to grant DED to the Haitians for one year. (40) Following the September 11, 2001 terrorist attacks, INS issued a press release announcingthat family members of victims of the terrorist attacks whose own immigration status was dependenton the victim's immigration status should not be concerned about facing immediate removal fromthe United States. The then-Commissioner James Ziglar stated: "The INS will exercise its discretionin a compassionate way toward families of victims during this time of mourning and readjustment. On September 19, we began to advise our offices to exercise compassionate discretion in thesecircumstances." (41) Some, including a group of Democratic Senators, have requested that DHS Secretary MichaelChertoff issue a formal statement reassuring immigrant victims of Hurricanes Rita and Katrina thatthey can seek help from relief agencies without fear of deportation or being turned over toimmigration authorities. (42) Meanwhile, it appears that some foreign nationals who were adversely affected by HurricaneKatrina are beginning to depart the United States voluntarily. Mexican consular officials in theUnited States, for example, are reportedly helping to repatriate Mexicans when the person who hasbeen displaced by the hurricane requests it. (43) Initially it was unclear whether ICE would initiate forciblerepatriations targeting unauthorized aliens who were victims of Hurricane Katrina. (44) More recently there havebeen reports, however, of unauthorized aliens who were victims of Hurricane Katrina being arrested,detained, and ordered deported. (45)

The devastation and displacement caused by Hurricane Katrina in the Gulf Coast region ofthe United States has very specific implications for foreign nationals who lived in the region. Whether the foreign national is a legal permanent resident (LPR), a nonimmigrant (e.g., temporaryresident such a foreign student, intracompany transferee, or guest worker) or an unauthorized alien(i.e., illegal immigrant) is a significant additional factor in how federal laws and policies are applied. In this context, the key question is whether Congress should relax any of these laws pertaining toforeign nationals who are victims of Hurricane Katrina . Many of the victims of Hurricane Katrina lack personal identification documents as a resultof being evacuated from their homes, loss or damage to personal items and records, and ongoingdisplacement in shelters and temporary housing. As a result of the widespread damage anddestruction to government facilities in the area affected by the hurricane, moreover, many victimswill be unable to have personal documents re-issued in the near future. Lack of adequate personalidentification documentation, a problem for all victims, has specific consequences under immigrationlaw, especially when it comes to employment and eligibility for programs and assistance. Noncitizens -- regardless of their immigration status -- are not barred from short-term,in-kind emergency disaster relief and services, or from assistance that delivers in-kind services atthe community level, provides assistance without individual determinations of each recipient's needs,and is necessary for the protection of life and safety. As legislation to ease the eligibility rules ofmajor federal programs for Hurricane Katrina victims generally is under consideration, the questionof whether to ease the specific rules for immigrants has arisen ( S. 1695 ). Most avenues for immigration require that aliens have a family member or employer who iseligible, able, and willing to sponsor them. There are very few immigration opportunities based onself petitioning. The loss of life, devastation of businesses, or depletion of personal assets directlyaffects visa qualifications for otherwise eligible aliens who are victims of Hurricane Katrina or thefamily of victims. It also affects nonimmigrants whose purposes for the temporary visas aredisrupted by the hurricane and its aftermath. Legislation comparable to that enacted for survivingfamily of victims of the September 11, 2001 terrorist attacks has passed the House ( H.R. 3827 ). Finally, at various times in the past, the government has given discretionary relief fromdeportation so that aliens who have not been legally admitted to the United States or whosetemporary visas have expired nonetheless may remain in this country temporarily. Following theSeptember 11, 2001 terrorist attacks, for example, family members of victims whose ownimmigration status was dependent on the victim's immigration status were assured that they shouldnot be concerned about facing immediate removal from the United States. This report will beupdated.

On November 4, 2002, United States Trade Representative (USTR) Robert B. Zoellick notified Congress of the Administration's intention to launch negotiations for a free trade agreement (FTA) with the Southern African Customs Union (SACU), comprised of Botswana, Namibia, Lesotho, South Africa, and Swaziland. This agreement would be the first U.S. FTA with a Sub-Saharan African country. The first round of negotiations for the SACU FTA began on June 3, 2003, in Johannesburg, South Africa. The negotiations were initially scheduled to conclude by December 2004, but the deadline was pushed to the end of 2006 after negotiations stalled in late 2004 and resumed in late 2005. The talks continued to move at a slow pace until April 2006, when U.S. and SACU officials decided to suspend negotiations and instead begin a longer term joint work program. On July 16, 2008, USTR Susan Schwab signed a Trade, Investment and Development Cooperation Agreement (TIDCA) with trade ministers from SACU. Several possible rationales exist for the negotiation of an FTA with SACU. One impetus derives from Sec. 116 of the African Growth and Opportunity Act (AGOA) (Title I, P.L. 106 - 200 ), in which Congress declared its sense that FTAs should be negotiated with sub-Saharan African countries to serve as a catalyst for trade and for U.S. private sector investment in the region. Such trade and investment could fuel economic growth in Southern Africa, by creating new jobs and wealth. SACU member countries have achieved the most robust export growth under AGOA, and an FTA may expand their access to the U.S. market. An FTA may also encourage the continued economic liberalization of the SACU members, and it could move SACU beyond one-way preferential access to full trade partnership with the United States. Finally, although SACU is a customs union, its members' investment and regulatory regimes are not fully harmonized. A comprehensive FTA with the United States could force SACU to achieve greater harmonization. A potential U.S.-SACU FTA is of interest to Congress because: (1) Congress will need to consider ratifying any agreement signed by the parties; (2) provisions of an FTA may adversely affect U.S. business in import-competing industries, and may affect employment in those industries; and (3) an FTA may increase the effectiveness of AGOA and bolster its implementation. On January 9, 2003, a bipartisan group of 41 Representatives wrote to Ambassador Zoellick to support the beginning of FTA negotiations with SACU. The U.S. business community has also shown interest in a U.S.-SACU FTA. The U.S.-South African Business Council, an affiliate of the National Foreign Trade Council, announced the creation of an FTA advocacy coalition in December 2002. The Corporate Council on Africa, a U.S. organization dedicated to enhancing trade and investment ties with Africa, also supports the negotiations. For these business groups, a primary benefit of an FTA with SACU would be to counteract the free trade agreement between the European Union and South Africa, which has given a price advantage to European firms. The FTA could also provide an opportunity to address the constraints on U.S. exports to SACU countries, such as relatively high tariffs, import restrictions, insufficient copyright protection, and service sector barriers. Some U.S. businesses have reportedly expressed skepticism about an FTA with SACU, citing concerns over corruption and inadequate transparency in government procurement, particularly in South Africa. On December 16, 2002, the interagency Trade Policy Staff Committee, which is chaired by the USTR, held a hearing to receive public comment on negotiating positions for the proposed agreement. Several groups representing retailers, food distributors, and metal importers supported the reduction of U.S. tariffs on SACU goods that an FTA would bring. Others representing service industries and recycled clothing favored negotiations to remove tariff and non-tariff barriers in the SACU market. Yet other groups opposed the additional opening of U.S. markets to SACU goods or sought exemptions for their products. They included the growers and processors of California peaches and apricots, the American Sugar Alliance, rubber footwear manufacturers, and producers of silicon metal and manganese aluminum bricks. Some U.S. civil society organizations are concerned that a SACU FTA could have negative consequences for poor Southern Africans, citing potential adjustment costs for import-competing farmers, poor enforcement of labor rights, privatization of utilities, and increased restrictions on importing generic drugs to treat HIV/AIDS. The South African Customs Union consists of Botswana, Lesotho, Namibia, South Africa, and Swaziland: five contiguous states with a population of 51.9 million people encompassing 1.7 million square miles on the southern tip of the African continent. Although this figure represents less than 1% of the population of sub-Saharan Africa, SACU accounts for one-half of the subcontinent's gross domestic product (GDP). Wide differences exist among the economies of SACU. While South Africa has developed a significant manufacturing and industrial capacity, the other countries remain dependent on agriculture and mineral extraction. The grouping is dominated by South Africa, which accounts for 87% of the population, and 93% of the GDP of the customs area. SACU member states had combined real GDP of about $158 billion in 2005. SACU is the United States' second largest trading partner in Africa behind Nigeria whose exports are almost exclusively petroleum products. Overall, SACU is the 33 rd largest trading partner of the United States. Merchandise imports from SACU totaled $10.0 billion in 2007, a 33% increase from 2005 and a 169% increase from 1997. They were composed of minerals such as platinum and diamonds, apparel, vehicles, and automotive parts. Major U.S. exports to the region include aircraft, automobiles, computers, medical instruments and construction and agricultural equipment. The 2007 merchandise trade deficit with SACU was $4.4 billion. The United States ran a services trade surplus with South Africa (the only member of SACU for which service data are available) with exports of $1.6 billion and imports of $1.1 billion in 2006. Services trade between the United States and South Africa has increased steadily over the last decade, with both imports and exports doubling since 1996. The stock of U.S. foreign direct investment in South Africa totaled $3.8 billion in 2006 and was centered around manufacturing, chemicals and services. The stock of South African investment in the U.S. stood at $652 million in 2006. FTA negotiations with SACU may result in the first U.S. trade agreement with an existing customs union. SACU is the world's oldest customs union; it originated as a customs agreement between the territories of South Africa in 1889. The arrangement was formalized through the Customs Agreement of 1910 and was renegotiated in 1969. In 1994, the member states agreed to renegotiate the treaty in light of the political and economic changes implicit from the end of the apartheid regime. The renegotiated agreement was signed on October 21, 2002 in Gaborone, Botswana, and it is now being implemented. Some observers are concerned that further integration of the customs union may be threatened by individual member countries signing economic partnership agreements (EPAs) with the European Union (EU), because these agreements would include policies that SACU has yet to harmonize, such as rules of origin and customs procedures. Some observers believe that SACU should only negotiate these policies as a group to avoid roadblocks to harmonization. The 2002 Agreement provides for greater institutional equality of the member states and effectively redistributes tariff revenue within the member states. Its three key policy provisions are: the free movement of goods within SACU; a common external tariff; and a common revenue pool. It also provides more institutional clout to Botswana, Lesotho, Namibia, and Swaziland (BLNS) in decision-making by creating a policymaking Council of Ministers. The agreement enhances the existing Customs Union Commission, and it creates a permanent Secretariat based in Windhoek, Namibia. The Agreement renegotiated the formula for disbursement of the common revenue pool, which accounts for a large portion of government revenue in the BLNS countries. BLNS disbursements were specified under the old formula, but under the new formula they are variable and based on shares of intra-SACU trade. Both formulas result in a redistribution of SACU tariff revenues from South Africa to BLNS, but the new formula has its basis in some measure of economic activity. Recent estimates indicate SACU payments accounted for 49% of government revenue in Lesotho, 69% in Swaziland, 25% in Namibia, 12% in Botswana, and 3% in South Africa in 2005. A 2003 WTO Trade Policy Review of SACU member states examined the tariff structure and trade posture of the customs union. It noted that the South African tariff structure, which was still the basis for the SACU tariff, was relatively complex, consisting of specific, ad valorem , mixed compound and formula duties. However, the South African government has embarked on a tariff rationalization process to simplify the tariff schedule, to convert tariff lines to ad valorem rates, and to remove tariffs on items not produced in the SACU. According to the USTR, the complexity of the tariff regime has made it necessary for some U.S. firms to employ facilitators to export to South Africa. The WTO found applied MFN tariffs averaged 11.8% in manufacturing, 5.5% in agriculture, and 0.7% in mining and quarrying. These average tariffs represent a reduction from the previous WTO review in 1998, when MFN tariffs averaged 16%, 5.6%, and 1.4%, respectively. However, tariffs are often bound much higher, with some bindings as high as 400%. After nearly three years of slow-moving and stalled negotiations, U.S. and SACU trade officials called off the FTA negotiations in April 2006 in favor of a longer term trade and investment work plan. On July 16, 2008, they signed a Trade, Investment and Development Cooperation Agreement (TIDCA), which is the first of its kind. The TIDCA is reportedly a formal mechanism for the United States and SACU to negotiate interim trade-related agreements which may serve as the building blocks for a future FTA. The agreement will also allow the two parties to work on key issues in their trade, such as trade facilitation, technical barriers, investment promotion, and sanitary and phytosanitary standards. Observers have cited several possible reasons for the halt in FTA negotiations. First, the United States and SACU did not agree on the scope of the negotiations. Per their mandate from Congress to pursue comprehensive FTAs, U.S. negotiators attempted to proceed with negotiations including intellectual property rights, government procurement, investment, and services provisions. However, SACU officials reportedly argued for these provisions to be excluded from the negotiations. They called for making market access commitments first, and then negotiating the other areas. Now that Congress has extended the AGOA benefits to 2015 through the AGOA Acceleration Act of 2004 ( P.L. 108 - 274 ), there may be less incentive for SACU countries to complete an FTA with the United States. Also, the United States and SACU reportedly held different views on how to include certain industrial sectors in the negotiations. The United States preferred what is called a negative list, where all industries are negotiable unless specifically excluded. Meanwhile, SACU preferred a positive list, where the industries to be included in the negotiations are specified in advance, and additional industries may be included in the agreement over time. Finally, the United States and SACU differed on issues concerning labor rights and environmental regulations. Some observers have speculated that South Africa may be leery of negotiating issues that are included in the current WTO negotiations, so as not to influence their positions in the WTO. Former USTR Robert Zoellick has stated that the United States recognizes that SACU is still an emerging entity. It has not developed harmonized policies on many of the issues that would be included in an FTA, which may add to the challenges of negotiating an FTA.

Negotiations to launch a free trade agreement (FTA) between the United States and the five members of the Southern African Customs Union (SACU) (Botswana, Lesotho, Namibia, South Africa, and Swaziland) began on June 3, 2003. In April 2006, negotiators suspended FTA negotiations, launching a new work program on intensifying the trade and investment relationship with an FTA as a long term goal. A potential FTA would eliminate tariffs over time, reduce or eliminate non-tariff barriers, liberalize service trade, protect intellectual property rights, and provide technical assistance to help SACU nations achieve the goals of the agreement. This potential agreement would be subject to congressional approval. This report will be updated as negotiations progress.

RS21213 -- Colombia: Summary and Tables on U.S. Assistance, FY1989-FY2004 Updated May 19, 2003 While the United States has been providing counternarcotics (CN) assistance to Colombia at least as far back as the mid-1970s, former President George H.W. Bushdramatically increased CN aid to Colombia through his 1989 "Andean Initiative." Grant aid to Colombia hadincreased gradually, albeit not evenly, through the1980s, as Colombia evolved from a major supplier of marijuana to the United States, to nearly the sole supplier ofcocaine. By the end of the 1980s, with coca leafcultivation and cocaine production rising in the Andean region, and Colombia suffering increased political violencefrom the Medellin drug-trafficking cartel, theformer Bush Administration established its new CN program. Under this region-wide initiative, the United Statessubstantially increased State Department supportfor Colombian CN efforts, and provided Colombian security forces, primarily the police, with equipment throughforeign military financing grants and DODequipment drawdowns. As part of the effort to bring military resources to bear on the "war against drugs," in 1991,Congress enacted "Section 1004" of the 1991National Defense Authorization Act (NDAA) ( P.L.101-510 ). This provides the DOD with authority to providetransportation, reconnaissance, training, intelligence,and base support when requested by foreign law enforcement agencies for CN purposes. Funding for Colombia dropped in the first two years of the Clinton Administration budgets. It began to increase in FY1997, with increased attention to eradicationefforts. Until FY1998, however, the numbers fell short of the Bush years. (1) In 1998, Congress established a new authority, Section 1033 of the1998NDAA ( P.L.105-85 ), for the U.S. military to provide non-lethal equipment, and to maintain and repair counter-drug equipment. Table 2 details funding for the eleven yearsfrom FY1989 - FY1999, which totals $1,066.7 million (i.e., $1.07 billion). The 1998 election of a new Colombian president, Andres Pastrana, led to a reevaluation of U.S. policy and greater cooperation. During Pastrana's October 1998state visit, President Clinton announced that the United State would provide nearly three times more assistance toColombia during FY1999 than it had the previousyear. Much of this, however, was the $173.2 million in congressionally-mandated supplemental appropriationsfunding ( P.L. 105-277 ) for helicopter and aircraft upgrades, radar, andpolice assistance that the Administration had not requested. In FY2000, the funding again rose substantially withthe "Plan Colombia" legislation. In July 2000, Congress approved the Clinton Administration's request for $1.3 billion in FY2000 State Department and DOD emergency supplemental appropriations ( P.L. 106-246 ) forthe region-wide "Plan Colombia," of which $860.3 was earmarked for Colombia. Nearly half of the Colombiafunding was dedicated to the "Push into Southern Colombia" program toset up and train two new Colombian Army Counternarcotics battalions (CACBs), which combined with an existingone set up earlier by the United States to form a brigade of some2,700. The brigade assists the Colombian National Police (CNP) in the fumigation of illicit narcotics crops and thedismantling of laboratories, beginning with coca fumigation in thesouthern provinces of Putumayo and Caqueta, where coca cultivation was spreading rapidly. Congress alsoprovided substantial assistance for economic development, displacedpersons, human rights monitors, and administration of justice and other governance programs, all intended to helpColombia counter the many threats to its stability and integrity fromthe trafficking of illegal narcotics. With its FY2002 budget request, the Bush Administration expanded the scope of Clinton's "Plan Colombia" policy through its Andean Regional Initiative (ARI), with continuing highlevels of support for existing "Plan Colombia" programs in Colombia, and increased assistance to states borderingor close to Colombia. Congress provided $380.5 million, nearly all ofthe Administration's requested $399 million, for Colombia in State Department counternarcotics funding in theFY2002 foreign operations appropriations ( P.L. 107-115 ). (2) As inprevious years, the appropriations bill included human rights and other conditions, and a cap on the numberdeployed of military personnel and of private contractors who are U.S.citizens. In February 2002, through requests for FY2002 emergency supplemental appropriations and FY2003 regular appropriations, the Bush Administration sought authority and funding toexpand the scope of military assistance. In both requests, it asked for foreign military financing (FMF) funds to trainand equip Colombian soldiers to defend oil pipelines and otherinfrastructure from attacks by leftist guerrillas, in addition to funding for Plan Colombia programs. Thesupplemental request also sought funding to train Colombian security forces inanti-kidnapping techniques. In addition, the supplemental submission proposed to broaden the authorities of theDefense and State Departments to use FY2002 and FY2003 assistanceand unexpended Plan Colombia ( P.L. 106-246 ) aid to support the Colombian government's "unified campaignagainst narcotics trafficking, terrorist activities, and other threats to itsnational security." In the month before Colombia's new president, Alvaro Uribe, took office in August 2002, Congress provided almost all of the requested supplemental funding and expanded the scopeof military assistance permitted with those and previous-fiscal year funds. With the FY2002 supplementalappropriations (Section 305, P.L. 107-206 ), Congress provided authority forthe Administration to use counternarcotics and other funds to support Colombia's "unified campaign" againstnarcotics trafficking and against activities by organizations designated asterrorist organizations, naming specifically the two major leftist guerrilla groups, the Revolutionary Armed Forcesof Colombia and the National Liberation Army, and the rightist UnitedSelf-Defense Forces of Colombia, as well as in emergency circumstances. Congress, however, did not provideexpanded authority for activities involving any other national securitythreats. Congress extended the authority for State Department FY2003 funding in the omnibus FY2003appropriations bill ( P.L. 108-7 , under the heading "Andean CounterdrugInitiative"), passed in February 2003, which included annual State Department appropriations, and for DOD fundingin the FY2003 defense appropriations bill (Section 8145, P.L.107-248 ). Congress approved just $5 million shy of the $537 million the Bush Administration requested in CN($433.2 million) and FMF ($93 million) funding. In the FY2003supplemental appropriations ( P.L. 108-11 ), Congress included $105 million for Colombia: $34 million in StateDepartment CN funding, $34 million in DOD CN funding, and $37.1million in FMF funding. Both bills condition aid on the observance of human rights and environmental and otherrestrictions. For FY2004, the Bush Administration has requested $573 million for Colombia, including $463 million in Andean Counterdrug Initiative (ACI) funds, and $110 million in ForeignMilitary Financing. It has also requested military funding for Colombia that, for the first time since Plan Colombiawas adopted, is not requested for a very specific purpose. TheAdministration request states that FMF for Colombia is intended "to support counter-terrorism operations andprotect key infrastructure such as the oil pipeline." Table 1 shows aid to Colombia from FY2000 through FY2003 and the FY2004 request. Table 2 shows aid from FY1989-FY1999. (For more information, see CRS Report RL30541 , CRS Report RL31016 , and CRS Report RL31383(pdf) .) Tables 1 and 2 include direct U.S. foreign assistance (i.e., the categories usually counted as U.S. foreign aid, which are in italics ) as well as the costs of goods and services provided toColombia from other U.S. government programs supporting CN efforts there. These figures were taken frompublically-available documents or provided directly by the Departments ofState and Defense. The United States also provides a small amount of DOD Excess Defense Articles (EDA) toColombia. These charts provide as comprehensive a picture as possible of U.S. assistance to Colombia, but there are limitations. For instance, some funds are spent in Colombia on counternarcoticsand other activities that are considered part of U.S. programs: for instance, the Drug Enforcement Administration(DEA) spends its own funds on joint operations in Colombia. Otherfunds are provided through regional programs of USAID and other programs which are not counted as assistanceon a country-by-country basis. No attempt was made to estimate suchfunds. Also, there are inconsistencies among various sources. Because of these and other constraints on gatheringdata, the amount of assistance provided to Colombia may be largerthan the amounts cited in these tables. Table 1. U.S. Assistance to Colombia FY2000-FY2004 (Obligations andauthorizations, $ millions) Notes: NA = Not Available. Figures on State Department INC (International Narcotics Control), ACI (Andean Counterdrug Initiative), USAID, FMF, and IMETfunding from StateDepartment Congressional Presentations, budget justification documents, and allocation information provided bythe Department of State. Figures on INC Air Wing (FY2000-FY2004)provided by the State Department: figures provided May 5, 2003. (INC Air Wing funding supports the sprayeradication efforts. FY2000 figure includes $5.5 million in support of theColombian Army.) Figures on DOD 1004, 1004/124, and 1033 funding provided April 11, 2002, for FY2000-2002;and April 18, 2003, for FY2003 and FY2004. Both INC Air Wingand DOD funding are taken from regional accounts, therefore the FY2003 and FY2004 allocations are estimates,and can be shifted to respond to developing needs in other areas. a FY2000 and thereafter, non-DOD Plan Colombia funds are all assigned to the State Department INC (FY2000 and FY2001) or ACI (FY2002 and thereafter) account; the StateDepartment transfers them to the other agencies carrying out programs in Colombia with those funds. These includethe Department of Justice and USAID. The USAID FY2000 andFY2001 figures are Economic Support Funds (ESF). These USAID figures do not include funds provided to USAIDfrom the INC account. Table 2. U.S. Aid to Colombia FY1989-FY1999 (Obligations and Authorizations, $ millions) Sources: Data is drawn from a number of sources, not all of which are consistent. These include: various editions of the U.S. Overseas Loans and Grants and Assistance fromInternational Organizations "Green Book," prepared by the US AID budget office; various editions of the ForeignMilitary Sales, Foreign Military Construction Sales, and MilitaryAssistance Facts book, prepared by the Department of Defense Security Cooperation Agency; information provideddirectly by the departments of State and Defense that are notrecorded in these publications; and by the General Accounting Office (GAO) for 1996-1998. (See GAO-01-26)Where contradictions existed, GAO data was preferred. Because of apossible lack of data or inaccuracies, some yearly totals may be understated or overstated, particularly prior toFY1997. a In these years, there was assistance in this category of less than $50,000. b Although it is likely that Section 1004 assistance was provided to Colombia as far back asFY1992, there is no public breakdown of such assistance until FY1997. That is the first yearin which DOD provided a publicly-available breakdown by country and authority for funding from its centralcounternarcotics account. c Not included in totals.

Over the past 15 years, from FY1989-FY2003, the United States has providedColombia with over $3.6 billion inassistance, most of it directed to counternarcotics or related efforts. During the first 11 fiscal years(FY1989-FY1999), when assistance totaled just over $1 billion,the annual levels were considerably lower than during the past three fiscal years and the current fiscal year. FromFY2000-FY2003, assistance totals about $2,556billion. The Clinton Administration increased assistance in FY2000 to fund its "Plan Colombia" programs tocounter the spread of coca cultivation in southernColombia. The Bush Administration has continued "Plan Colombia" programs through its Andean Regional Initiative(ARI), which also provides increased funding forColombia's neighbors. In FY2002, President Bush also sought authority to expand the circumstances under whichfunding for the Colombian security forces can beused. As approved by Congress in 2002 and 2003, funding for FY2003 and previous years can be used forcounternarcotics and anti-terrorist purposes. For FY2004, the Bush Administration has requested $573 million in State Department Andean CounterdrugInitiative and Foreign Military Financing funds, andestimates it will spend some $45 million in Colombia from the central State Department Air Wing account. TheDepartment of Defense (DOD) estimates that itwill spend almost $119 million for Colombia from its central counternarcotics account.

On March 16, 2010, the Federal Communications Commission (FCC) released Connecting America: The National Broadband Plan . Mandated by the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ), the FCC's National Broadband Plan (NBP) is a 360-page document composed of 17 chapters containing over 200 specific recommendations directed to the FCC, the Executive Branch (both to individual agencies and to the Administration as a whole), Congress, and nonfederal and nongovernmental entities. The ARRA mandated that the NBP should "seek to ensure that all people of the United States have access to broadband capability." Accordingly, the NBP identified significant gaps in broadband availability and adoption in the United States, and in order to address those gaps and other challenges, the NBP set six specific goals to be achieved by the year 2020. These goals are as follows: Goal No. 1: At least 100 million U.S. homes should have affordable access to actual download speeds of at least 100 megabits per second and actual upload speeds of at least 50 megabits per second. Goal No. 2: The United States should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation. Goal No. 3: Every American should have affordable access to robust broadband service, and the means and skills to subscribe if they so choose. Goal No. 4: Every American community should have affordable access to at least 1 gigabit per second broadband service to anchor institutions such as schools, hospitals, and government buildings. Goal No. 5: To ensure the safety of the American people, every first responder should have access to a nationwide, wireless, interoperable broadband public safety network. Goal No. 6: To ensure that America leads in the clean energy economy, every American should be able to use broadband to track and manage their real-time energy consumption. This report does not address the appropriateness of those goals or the ongoing debate over the best ways to reach those goals. Rather, this report--with three years having passed since release of the NBP--looks at each of these goals and examines available data and activities which might indicate the nation's progress towards meeting them. Currently, the 113 th Congress and the FCC are initiating, developing, and/or overseeing a number of telecommunications policies and programs including universal service reform and a number of spectrum and wireless policy initiatives. Given that those policies and programs are intended to help the nation reach many of the goals set by the NBP, the extent to which the NBP goals are met will likely be a part of the ongoing debate over many of these issues. Goal No. 1: At least 100 million U.S. homes should have affordable access to actual download speeds of at least 100 megabits per second and actual upload speeds of at least 50 megabits per second. Popularly referred to as "100 squared" (100 Mbps in 100 million households), this goal would offer next-generation broadband to about 75% of all U.S. households. Typically, the higher the speeds offered, the more costly the deployment and the higher the prices to consumers. Deployments of 100 Mbps are more likely in densely populated urban and suburban areas than in rural areas. Currently, capabilities in the range of 100 Mbps/50 Mbps are offered by fiber and a next generation cable technology called DOCSIS 3.0. According to the most recent National Broadband Map data (released February 2013, data current as of June 2012), 63 m illion households are in areas with advertised download speeds greater than 100 Mbps. The same data show that 1 3 million households have advertised upload speeds greater than 50 Mbps. The goal also calls for "affordable access." According to the New America Foundation, "it costs between $100 and $300 per month to get a connection speed of over 100 Mbps in most U.S. cities--if such high speeds are even available at all." Similarly, the Information Technology & Information Foundation (ITIF) cites FCC international data indicating an average price in the U.S. of $199.99 per month for 100 Mbps or more. According to ITIF, the high price "reflects the fact that the service tier above 100 Mbps is more a curiosity than a meaningful service today." It is important to note that the goal sets a target for actual speed (e.g., the download and upload speeds actually experienced by consumers), whereas the National Broadband Map data reflects advertised speed. The FCC has initiated the Measuring Broadband America Program to survey actual performance data of Internet Service Providers serving over 80% of the residential broadband market. The February 2013 Measuring Broadband America Report found that ISPs deliver on average 97% of advertised speeds during peak intervals. Meanwhile, the National Broadband Plan set--as a milestone--an interim goal of 100 million homes with actual download speeds of 50 Mbps and actual upload speeds of 20 Mbps by 2015. Accordingly, National Broadband Map data show 101 m illion households with advertised download speeds over 50 Mbps, and 22 m illion households with advertised upload speeds over 25 Mbps (which is the closest speed tier to 20 Mbps). Thus, while the interim goal has been met for download speeds (100 million households with 50 Mbps by 2015), the interim upload speed goal (100 million households with 20 Mbps) is farther from being reached. Recently, the cable industry has begun rolling out the latest generation of cable modem technology --DOCSIS 3.0--which can offer 100 Mbps download speeds. Thus, the number of households currently having access to 100 Mbps/50 Mbps is likely higher than what is reflected in the National Broadband Map data, which is current through June 2012. With respect to download speeds, the FCC is optimistic that the 100 squared goal will be met. According to the Measuring Broadband America report, In just the year since we collected data for our last Report, ISPs have improved in both their ability to deliver what they promise to their customers, and in the overall speeds they can and are delivering. This is a success story, and indicates strong progress toward the important goals set forth in the NBP, that by 2015, 100 million homes should have affordable access to actual download speeds of 50 Mbps, and by 2020 the actual download speed should have increased to 100 Mbps. Though we are making progress toward these goals, we have not yet reached them, and to ensure success it is essential that ISPs continue to improve at the impressive pace indicated by this Report. Over the next year, we anticipate that providers will continue to innovate and increase their offerings in the higher speed tiers. We know based on industry discussions that the major expansion in high speed service tiers first noted in the July 2012 report was enabled by the deployment by the cable industry of DOCSIS 3.0 technology which permitted service rates of 100 Mbps and above. The cable industry has also announced that it intends in the near future to extend its services to rates beyond 100 Mbps, both to support future service offerings such as ultra-high definition television, and to meet competition created by fiber-based service providers. Verizon fiber is now offering rates up to 300 Mbps in select parts of their market footprint, while Google offers 1 Gbps (1000 Mbps) service in Kansas City, MO. Similarly, the FCC, in its Eighth Broadband Progress Report , notes the acceleration of private sector rollouts of next generation broadband technologies: Higher-speed broadband (10 Mbps and above) is increasingly available in many areas of the country . We must keep in mind these developments as we assess the current market and project consumer demand and expectations in the future . For example, cable providers have made much progress on rolling out DOCSIS 3.0, which is capable of 100 Mbps speeds and even higher speeds . And, Americans continue to demand and subscribe to higher services . We will examine in the next Inquiry whether we should identify multiple speed tiers in these reports to assess the country's progress toward our universalization goal, as well as additional goals--such as affordable access to 100 Mbps/50 Mbps to 100 million homes by 2020. Goal No. 2: The United States should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation . National Broadband Map data monitor the availability and extensiveness of wireless broadband networks in the United States. As Table 1 shows, lower download speeds (up to 3 Mbps, typically provided by 3G wireless technology) are available to 90% or more of U.S. households. The availability percentage for next generation wireless (4G LTE wireless technologies, which can provide over 6 Mbps) is less, at over 78% of U.S. households. These percentages, reflecting June 2012 data, can be expected to rise, given the recent and ongoing buildout and deployment of 4G LTE wireless broadband technologies. An assessment of whether or not the United States "lead[s] the world in mobile innovation" is a subjective judgment. The FCC notes that since 2010, U.S. wireless providers have aggressively built out the newest commercial technology for mobile broadband, known as 4G LTE, which offers download speeds in the range of 5 to 12 Mbps. According to the FCC, as of the summer of 2010 there was no LTE deployment in the United States; by January 2012, three mobile wireless providers had launched LTE networks which covered an estimated 211 million people. The FCC's most recent International Broadband Data Report asserts that this recent wireless network building is "securing the United States' position as the world leader in LTE adoption." The FCC notes that according to Deloitte, U.S. investment in 4G networks during 2012-2016 could be $25-$53 billion, that more than 80% of smartphones sold globally run on U.S. operating systems (up from less than 25% three years ago), and that as the first adopters of 4G LTE, the United States is the global test bed for wireless technology and services. In view of this recent progress, the FCC concludes that "the United States has regained its role as a global leader in and around mobile broadband." On the other hand, another data source, from the Organisation for Economic Co-operation and Development (OECD), provides international comparisons with respect to wireless broadband subscriptions per 100 inhabitants. These data refer to actual subscriptions as opposed to the coverage or extensiveness of wireless networks. The latest OECD data, current as of June 2012, shows the United States ranking 8 th behind Korea, Sweden, Australia, Finland, Denmark, Japan, and Norway in wireless broadband subscriptions per 100 inhabitants. Goal No. 3: Every American should have affordable access to robust broadband service, and the means and skills to subscribe if they so choose. This goal encompasses two separate but interrelated and measurable aspects of broadband deployment: availability and adoption. The download and upload speeds at which broadband might be considered "robust" is a subjective judgment that depends on what speeds and associated applications are considered required by broadband users. Section 706(d)(1) of the Telecommunications Act of 1996 ( P.L. 104-104 ) defines "advanced telecommunications capability" as "high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology." The National Broadband Plan recommended a broadband benchmark speed of 4 Mbps download/1 Mbps upload, which could initially serve as a minimum threshold constituting broadband under section 706. According to the Eighth Broadband Progress Report : In each of the reports the Commission has conducted under section 706, it has relied on a speed benchmark for determining whether a service satisfies this statutory definition. In the 2010 Sixth Broadband Progress Report , the Commission updated this speed benchmark from 200 kbps in both directions to services that offer actual download (i.e., to the customer) speeds of at least 4 Mbps and actual upload (i.e., from the customer) speeds of at least 1 Mbps (4 Mbps/1 Mbps, or "speed benchmark"). In this report, we continue to rely upon this speed benchmark, which the Commission has used in the two most recent broadband reports. We find that this speed benchmark still reflects the requirements in section 706(d)(1) and generally "enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology." For instance, broadband service offering 4 Mbps/1 Mbps enables users to stream high-definition video and engage in basic video conferencing. Maintaining the speed benchmark from prior years also simplifies the measurement of progress from the prior two years. Because the consumer demand for bandwidth and services increases over time, the NBP recommended that the 4 Mbps download/1 Mbps upload benchmark be reviewed and possibly reset every four years. Broadband availability refers to the presence of broadband service that is offered in a given area. According to the National Broadband Map, 98.2% of the U.S. population has broadband service available with speeds of at least 3 Mbps download/768 kbps upload. This speed level is the National Broadband Map data measurement tier closest to the FCC's 4 Mbps/1 Mbps benchmark. Therefore, the FCC uses the 3 Mbps/768 kbps data as a surrogate for the broadband benchmark. Under this criterion, broadband availability levels appear to be approaching 100%. Broadband adoption refers to the extent to which Americans actually subscribe to and use broadband. Specifically, the NBP set an adoption goal of "higher than 90%" by 2020. There are several ways to characterize broadband adoption. The FCC's semiannual report tracking broadband subscribership (also known as the Form 477 report) provides subscribership ratios, which is the number of fixed broadband connections nationwide divided by the number of households. According to the most recent semiannual FCC subscriber data (current as of December 31, 2011, released in February 2013), the subscriber ratio is 40% for fixed residential connections with advertised speeds of at least 3 Mbps down and 768 kbps up. The subscribership ratio for fixed residential connections of at least 200 kbps in any direction (which previously was the FCC's minimum benchmark for broadband) is 68%. The latest Pew Internet and American Life Project telephone survey (conducted in April 2012) found that 66% of Americans surveyed said they have broadband connections at home. The download and upload speeds of those connections was not specified. The Pew data show that broadband adoption rates have slowed and plateaued in recent years--adoption was at 63% in 2009, as compared to 66% in the 2012 survey. Additionally, the 66% rate in the Pew Survey refers to any speed identified as broadband by the survey respondent. The subscribership rate for the NBP benchmark speed of 4 Mbps/1 Mbps is lower (at 40% for fixed residential connections) as reported by the FCC. Thus progress towards meeting the "higher than 90%" goal of the NBP appears to have slowed. According to the Pew Survey, certain demographic groups tend to have lower broadband adoption rates. These groups include minorities, low income households, the elderly, adults with less educational attainment, and rural populations. Of those surveyed without Internet, almost half said that the main reason they don't go on line is because they don't believe the Internet is relevant to them. In an April 2009 survey, most respondents without broadband said that a drop in price was most likely to get them to switch to broadband. The lack of a computer in the home is also a major reason why households choose not to subscribe to broadband service. Affordability is an important aspect of Goal 3, which calls for "affordable access to robust broadband service." Affordability is also a key factor affecting broadband adoption rates, given that one of the major reasons why people say they choose not to subscribe to a broadband service is its cost. The question then becomes: at what price should broadband service be considered "affordable?" While measuring affordability is complex, difficult to quantify, and often subjective, one way that broadband service affordability is often assessed is by comparing broadband service prices domestically with rates in other countries. Comparisons of international broadband data can be interpreted in very different ways. Some assert that Americans pay significantly more for broadband than those in other countries, especially for next-generation, very high speed connections. Others assert that broadband prices in the U.S. are reasonable, and that network performance in the U.S. is better than in all but a handful of nations that have densely populated urban areas and have used government subsidies. The Broadband Data Improvement Act ( P.L. 110-385 ) requires the FCC to prepare international comparisons of broadband service. The third annual International Broadband Data Report surveyed broadband plans in 38 countries, including 213 broadband plans (113 fixed, 100 mobile) in the United States. The FCC found that the cheapest plan among those surveyed was $23 per month with 768 kbps download speed and unlimited data. The most expensive standalone broadband plan was a fiber broadband plan at $199 per month with 150 Mbps of download speed, 35 Mbps of upload speed and unlimited data. Table 2 shows average prices of fixed residential (wireline) broadband plans in the United States surveyed by the FCC. The FCC found that From the analysis of the data, we have concluded that the United States is in the midprice range of countries, whether we compare by speed tier or price per gigabyte of data, for fixed residential broadband. With respect to mobile broadband, the FCC concluded that "particularly for smartphone plans, the United States is one of the ten least expensive countries in terms of price per gigabyte of data." Goal No. 4: Every American community should have affordable access to at least 1 gigabit per second broadband service to anchor institutions such as schools, hospitals , and government buildings. Based on currently available data, it is difficult if not impossible to determine how many communities have affordable access to at least 1 gigabit per second broadband service to their anchor institutions. The National Broadband Map includes a dataset which contains nearly 300,000 records of community anchor institutions (CAIs) including schools, colleges and universities, libraries, medical/healthcare facilities, public safety institutions, and community centers (both governmental and nongovernmental). For a large percentage of the CAIs in the dataset (54%) it is unknown whether or not they subscribe to broadband service. However, of the CAIs which have reported whether or not they have broadband service (and which have reported the download speeds they are receiving), 7.8% report download speeds greater than 1 gigabit per second. The most recent FCC report on the status of broadband deployment--the Eighth Broadband Progress Report --concluded that elementary and secondary schools may lack a sufficient level of broadband service, and that "it continues to appear that many schools and classrooms are underserved by broadband today." Specifically, the FCC cites a January 2011 survey of the Schools and Libraries Program (E-rate) funded schools and libraries in which 80% of E-rate recipients said their broadband connections did not fully meet their needs, and 78% of recipients said they need additional bandwidth. Based on National Broadband Map data, the FCC found that "providers offer download speeds of at least 25 Mbps to only 63.7 percent of the nation's schools, suggesting that many schools may not have a sufficient level of broadband service." Other data are available from the American Library Association's Information Policy and Access Center, which found that 31.2% of libraries have connectivity speeds greater than 10 Mbps, and 55% have speeds between 1.5 and 10 Mbps. Meanwhile, one of the purposes of the broadband stimulus grants awarded by the National Telecommunications and Information Administration (NTIA) is to provide ultra-high-speed broadband connections to CAIs. Specifically, the Comprehensive Community Infrastructure grant program (under the Broadband Technology Opportunity Program or BTOP) has awarded 117 grants, many of which are due to be complete by the end of FY2013. According to NTIA, 12,000 CAIs have been connected, and over 80% of the 1,500 communities served by the projects will receive speeds greater than a gigabit per second. Goal No. 5: To ensure the safety of the American people, every first responder should have access to a nationwide, wireless, interoperable broadband public safety network. In its 2010 National Broadband Plan report, the FCC stated that "nearly a decade after 9/11, our first responders still lack a nationwide public safety mobile broadband communications network, even though such a network could improve emergency response and homeland security." Provisions in the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ) called for developing, constructing, and operating a nationwide network, called FirstNet, designed to meet public safety communications needs. Goal No. 6: To ensure that America leads in the clean energy economy, every American should be able to use broadband to track and manage their real-time energy consumption. According to the FCC, "broadband and advanced communications infrastructure will play an important role in achieving national goals of energy independence and efficiency." In order for this goal to be realized, there must be universal broadband (see Goal 3, above) and, according to the NBP, "the country will need to modernize the electric grid with broadband and advanced communications." The FCC's central recommendation for reaching this goal involves integrating broadband into the Smart Grid. Currently, the United States "is undertaking a massive communications and information technology buildout to produce the Smart Grid, which the National Institute of Standards and Technology (NIST) defines as the 'two-way flow of electricity and information to create an automated, widely distributed energy delivery network.'" Title XIII of the Energy Independence and Security Act of 2007 ( P.L. 110-140 ) set forth the policy of the United States "to support the modernization of the nation's electricity transmission and distribution system to maintain a reliable and secure electricity infrastructure." P.L. 110-140 stipulated initiatives for government programs to undertake in Smart Grid investments, including coordinated research, development, demonstration, and information outreach efforts. The National Broadband Plan contained over 200 specific recommendations intended to help achieve the Plan's goals. The NBP's recommendations were directed to the FCC, to Congress, to the Executive Branch (both to individual agencies and to Administration as a whole), and to nonfederal and nongovernmental entities. The Benton Foundation maintains a database that tracks the implementation of the NBP recommendations. According to Benton, out of a total 218 recommendations, 17% are completed, 40.4% are in progress, 15.6% are started, and 27.1% are not started. Many of the key telecommunications issues that are currently being considered by the 113 th Congress are focused on improving broadband deployment, and thus are intended to have a positive impact on the nation's progress towards reaching one (or in many cases, several) of the NBP goals. Issues include Congressional oversight of the FCC's efforts to establish the Connect America Fund and its Mobility and Remote Areas component funds as part of Universal Service Fund reform; Congressional oversight of the FCC's efforts to expand the Lifeline Program by allowing subsidies to low-income Americans to be used for broadband, and to modify the Rural Health Care and Schools and Libraries (E-rate) programs, also part of Universal Service Fund reform; Congressional and FCC consideration of spectrum policies intended to make more spectrum available for wireless broadband; Congressional oversight of the development, construction, and implementation of FirstNet, a nationwide broadband network designed to meet public safety communications needs; Congressional oversight of ARRA broadband grant and loan programs and reauthorization of broadband loan programs in the 2013 farm bill; and Congressional consideration of possibly revising the current regulatory framework established by the 1996 Telecommunications Act (and its underlying statute, the Communications Act of 1934) in response to the convergence of telecommunications providers and markets and the transition to an Internet Protocol (IP) based network. Three years after the rollout of the National Broadband Plan, available data indicate that there has been progress towards reaching the 2020 goals. The following observations can be made: the United States is much closer to reaching broadband availability goals than broadband adoption goals, which remain a major challenge; the United States is much closer to achieving broadband download speed goals than upload speed goals; while the 100 squared goal seems well within reach (at least for download speeds), its price remains high--affordability could improve in the future depending on technological advances and consumer demand for 100 Mbps plus speeds; recent rollouts of next generation wireless technologies (4G LTE) have led the FCC to state that the United States leads the world in mobile innovation; on the other hand, the latest OECD data indicate that the United States remains in the middle of the pack with respect to wireless broadband subscriptions per 100 population; while broadband data are incomplete for Community Anchor Institutions, available information indicate that the number of CAIs with 1 gigabit connections remains relatively low; and two major initiatives--FirstNet and Smart Grid--are currently underway in order to help reach goals 5 and 6. In weighing progress towards reaching the goals of the National Broadband Plan, two important considerations should be taken into account. First, the specific broadband goals developed by the FCC are not necessarily universally agreed upon by all stakeholders. For example, the 100 squared goal has been criticized for endorsing an evolution of broadband deployment that could leave rural areas without the next generation broadband service that urban and suburban areas might enjoy. Second, it is impossible to quantify to what extent progress towards reaching these goals is due to the NBP recommendations versus the natural evolution of the broadband market, independent of any impact of the NBP. Finally, as the 113 th Congress considers contentious telecommunications issues such as universal service reform, wireless technology and spectrum policy, and telecommunications regulatory reform, the ongoing progress towards meeting the NBP goals is likely to be part of that debate.

On March 16, 2010, the Federal Communications Commission (FCC) released Connecting America: The National Broadband Plan. The National Broadband Plan (NBP) identified significant gaps in broadband availability and adoption in the United States, and in order to address those gaps and other challenges, the NBP set specific goals to be achieved by the year 2020. Goals were set for next generation broadband service; universal broadband service; mobile wireless broadband innovation and coverage; broadband access of Community Anchor Institutions; a nationwide, wireless, interoperable broadband public safety network; and broadband for tracking energy consumption. Three years after the rollout of the NBP, available data indicate that there has been progress towards reaching the 2020 goals. The following observations can be made: the United States is much closer to reaching broadband availability goals than broadband adoption goals, which remain a major challenge; the United States is much closer to achieving broadband download speed goals than upload speed goals; while the next generation broadband goal of 100 million households with 100 Mbps speeds seems within reach (at least for download speeds), the price remains high--affordability could improve in the future depending on technological advances and consumer demand for ultra-high speed next generation performance; recent rollouts of next generation wireless technologies have led the FCC to state that the United States leads the world in mobile innovation; on the other hand, the latest Organisation for Economic Co-operation and Development (OECD) data indicate that the United States remains in the middle of the pack with respect to wireless broadband subscriptions per 100 of the population; while broadband data are incomplete for Community Anchor Institutions, available information indicate that the number of CAIs with 1 gigabit connections remains relatively low; and two major initiatives--FirstNet and Smart Grid--are currently underway in order to help reach the goals for a public safety wireless network and for broadband monitoring of energy consumption. Many of the key telecommunications issues that are currently being considered by the 113th Congress are focused on improving broadband deployment and thus are intended to have a positive impact on the nation's progress towards reaching one (or in many cases, several) of the NBP goals. As the 113th Congress considers contentious telecommunications issues such as universal service reform, wireless technology and spectrum policy, and telecommunications regulatory reform, the ongoing progress towards meeting the NBP goals is likely to be part of that debate.

In its FY2008 Budget Request, the Administration requested the 110 th Congress to enact a new performance-based compensation system for the Foreign Service. By the close of the 109 th Congress, the Administration, the American Foreign Service Association (AFSA), which is the recognized bargaining agent for the members of the Foreign Service, and the leadership of House Committee on International Relations (HIRC) and the Senate Committee on Foreign Relations (SFRC) agreed on provisions establishing a new Foreign Service compensation system. They unsuccessfully tried to bring this language to the floor of the House for consideration. The provisions would allow the Administration to establish a new Foreign Service performance-based compensation schedule for those at the upper mid-level rank of FS-01 and below. The new compensation system would also eliminate an 18.59% higher pay level that Foreign Service personnel receive for being posted in the Washington, DC, area than for being posted abroad. The pay disparity was resolved in 2005 for the Senior Foreign Service when its compensation system was converted to a performance-based system and all in the Senior Service began being paid at the Washington, DC, level regardless of their posting. Secretary of State Rice wrote to the House leadership on November 30, 2006, supporting the proposed Foreign Service Compensation Reform proposal, and stated that it was the intent of the Administration to fund the new system out of its FY 2007 budget request and out year estimates. The House Republican Leadership, however, omitted the provisions from the final bill providing certain State Department authorities, H.R. 6060 , the day before it was to be considered by the full House. The Leadership expressed concerns over whether the bill could get the necessary votes under a Suspension of Rules procedure because of costs involved. Thus on December 8, H.R. 6060 passed the House of Representatives without the new Foreign Service performance-based compensation provisions. The 110 th Congress may choose to decide if and how to address an issue that both the Department of State and the American Foreign Service Association (AFSA) consider to be a high priority personnel issue for the Foreign Service--the elimination of a 18.59 % pay disparity between service in the continental United States and service abroad. The Administration, in its February 2007 Budget Request to the Congress for FY 2008, urged the enactment of legislation creating a new compensation system for the Foreign Service, and the appropriation of $34.5 million needed to implement the first phase of the new compensation system. During the 109 th Congress, Republican and Democratic leadership of both the House Committee on International Relations and the Senate Committee on Foreign Relations worked to resolve this issue by developing the Foreign Service Compensation Reform proposal. This proposal would (1) place the Foreign Service compensation system on a pay-for-performance basis, and (2) eliminate the current pay disparity by creating a new worldwide pay structure at the Washington, DC, salary level. However, reportedly due to cost concerns among the House Republican leadership, this proposal was not included in the final version of H.R. 6060 , which was passed by the House and Senate, and enacted as P.L. 109-472 . The Foreign Service personnel and compensation system is separate and quite different from the federal government's General Service (GS) system. The current Foreign Service system was created under the authorities provided by the Foreign Service Act of 1980 ( P.L. 96-465 ). There are about 13,000 Foreign Service Officers and Specialists with two-thirds of them serving abroad at over 250 posts and missions at any one time. The remaining third is generally posted in Washington, DC. Typically, members of the Foreign Service spend two-thirds of their careers abroad serving at a post from one to three years, and then are assigned elsewhere in the world. In terms of levels or rank within the Foreign Service, it is divided into two categories. The Senior Foreign Service (SFS) is divided into 5 pay categories and, like the Civil Service Senior Executive Service (SES), requires a presidential appointment into the senior service. The regular Foreign Service is divided into nine ranks or classes with the FS-01 level the highest. Most Foreign Service Officers enter the Foreign Service at the 05 or 06 levels, and generally serve for four to five years before being tenured and commissioned as Foreign Service Officers. The personnel system is basically an "up-or-out" system that reviews the members of the Foreign Service annually and has both Time-in-Class (TIC) and Time-in-Service (TIS) limitations that require promotions within certain time frames or the person is separated from the Service. Because of this system, most members of the Foreign Service leave the service after a full and distinguished career in their mid-50s at an 01 or 02 rank. With the creation of locality pay adjustments for federal employees in 1990, a pay gap began for the Foreign Service depending upon whether one was posted in Washington, DC, or abroad because locality pay adjustments were not available for positions abroad. Each year the gap increased and by 2007, an individual's salary was 18.59% higher if he/she served in Washington as opposed to serving abroad. Proponents of revision to the Foreign Service system indicated that the gap impacts morale and the assignments procedure, and diminishes the intent of adjustments such as the hardship and danger pay differentials. They point out that if a person were to go to a 15% hardship post from a Washington assignment, he or she would still experience nearly a 3.6% decrease in salary. The elimination of this difference is a major issue for the members of the Foreign Service and its union, the American Foreign Service Association. The Bush Administration, however, opposes any changes in the Foreign Service compensation system unless it is linked to performance, and part of an overall review of Foreign Service personnel modernization. The Administration states its belief that the current civil service system is ineffective and needs to be tied to a market-sensitive, performance-based system. Thus for the Administration, any changes for Foreign Service also would have to include a performance-based pay system. The 109 th Congress's HIRC and SFRC leadership developed provisions addressing both the Foreign Service and the Administration's views. These provisions, which were designated as the Foreign Service Compensation Reform proposal, were supported by the Administration and AFSA. On November 30, 2006, Secretary of State Rice wrote the House Leadership expressing her support for these provisions and urging prompt consideration and passage by the House of Representatives. For the Administration to support a legislative proposal overhauling the Foreign Service pay structure, the proposal needed to eliminate automatic pay increases and base all salary adjustments on performance. AFSA also sought certain basic assurances in order to support the move to a new pay-for-performance/global rate of pay system. These assurances included a sufficiency of funds to implement and sustain the new system, maintenance of the traditional role of the selection boards, and the traditional relationship between the Foreign Service's recognized bargaining agent and management. Ultimately AFSA needed to believe that the move to a pay-for-performance system from one that included automatic salary increases would be in the best interests of the members of the Foreign Service. The 109 th Congress Foreign Service Compensation Reform proposal had the support of the Administration, the Foreign Service union, and broad support on Capitol Hill. That support, however, was not unanimous. There were some members of the Foreign Service, as well as some Members and staff, concerned about the loss of the current system's automatic increases in salary with the elimination of both the step increases and the tie to the annual Employment Cost Index (ECI) adjustment. There were others who question the Administration's intent, considering the difficulty between labor and the Administration at the Departments of Defense and of Homeland Security as the Administration attempts to institute a new performance-based personnel structure at these two departments. Some of Members and congressional staff who are concerned about the proposed performance-based system state that congressional dynamics have changed with the 2006 election. They believe the elimination of the pay disparity between service in Washington and abroad is reasonable. However, they state that the elimination of the pay disparity does not need to be linked to a pay-for-performance system. The top legislative issue for members of the Foreign Service and AFSA is elimination of the pay disparity that exists between service in Washington, DC, where most Foreign Service personnel are domestically assigned, and service abroad. The Federal Pay Comparability Act of 1990 excludes federal employees posted outside the continental United States from receiving locality pay adjustments. Locality pay is designed to create pay comparability between federal employees and non-federal workers doing the same levels of work within a specific geographic locality in the continental United States. Because there is no basis for comparison of Foreign Service personnel posted abroad to non-federal workers in the United States, those in the Foreign Service, who spend about two-thirds of their careers posted abroad, receive less salary while serving abroad than their colleagues in Washington, DC. This pay difference affects both morale and decisions Foreign Service personnel make when applying for assignments. Supporters of changing the pay system argue that by FY2006 this difference resulted in more than a 17% pay disparity and "created an increasing pay disincentive to overseas service." However, this Foreign Service pay difference exists only for those at the 01 level and below. In 2005, the pay difference was eliminated for those in the Senior Foreign Service as they went to a pay-for-performance system. At that time, all members of the Senior Foreign Service were brought to the Washington, DC, salary levels regardless of where they were posted. AFSA reportedly estimated in 2005 that a member of the Foreign Service who had been hired in 1995 and served a standard 27-year career, leaving at the 01 level, would lose $444,162 in pay and retirement benefits over the course of that career when compared to a similar individual in the Civil Service who served only in Washington, DC. Surveying its members in August 2005, AFSA reported that "getting overseas comparability pay (OCP, a.k.a. 'locality pay') for nonsenior FS personnel posted overseas is overwhelmingly our members' highest priority." A 2006 Government Accountability Office (GAO) study discussing obstacles to attracting mid-level officers to hardship posts also noted the impact of the pay disparity as a deterrent to bidding for hardship assignments: ...officers and State personnel we interviewed both at hardship posts and in Washington, D.C. consistently cited the lack of locality pay as a deterrent to bidding at hardship positions. In 2002, we reported that the differences in the statutes governing domestic locality pay and differential pay for overseas service had created a gap in compensation penalizing overseas employees. This gap grows every year, as domestic locality pay rates increase, creating an ever-increasing financial disincentive for overseas employees to bid on hardship posts. After accounting for domestic locality pay for Washington, D.C., a 25 percent hardship post differential is eroded to approximately 8 percent. As estimated in our 2002 report, differential pay incentives for the 15 percent differential hardship posts are now less than the locality pay for Washington, D.C., which is currently 17 percent and can be expected to soon surpass the 20 percent differential hardship posts. On July 20, 2005, the House of Representatives passed H.R. 2601 , the Foreign Relations Authorization Act 2006 and 2007. Section 305 of H.R. 2601 created an Overseas Comparability Pay Adjustment for those at 01 levels and below posted abroad that, over a three year period, would become equal to, and then be maintained at the Washington, DC, locality pay level. The Administration opposed the proposed pay adjustment system for the Foreign Service in H.R. 2601 , and for the first time stated under what conditions it would consider any Foreign Service pay adjustment. The Administration said, "Adjustments to overseas compensation levels should be linked to performance and considered as part of an overall review of Foreign Service personnel modernization." The Bush Administration contends that the current GS pay framework is a "failure." It maintains that the "one size fits all" approach of the GS pay schedule can mask dramatic disparities in the market value of different federal jobs, and uses on-the-job longevity as a substitute for performance. The Administration proposes repealing the current GS Schedule by 2010, and replacing it with "a system of occupational pay groups, pay bands within those groups and pay for performance across the federal government. The new system would be a pay-for-performance system." At the request of the Administration, Congress developed new structures for civilians working for the Departments of Defense (DOD) and Homeland Security (DHS). These personnel systems, which are currently being challenged in the courts by federal employee unions, would cover nearly one-half of all non-uniformed federal employees if fully implemented. The Administration sought to change the entire Civil Service system through its 2005 draft legislative request, the "Working for America Act (WFAA)," and also the separate request for the Foreign Service system. During much of the fall of 2005, discussions within the Administration regarding a new Foreign Service personnel modernization system took place. In February 2006, Secretary of State Rice said, "the President has requested funding to modernize the Foreign Service pay system and in so doing address the problem of the ever-growing overseas pay gap for FS 01s and below." The Department of State's Budget in Brief for Fiscal Year 2007 elaborated on the funding request, explaining that this was "the first step of transition to a performance-based pay system and global rate of pay for Foreign Service personnel grade FS-01 and below." On July 28, 2006, after months of discussions among the Office of Management and Budget (OMB), the Office of Personnel Management (OPM), various Departments and agencies with Foreign Service personnel, AFSA, and Members and congressional staff, an agreed-upon legislative text was developed that served as the basis of the Administration's request to the Congress for a new Foreign Service compensation system. This text, in large measure, served as the basis of discussion in developing the Foreign Service pay-for-performance/compensation sections in the House bill, H.R. 6060 as reported, and S. 3925 in the Senate. In arriving at this merging of views, the draft bill submitted by the Administration addressed the concerns of both the Administration and AFSA, the Foreign Service's union. For the Administration with its desire for a performance-base system, the proposal contained a new personnel/compensation system that maintains the current nine classes with the 01 level as the highest, but within those classes there are no intervening steps. The Secretary of State determines which basic salary rate within a salary class would be paid to the members of that class, but the Secretary's determination would take into consideration several factors, some of which are negotiated with AFSA. The draft stated that salary adjustments would be based on performance, and that individuals found to be performing below the standards of their class would receive no salary adjustment. The following issues were advocated by AFSA: the role of the Selection Boards in determining performance and promotion recommendations to the Secretary is incorporated into the legislation. the current requirement that the Selection Board recommendations be followed in the order that they are presented is also maintained. The Secretary continues to have the authority to withhold action temporarily on the recommendations of the Selection Boards, but to do so would be under transparent procedures negotiated in advance with AFSA. the role of the Foreign Service's union is recognized and is consistent with current procedures. assurances that a sufficient pool of funds will be allocated to implement a pay-for-performance system, and an assurance that in April 2008, a new Foreign Service worldwide compensation schedule shall become effective with pay at the Washington, DC, level. However, a key question for the Department of State and the Foreign Service was whether the proposal would avoid the labor-management problems affecting DOD and DHS. Currently the full implementation of the personnel systems for DOD and DHS is being contested by actions in the courts as federal employee unions seek to block the pay-for-performance system and the associated labor-management rules, contending that they do not provide for adequate employee protection and collective bargaining rights. Because the Foreign Service would forgo an automatic 3% in-grade step increase plus the annual ECI and locality pay adjustments and accept performance based adjustments with unknown percentages of increases, AFSA sought assurances that the system would be fair to its employees. In this case, both labor and management concluded that the Administration/AFSA agreed upon proposal of July 28 was significantly different enough from the other pay-for-performance proposals, and the Foreign Service system was unique enough, that a conversion to a pay-for-performance system could be mutually beneficial. The AFSA President, Ambassador J. Anthony Holmes, earlier explained his views regarding the general concept of tying a pay-for-performance system with an overseas comparability pay system stating: Pay for performance is an unknown for most of us. From media reports of DOD/DHS efforts to convert their civil servants to a PFP system and the administration's Working for America Act targeting the rest of the Civil Service, one can easily view it as menacing, ideological, and anti-employee. But it is clear from State's own experience with the Senior FS conversion to PFP two years ago that it should be possible to make this work and have a win-win situation all around. The reality is that the present FS personnel system, with its rank-in-person, not in-job, annual evaluations, and competitive up-or-out system is inherently PFP already. So the changes in the system should be much less dramatic than many of our members fear. The Foreign Service personnel and compensation systems are very different from the Civil Service system. As Ambassador Holmes stated, the Foreign Service system resembles more a pay-for-performance system than it does the Civil Service system. Proponents of the change to a new system believe it is important to understand these differences because the impact that a performance-based compensation system would have on the Foreign Service is less dramatic than many, especially those who are familiar with the Civil Service system, might anticipate. Further, the Senior Foreign Service (SFS) personnel system became performance-based in 2005 when the Senior Executive Service (SES) was changed. But unlike the SES, the experience for the SFS has been viewed more positively because of the different nature of the existing, decades-old Foreign Service personnel system. Like the Civil Service system, the Foreign Service system currently has both levels or ranks, and within these levels there are in-grade step adjustments that periodically allow an individual's salary to increase without getting a promotion. The members of the Foreign Service regularly receive an Employment Cost Index (ECI) adjustment equivalent to their Civil Service counterparts. Foreign Service personnel serving in a Locality Pay area also receive a Locality Pay adjustment equal to that which Civil Service personnel receive in the same locale. Foreign Service (FS) personnel carry their rank in person and not in position as do members of the Civil Service. Thus a member of the Foreign Service may be an 02 Officer successfully holding an 01 position, but receives the salary of an 02 officer, and when evaluated for a promotion, may or may not receive a promotion to an 01 level. FS personnel have their performance reviewed annually for promotions regardless of the position they hold. FS personnel are judged for promotions by Selection Boards of their colleagues and not by their supervisors, and the performance determinations are based on Employee Evaluation Reports (EER). The factors used to judge performance are negotiated with AFSA about a year ahead of the reviewing cycle, and those involved are supposed to be aware of the criteria upon which they will be judged. AFSA is present when management briefs the Selection Boards on the criteria and expectations are explained. Selection Boards make their recommendations for promotions to the Secretary, and, by law, the Secretary must follow those recommendations in the order presented. The Secretary can temporarily withhold the recommendations of a Selection Board under negotiated procedure but the final decision is left to a Selection Board for action. The FS is an up-or-out system with promotions required in terms of both "Time-in-Class" (TIC) and "Time-in-Service" (TIS). If an individual exceeds these limits, the individual is separated/retired from the Service. In general, because of this system, an individual is separated/retired from the Service when they are in their mid-50s as an 01 or 02 rank. Selection Boards are required to identify and designate those individuals who are ranked at the bottom 5% of their class. If an individual is "low ranked" twice in a five-year period, and the employee had different rating officials in these two years of "low ranking," that individual is referred to a Performance Standards Review Board for possible separation from the Service. Beyond the low ranking procedure, however, the Selection Board also can refer others directly to the Performance Standards Review Board to be considered for separation from the Service. The Administration's draft bill served as the basis for the bills H.R. 6060 as approved by HIRC and S. 3925 as introduced in the Senate during the 109 th Congress. Both bills contained many similar ideas such as maintaining the nine classes but not having any intervening steps within those classes, or requiring that all salary adjustments be made on the basis of performance. Important differences also existed between the two bills. However, on November 28, 2006, SFRC and HIRC leadership agreed to final language, the Foreign Service Compensation Reform proposal, and it was hoped that the proposal could be brought before the House and Senate under expedited procedures. On November 30, 2006, Secretary of State Rice wrote to the House and Senate leadership expressing the Administration's support for the provisions in the Foreign Service Compensation Reform title, and requesting prompt consideration and passage. She also stated that the Administration intends to fund this initiative within its FY 2007 budget request and out year estimates. If the 110 th Congress chooses to address the elimination of the Foreign Service "service in Washington/service abroad" pay disparity, one possible approach would be to reintroduce the agreed upon authorization language of the Foreign Service Compensation Reform proposal. Such language would authorize the following: The President establishes, reviews on an annual basis, and periodically adjusts a new worldwide Foreign Service schedule consisting of nine classes with no intervening steps within each class. The annual review shall include consideration of pertinent economic measures, including changes in the Economic Cost Index (ECI). The new system becomes effective April 2008. The Secretary determines, on at least an annual basis, the size of any salary adjustment, expressed as a percentage or otherwise, which shall be paid to members of a salary class. The Secretary's determination takes into account several factors, some of which are negotiated with AFSA as the recognized bargaining agent for the FS. All subsequent salary adjustments are based on performance. If an individual is performing below his or her class, that individual receives no salary adjustment for that year. Selection Boards make recommendations to the Secretary regarding performance-based salary adjustments. As with promotions, AFSA negotiates the standards to be used by the Selection Boards in its performance determinations. Also, as in the case of promotion recommendations, the Secretary must follow the recommendations of the Selection Board, except in those cases and through procedures previously negotiated with AFSA. After conversion to the new system, members of the Foreign Service will not be eligible for the January ECI adjustment, locality pay, or the non-foreign area salary allowances. Each year, the Secretary must allocate funds to ensure that, in the aggregate, a minimum funding pool is available for performance-based adjustments that would not disadvantage employees due to the conversion to the new system. The funds to be allocated would be equal to or greater than the sum of an amount that would be required if the within grade step increase system still existed, plus amounts that would cover adjustments for an ECI increase that would be provided to the Civil Service under 5 U.S.C. 5303, and funds that would cover locality pay adjustments if the Foreign Service were still covered under 5 U.S.C. 5304. For those members of the Foreign Service posted in areas where locality pay is higher than the Washington, DC level or are receiving a non-foreign area allowance, the Secretary may establish a special transition rule to prevent those personnel from suffering a salary decrease. Once that person is rotated out of that assignment, however, the compensation level for that post will be set at the worldwide scale. A one year transition compensation system is established which maintains the current nine levels and 14 steps. Pay is tied to the January ECI increase and to locality pay adjustments as appropriate. Beginning in April 2007, those members of the Foreign Service who are posted in non-locality pay, non-foreign area allowance areas would receive a 9% pay increase (unless the President sets a lower level) in their salary levels. Management has as "Management Rights" certain authorities regarding performance pay provisions for members of the Senior Foreign Service, within-grade salary adjustments for those ranked 01 and below, salary adjustment for those not yet reviewed, and the allocation of funds for the pay-for-performance system. Designated as "Management Rights," these authorities are not subject to negotiation with labor. The new system adds authorities to existing "Management Rights," but it also recognizes the ability of management and labor to negotiate the procedures that management officials observe in exercising their rights, and an appropriate process to consider the situation of those adversely affected by management determinations. The list of issues excluded from the definition of "grievance" is amended and the provisions clarify that judgments with respect to pay determinations, within-grade pay adjustments, and the allocation determined to meet performance pay requirements are not subject to grievances. As the Foreign Service Compensation Reform proposal was being developed in the closing days of the 109 th Congress, important differences between H.R. 6060 and S. 3925 were resolved for Republican and Democratic leaders on both HIRC and SFRC, the Administration, and AFSA to agree to common language. These compromises were made under a deadline in order to move the legislation to the floor before adjournment. If the Foreign Service compensation issue is addressed in the 110 th Congress, some issues could be reopened for discussion. The key difference between the HIRC-reported version of H.R. 6060 and S. 3925 was that H.R. 6060 provided the Secretary sole and exclusive discretion in making certain determinations, such as which basic salary rate within a band of rates of pay members of the Foreign Service would receive. S. 3925 did not include that discretionary authority. Initially, the Administration insisted upon the phrase "in the Secretary's sole and exclusive discretion." Many who are concerned about employee rights questioned whether the phrase should be included in the legislation. They were concerned that it could be interpreted as curtailing traditional bargaining rights to negotiate procedures for the pay for performance system and appropriate arrangements for employees adversely impacted by the change to such a system. Those Members and Congressional staff asserted that it is contradictory to use the phrase "sole and exclusive" and then put limitations on the exercise of that discretion. They were concerned that in the end, "the Secretary's sole and exclusive discretion" would have greater standing than the limitations if an issue had to be resolved in court. The Foreign Service Compensation Reform provisions did not include the phrase "in the Secretary's sole and exclusive discretion." Instead, existing "Management Rights" authorities under the Foreign Service Act of 1980 were expanded to include certain salary adjustments and the allocation of funds to cover these adjustments. The existing provisions regarding "Management Rights" also continued providing for labor and management to negotiate procedures in making within grade salary adjustment determinations, and appropriate arrangements for those adversely affected by management decisions. These provisions further clarified that those areas reserved as "Management Rights" were not subject to a grievance. H.R. 6060 as reported, and S. 3925 as introduced, required the President to establish and periodically adjust a new worldwide Foreign Service schedule. There was no agreed upon language in the bills as to how often the President would make adjustments. The salary range of the class created by the President would establish a floor and ceiling for a person in a particular class. The concern was that the ceiling for that class could end up below what would be an inflation-adjusted level if the class ranges were not adjusted by the President frequently enough. The provisions in the Foreign Service Compensation Reform proposal provided that the President establish, review on an annual basis, and periodically adjust a new worldwide Foreign Service schedule consisting of nine classes with no intervening steps within each class. The annual review would include consideration of pertinent economic measures, including changes in the Economic Cost Index. Some members of the Foreign Service expressed concern that due to the lack of automatic increases in the new system because of the elimination of both the step adjustments and the ties to the ECI and Locality Pay increases, the Foreign Service compensation system could fall behind the Civil Service. The Foreign Service Compensation Reform proposal stated that the Secretary would annually allocate sufficient funds so that "employees, in the aggregate, are not disadvantaged in terms of the overall amount of pay available as a result of conversion to the new foreign service performance-based compensation system...." Some were concerned that on an individual basis, without the automatic 3% step increase and the ECI adjustment, among other things, an individual could fall behind what he or she would have been receiving under a system that was tied to those automatic adjustments. Those supporting the performance-based system argued that the automatic increases were part of the problem of the old system that did not recognize performance. In its February 2008 budget submission, the Administration requested $34.5 million to begin implementing the new system. During the 109 th Congress with the lower budget request of $32 million and the pre-January 2007 salary adjustment, the Congressional Budget Office (CBO) estimated that the costs resulting from the new Foreign Service Compensation System then being proposed would "cost about $32 million in 2007, $99 million in 2008, and an average of $141 million a year over the 2009-2011 period, assuming appropriation of the necessary funds." The estimate total, at that time, was $554 million over five years. CBO's cost estimate would be higher for the 110 th Congress to implement a similar program.

At a time when increasing numbers of Foreign Service personnel are going to posts of greater hardship and danger, an 18.5% pay differential that currently exists between service in Washington, DC, and service abroad is impacting morale and assignment considerations. Provisions implementing a new compensation system to address this issue were developed and supported by the George W. Bush administration, the American Foreign Service Association (AFSA), and the bipartisan leadership of both the House Committee on International Relations (HIRC) and the Senate Committee on Foreign Relations (SFRC). These provisions, which were to be part of the Department of State Authorities Act of 2006 (P.L. 109-472; H.R. 6060), were dropped from the final version of the bill because of House Republican Leadership concerns over the five-year cost of implementing the new compensation system. The Bush administration, AFSA, and the leadership of both HIRC and the SFRC were in discussion and negotiations for more than a year before developing the consensus compensation provisions. These provisions, the Foreign Service Compensation Reform proposal, would institute a new worldwide, performance-based system for the Foreign Service that would be tied to Washington, DC, salary rates. The compromise language addressed two outstanding issues--the morale-impacting pay disparity, and the institution of a performance-based pay system that the Administration believed would improve the Service. The Administration, once again, requested enactment of a new worldwide, performance-based, compensation system in its fiscal year 2008 budget request. The concepts behind the agreed upon Foreign Service compensation system have wide support. However, support is not unanimous. Some members of the Foreign Service are concerned about the elimination of automatic pay increases that are inherent to the proposed performance-based system. Others question the Administration's intent with regard to the rights of labor. Further, House Republican Leadership expressed concerns regarding the reaction of some of the more fiscally conservatives Members to the more than $500 million five-year cost that is associated with the full implementation of this new compensation system. This report discusses (1) the background leading to a proposal to change the compensation system from both an Administration and Foreign Service perspective, (2) the current Foreign Service (FS) System as established in the Foreign Service Act of 1980 and why the Foreign Service views its personnel system as already a performance-based system, (3) the 109th Congress agreements on this legislation, (4) major issues that remained to be resolved in arriving at the agreement, (5) continuing concerns, and (6) cost estimates.

This report provides a cumulative history of Department of Energy (DOE) funding for renewable energy compared with funding for the other energy technologies--nuclear energy, fossil energy, energy efficiency, and electric systems. Specifically, it provides a comparison that covers cumulative funding over the past 10 years (FY2009-FY2018), a second comparison that covers the 41-year period since DOE was established at the beginning of FY1978 through FY2018, and a third comparison that covers a 71-year funding history (FY1948-FY2018) for DOE and predecessor agencies. The final amount of FY2017 Energy and Water Development appropriations for DOE energy technologies was established by the Consolidated Appropriations Act, 2017 ( P.L. 115-31 ), which was signed by the President on May 5, 2017. The act contained appropriations for all FY2017 appropriations bills, including Energy and Water Development programs (Division D). Final funding for FY2018 was set by the Consolidated and Further Continuing Appropriations Act, 2018 ( P.L. 115-141 ), which was signed by the President on May 23, 2018. Funding levels for DOE are included in Energy and Water Development programs (Division D). Figure 1 presents the fiscal year funding totals for DOE in real terms (2016 dollars) since 1978 for each technology or energy source. Table 1 shows the cumulative funding totals in real terms (2016 dollars) for the past 10 years (first column), 41 years (second column), and 71 years (third column). Table 2 converts the data from Table 1 into relative shares of spending for each technology or energy source, expressed as a percentage of total spending for each period. Figure 2 displays the data from the first column of Table 2 as a pie chart. That chart shows the relative shares of cumulative DOE spending for each technology or energy source over the 10 years from FY2009 through FY2018. Figure 3 provides a similar chart for the period from FY1978 through FY2018. Figure 4 shows a chart for FY1948 through FY2018. The availability of energy--especially gasoline and other liquid fuels--played a critical role in World War II. Another energy-related factor was the application of research and development (R&D) to the atomic bomb (Manhattan Project) and other military technologies. During the post-World War II era, the federal government began to apply R&D to the peacetime development of energy sources to support economic growth. At that time, the primary R&D focus was on fossil fuels and new forms of energy derived from nuclear fission and nuclear fusion. The Atomic Energy Act of 1946 established the Atomic Energy Commission (AEC), which inherited all of the Manhattan Project's R&D activities and placed nuclear weapon development and nuclear power management under civilian control. A major focus of the AEC was research on "atoms for peace," the use of nuclear energy for civilian electric power production. Prompted by the oil embargo declared by the Organization of Arab Petroleum Exporting Countries in 1973, the Federal Energy Administration was established in mid-1974. In early 1975, the Energy Research and Development Administration (ERDA) was established, incorporating the AEC and several energy programs that had been operating under the Department of the Interior and other federal agencies. The Department of Energy (DOE) was established by law in 1977, incorporating activities of the FEA and ERDA. All of the energy R&D programs--fossil, nuclear, renewable, and energy efficiency--were brought under its administration. DOE also undertook a small program in energy storage and electricity system R&D that supports the four main energy technology programs. From FY1948 through FY1977, the majority of federal government support for energy R&D focused on fossil energy and nuclear power technologies. Total spending on fossil energy technologies over that period amounted to about $17.1 billion, in constant FY2016 dollars. The federal government spent about $51.6 billion (in constant FY2016 dollars) during that period for nuclear energy R&D (in all the tables and figures in this report, the "nuclear" category includes both fission and fusion). The energy crises of the 1970s spurred the federal government to expand its R&D programs to include renewable (wind, solar, biomass, geothermal, hydro) energy and energy efficiency technologies. Comparatively modest efforts to support renewable energy and energy efficiency began during the early 1970s. Since FY1978, DOE has been the main supplier of energy R&D funding compared to other federal agencies. In real (constant dollar) terms, funding support for all four of the main energy technologies skyrocketed during the 1970s to a combined peak in FY1979 at about $8.6 billion (2016 constant dollars). Funding then dropped steadily, to about $2.0 billion (2016 dollars) per year during the late 1990s. Since then, funding has increased gradually--except that the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) provided a one-year spike of $13 billion (2016 dollars) in FY2009. For FY2018, DOE energy R&D funding stood at nearly $4.5 billion (2016 dollars).

Energy-related research and development (R&D)--on coal-based synthetic petroleum and on atomic bombs--played an important role in the successful outcome of World War II. In the postwar era, the federal government conducted R&D on fossil and nuclear energy sources to support peacetime economic growth. The energy crises of the 1970s spurred the government to broaden the focus to include renewable energy and energy efficiency. Over the 41-year period from the Department of Energy's (DOE's) inception at the beginning of FY1978 through FY2018, federal funding for renewable energy R&D amounted to about 18% of the energy R&D total, compared with 6% for electric systems, 16% for energy efficiency, 24% for fossil, and 37% for nuclear. For the 71-year period from 1948 through 2018, nearly 13% went to renewables, compared with nearly 5% for electric systems, 11% for energy efficiency, 24% for fossil, and 48% for nuclear.

The decision in School District of the City of Pontiac v. Secretary of the United States Department of Education arose in response to litigation surrounding SS 9527(a) of the Elementary and Secondary Education Act (ESEA), as amended by the No Child Left Behind (NCLB) Act of 2001. Section 9527(a)--the so-called "unfunded mandates" provision--states, "nothing in this Act shall be construed to authorize an officer or employee of the Federal Government to ... mandate a State or any subdivision thereof to spend any funds or incur any costs not paid for under this Act." Enacted in 2002, the NCLB Act reauthorized and revised the ESEA, which is the primary federal law that provides financial assistance to state and local school districts for pre-collegiate education. Perhaps the most notable feature of NCLB is the wide array of assessment and accountability measures that seek to improve student achievement and performance, particularly in troubled schools. For example, the act mandates that states administer annual tests in reading and mathematics for students in grades 3-8, requires that schools make adequate yearly progress toward improving student performance, establishes a series of required actions for schools that fail to meet such performance standards, and adds new requirements regarding teacher qualifications. The bulk of the new accountability requirements are tied to the Title I, Part A program for disadvantaged students, which is the largest source of federal funding for elementary and secondary education. Arguing that the costs of complying with some of the new accountability measures far outweigh what they receive in federal funds, a number of states and school districts have protested what they perceive as a lack of federal assistance for some of the act's more controversial requirements, such as the testing and school choice provisions. Other critics have questioned whether mandating that states pay for the costs associated with some of the act's requirements is even lawful, given the language of SS 9527(a). Indeed, in 2005, the National Education Association (NEA), in conjunction with eight school districts in Michigan, Texas, and Vermont, filed a lawsuit claiming that the Secretary of Education was violating both the "unfunded mandates" provision and the Spending Clause of the U.S. Constitution. The NEA sought a declaratory judgment to the effect that states and school districts are not required to spend non-NCLB funds to comply with the NCLB mandates, and that a failure to comply with the NCLB mandates for this reason does not provide a basis for withholding any federal funds to which they are otherwise entitled under the NCLB. Plaintiffs also sought an injunction prohibiting the Secretary from withholding from states and school districts any federal funds to which they are entitled under the NCLB because of a failure to comply with the mandates of the NCLB that is attributable to a refusal to spend non-NCLB funds to achieve such compliance. In 2005, the United States District Court for the Eastern District of Michigan dismissed the NEA's lawsuit. In its ruling, the district court concluded that SS 9527(a) should be interpreted as a prohibition against the imposition by federal officers and employees of additional, unfunded requirements beyond those provided for in the statute, rather than as an exemption from the statute's requirements when the federal government fails to fully fund the Title I program. As a result, the court dismissed the lawsuit for failing to state a claim upon which relief can be granted. The plaintiffs appealed the dismissal to the Court of Appeals for the Sixth Circuit, which reversed the district court's decision. However, the case was subsequently reheard, and the en banc Sixth Circuit divided evenly, meaning that the judgment of the district court to dismiss the case was affirmed. In School District of the City of Pontiac v. Secretary of the United States Department of Education , a three-judge panel of the Sixth Circuit, in a 2-1 vote, held that the Spending Clause, which empowers Congress to spend money for the "general Welfare of the United States," requires congressionally enacted statutes to provide "clear notice to the States of their liabilities should they decide to accept federal funding under those statutes" and that the NCLB Act "fails to provide clear notice as to who bears the additional costs of compliance." Because the court found the statute to be ambiguous in this regard, it ruled that the plaintiffs had established a claim upon which relief could be granted and therefore reversed the district court's decision and remanded the case to the district court for further proceedings consistent with the Sixth Circuit's opinion. In reaching its decision, the two-justice majority emphasized its view that the Spending Clause requires "clear notice" of a state's financial obligations. Under the clause, Congress has frequently promoted its policy goals by conditioning the receipt of federal funds on state compliance with certain requirements. Indeed, the Supreme Court "has repeatedly upheld against constitutional challenge the use of this technique to induce governments and private parties to cooperate voluntarily with federal policy." Although the Court has articulated several standards that purport to limit Congress's discretion to place conditions on federal grants under the spending clause, these standards generally have had little limiting effect: First, the conditions, like the spending itself, must advance the general welfare, but the determination of what constitutes the general welfare rests largely if not wholly with Congress. Second, because a grant is 'much in the nature of a contract' offer that the states may accept or reject, Congress must set out the conditions unambiguously, so that the states may make an informed decision. Third, the Court continues to state that the conditions must be related to the federal interest for which the funds are expended, but it has never found a spending condition deficient under this part of the test. Fourth, the power to condition funds may not be used to induce the states to engage in activities that would themselves be unconstitutional. Fifth, the Court has suggested that in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which 'pressure turns into compulsion,' but again the Court has never found a congressional condition to be coercive in this sense. Relying on the standard that spending conditions be set forth "unambiguously," the Sixth Circuit cited two Supreme Court precedents: Pennhurst State School & Hospital v. Halderman and Arlington Central School District Board of Education v. Murphy . The Pennhurst decision involved the Developmentally Disabled Assistance and Bill of Rights Act of 1975, which contained a "bill of rights" provision stating that mentally disabled individuals "have a right to appropriate treatment, services, and habilitation for such disabilities." Unlike other requirements of the act, the bill of rights provision appeared to represent a general statement of federal policy and was not conditioned on the receipt of federal funding. As a result, the Court held that the provision did not create enforceable obligations on the state, in part because Congress had failed to provide clear notice to states that accepting federal funds would require compliance with the bill of rights provision. Meanwhile, the Arlington case involved the Individuals with Disabilities in Education Act, which authorizes a court to award "reasonable attorneys' fees" to plaintiffs who prevail in lawsuits brought under the act. Denying the plaintiffs' request for reimbursement of fees paid to a non-attorney expert, the Court held that the statute did not provide states with clear notice that their acceptance of federal funds obligated them to compensate prevailing parties for such expert fees. Applying these precedents, the Pontiac court sought to determine whether the NCLB Act provided clear notice to the states regarding their funding obligations. According to the court, because the statute "explicitly provides that '[n]othing in this Act shall be construed ... to mandate a State or any subdivision thereof to spend any funds or incur any costs not paid for under this Act,' a state official would not clearly understand that obligation to exist." Although the Sixth Circuit considered alternative interpretations under which the statute could be read to require states to comply with all NCLB requirements regardless of federal funding levels, the court ruled that "the only relevant question here is whether the Act provides clear notice to the States of their obligation." As a result, the court rejected the alternative interpretations advanced in the case, which included (1) the district court's view that the provision prevents officers and employees of the federal government from imposing additional requirements on the states, and (2) the Department of Education's (ED) argument that the provision simply emphasizes that state participation in NCLB is entirely voluntary. Although the Sixth Circuit acknowledged that ED's interpretation of the statute may ultimately be correct, the court held that neither interpretation was sufficiently evident to provide states with clear notice of their obligation to spend additional funds to comply with requirements that are not paid for under the act. As noted above, the Sixth Circuit's Pontiac decision was not unanimous. According to the dissenting judge, SS 9527(a) does not render the NCLB Act ambiguous and therefore does not violate the Spending Clause. Specifically, the dissent distinguished the cases cited as precedents and contended that the text, operation, and structure of the act contradict the majority's interpretation. Asserting that state and local school officials "had a crystal clear vision of what Congress was offering them," the dissent characterized the majority opinion as "contrary to the way our nation's education has been operated and funded for centuries" and concluded that "there is no support in the text or context of the NCLB for the proposition that Congress intended such a monumental and unprecedented change in our nation's education funding." In response to the ruling, ED sought review of the Pontiac decision by petitioning the Sixth Circuit for a rehearing en banc . Typically, federal appeals are heard by a panel consisting of three judges, but the term " en banc ," which translates as "full bench," refers to a situation in which a larger number of circuit judges reconsider a decision made by the three-judge panel. Under the Federal Rules of Appellate Procedure, "[a]n en banc hearing or rehearing is not favored and ordinarily will not be ordered unless: (1) en banc consideration is necessary to secure or maintain uniformity of the court's decisions; or (2) the proceeding involves a question of exceptional importance." Although a court of appeals is not obligated to grant a rehearing, ED's petition for en banc review was successful. In a highly fractured decision, the en banc Sixth Circuit ultimately divided evenly, with eight judges voting to affirm the judgment of the district court and eight judges voting to reverse that judgment. In cases in which an evenly divided vote occurs, the usual practice is to affirm the decision of the lower court. As a result, the en banc Sixth Circuit issued an order affirming the district court's decision to dismiss the case. The en banc Pontiac decision contains four separate opinions, two of which concurred in the order affirming the district court's judgment and two of which would have reversed the district court's judgment. In the first concurring opinion, Judge Jeffrey Sutton contended that the school districts had failed to demonstrate that the NCLB Act was ambiguous because the alternative interpretation of the statute that they offered "is implausible and fails to account for, and effectively eviscerates, numerous components of the Act." Specifically, Judge Sutton argued that the school districts' interpretation was inconsistent with provisions relating to accountability, flexibility, waivers, and other requirements because excusing states from compliance with these features of the act would effectively gut the statute. Moreover, Judge Sutton noted, even if the states and school districts were uncertain about their financial obligations when they first participated in the NCLB programs, by the time they filed the lawsuit, they were clearly on notice that ED would require compliance with all of the statutory requirements in exchange for federal funds. In a separate opinion, Judge David McKeague concurred in affirming dismissal for procedural reasons. In the first opinion that would have reversed the district court's judgment, Judge R. Guy Cole argued that the NCLB Act "simply does not include any specific, unambiguous mandate requiring the expenditure of non-NCLB funds," and, as a result, the statute fails to provide clear notice to the states of their financial obligations. Acknowledging that several other interpretations of the statutory language were plausible, Judge Cole emphasized that the relevant inquiry is whether a recipient's obligations are unambiguous, and Congress failed to provide clear notice on that point. In a separate dissent, Judge Julia Smith Gibbons agreed with Judge Sutton that "NCLB does seem to require states to spend their own funds to comply with the statute's requirements," but also agreed with Judge Cole that "the language of SS [9527(a)] is not clear." Judge Gibbons would therefore have focused the inquiry on whether SS 9527(a) creates so much ambiguity as to cast doubt on the meaning of the rest of the statute and would have remanded the case for further development on this question. Because the school districts do not appear to have appealed to the Supreme Court, the litigation in the Pontiac case has come to an end. The Sixth Circuit's rulings in the Pontiac case have several implications. From a practical perspective, had the original ruling of the three-judge panel not been invalidated by the split vote of the en banc Sixth Circuit, the case might have significantly undermined the operation and effect of the Title I program, as well as other ESEA programs that are subject to the "unfunded mandates" provision in SS 9527(a). Although that prospect did not occur, the fact that the en banc judges were evenly divided on the Spending Clause question could potentially create a degree of uncertainty across the landscape of federal funding programs by encouraging legal challenges not only to other federal education programs but also to federal funding programs operated by other federal agencies. In addition to the practical ramifications, there are several important legal implications of the Pontiac decision. First, the decision is effective only in states that fall within the jurisdiction of the Sixth Circuit. Those states are limited to Kentucky, Michigan, Ohio, and Tennessee. Because school districts and educational agencies in other states are not affected by the decision, they may decide to file similar lawsuits in other circuits. Second, if Congress is concerned that the closely divided vote of the en banc Sixth Circuit could encourage future challenges to NCLB requirements, then Congress may wish to clarify its views statutorily. For example, Congress could choose to amend the NCLB Act to clarify that states that accept NCLB funds are obligated to comply with all of the act's requirements, regardless of whether or not the costs of compliance are fully funded by the federal government.

In 2008, a panel of the Court of Appeals for the Sixth Circuit issued a decision in School District of the City of Pontiac v. Secretary of the United States Department of Education. In its decision, the court held that the No Child Left Behind (NCLB) Act failed to provide the required "clear notice" to states and school districts regarding the requirements they must fulfill as a condition of receiving federal funding. The case was subsequently reheard, but the en banc Sixth Circuit divided evenly, meaning that the judgment of the district court to dismiss the case was affirmed. This report discusses some of the practical and legal implications of the Sixth Circuit decisions.

Under a renewable energy portfolio standard (RPS), retail electricity suppliers (electric utilities) must either provide a minimum amount of electricity from renewable energy resources or purchase tradable credits that represent an equivalent amount of renewable energy production. The minimum requirement is often set as a percentage share of retail electricity sales, which is usually expressed in terms of kilowatt-hours (kwh). Many RPS programs use tradable credits, sometimes referred to as renewable energy certificates, to increase flexibility and reduce the cost of compliance with the purchase mandate, and to facilitate compliance tracking. In the late 1990s, many states began to restructure their electric utility industries to allow for increased competition. Some of the states with this newly "restructured" system established an RPS as a way to create a continuing role for renewable energy in power production. Some states without a restructured industry also began to adopt an RPS. The total number of states with an RPS has grown steadily. In June 2007, the Federal Energy Regulatory Commission (FERC) reported that 23 states and the District of Columbia had an RPS in place, collectively covering about 40% of the national electric load. Mandatory state RPS targets range from a low of 2% to a high of 25%. However, most targets range from 10% to 20% and are scheduled to be reached between 2010 and 2025. Although this emerging "tapestry of state programs" continues to spread to more states, the majority of recent actions have been to increase and accelerate previously established standards. Most states have a similar definition of eligible renewable resources that covers wind, solar, geothermal, biomass, and several forms of water-based power, including hydropower, current, wave, tidal, and ocean power. At least 19 of the 23 states allow some form of credit trading. Non-compliance penalties range from about one cent per kwh to 5.5 cents per kwh. There are significant regional differences in resource availability. As shown in the previously cited FERC map, most states in the Southeast and Midwest regions do not have an RPS requirement. Several states have broadened their RPS provisions to allow certain energy efficiency measures and technologies to help satisfy the requirement. Most state RPS programs employ an annual renewable energy target that is set as a percentage of total projected electricity production. With a percentage requirement, the amount of mandated renewable energy will increase or decrease in proportion to changes in end-use electricity sales. In general, the targets increase gradually, in a step-wise fashion, over a period of several years. The scheduled rise of the annual target, and its peak value, are intended to create predictable long-term purchase obligations that drive new development and economies of scale. The graduated schedule is intended to allow time for competition to emerge among eligible resources. Also, to create stability that allows for long-term contracts and financing that can help keep renewable energy costs down, the peak target often is designed to remain in place for several years after it is reached. Most state targets include only generation from new renewable energy facilities, placed in service after the RPS standard is enacted. Many states have created tradable credits as a way to lower costs and facilitate compliance. Typically, the owner of a qualified renewable energy facility receives one credit for each kilowatt-hour of electricity produced. The credits are treated as a product separate from generated power. Credits are a purely financial product that represents the attributes of electricity generated from renewable energy sources. The owner may bundle the credits for sale with its electrical energy. Alternatively, the owner may sell the credits and power separately. The power would be sold in the electricity market, and the credits would be sold in a secondary credit trading market. Each year, RPS requires all retail suppliers to show that they have acquired a number of credits equivalent to the percentage target for the previous year. The retail suppliers have options for meeting this requirement. Suppliers can choose to build a renewable energy facility, purchase renewable power bundled with credits, or buy credits separately through the trading market. They are also free to choose the types of renewable energy to acquire, the price paid, and the contract terms offered. Further, they can choose whether to enter into long-term credit and/or renewable power purchase contracts or to purchase these commodities on the spot market. If a supplier cannot obtain sufficient credits through these means, it can achieve "alternative compliance" by purchasing additional credits from the state regulatory agency. For a supplier that otherwise fails to meet the credit target, most states require that it purchase additional credits at a higher penalty price. Spreading credit requirements over a longer time period can make a credit trading market more flexible. Many credit trading systems provide a "true-up" (reconciliation) period after the RPS compliance year. During this period, retailers that are short on their obligation can buy additional credits and those with excess credits can sell them. "Credit banking" can reduce retailer risk and promote economies of scale by allowing credits to be carried forward to one or more future years. "Deficit banking" allows a retailer to defer making up a credit shortage to a future year. Legislative proposals to establish a federal RPS date back to the 105 th Congress. During the 107 th , 108 th , and 109 th Congresses, the Senate passed an RPS, but it did not survive conference committee action. Several bills introduced in the 110 th Congress would create an RPS. In Senate floor action on H.R. 6 , S.Amdt. 1537 proposed a 15% RPS. The proposal triggered a lively debate, but was ultimately ruled non-germane. In House action during the 110 th Congress, H.R. 969 was introduced with a proposal for a 20% RPS target. The House Leadership indicates that H.R. 969 may be offered as a floor amendment to H.R. 3221 , the House energy independence legislation. During Senate floor debate on H.R. 6 , S.Amdt. 1537 proposed to add an RPS title to the bill. The proposal would have modified Title VI of the Public Utility Regulatory Policies Act of 1978 to establish an RPS for retail electric utilities that would be administered by the Department of Energy (DOE). For each retail supplier that sells more than four billion kwh per year, the RPS would set a minimum electricity production requirement from renewable resources. The standard would start at 3.75% in 2010, rising to 7.5% in 2013, 11.25% in 2017, and then reaching a peak of 15% in 2020. Resources eligible to meet the RPS would include wind, solar, geothermal, biomass, landfill gas, ocean (including current, wave, tidal, and ocean thermal), and incremental hydropower. Existing generation from hydroelectric and municipal solid waste facilities would not be eligible to meet the percentage standard, but could be excluded from the sales base used to calculate the RPS. To supplement direct generation, retail suppliers would be allowed to purchase power from other organizations, purchase tradable credits from suppliers with a surplus, and purchase credits from the government at an inflation-adjusted rate that would currently stand at 1.9 cents/kwh credit. Power generated on Native American lands would receive a double credit, and onsite distributed generation capacity smaller than one megawatt (mw) used to offset the requirement would receive a triple credit. An excess of tradable credits could be carried forward (banked) for up to two additional years into the future. A credit deficit would lead to a penalty that would be set as the greater of 2.0 cents/kwh or 200% of the average market value of the credits. A credit cost cap (adjusted for inflation) would be set at 2.0 cents/kwh. States would be allowed to have stronger RPS requirements. Funds gathered from alternative compliance and penalty payments would be used for state grants to support renewable energy production, particularly in states that have a low current capacity for renewable energy production. During the House Energy and Commerce Committee's markup of draft energy independence legislation, a proposed amendment would have added H.Amdt. 748 to the legislation, but it was later withdrawn. Similar to S.Amdt. 1537 , H.Amdt. 748 would modify Title VI of the Public Utility Regulatory Policies Act of 1978 to establish an RPS for retail electric utilities that would be administered by DOE. For each retail supplier that sells more than one billion kwh per year, the RPS would set a minimum electricity production requirement from renewable resources. The standard would start at 2.75% in 2010 and then rise annually until reaching a peak of 15% in 2020. Electricity savings from energy efficiency measures would be allowed to compose a maximum of 25% of the standard in any given year, rising to a peak of 4% of the 15% total in 2020. Renewable energy resources eligible to meet the RPS would include wind, solar, geothermal, biomass, landfill gas, ocean, tidal, and incremental hydropower. Existing generation from hydroelectric facilities would not be eligible to meet the percentage standard, but could be excluded from the sales base used to calculate the RPS. To supplement direct generation, retail suppliers would be allowed to purchase power from other organizations, purchase tradable credits from suppliers with a surplus, and purchase credits from the government at an initial rate of 1.9 cents/kwh credit that would be inflation-adjusted. Power generated on Native American lands would receive a double credit, and onsite generation used to offset the requirement would receive a triple credit. An excess of tradable credits could be carried forward (banked) for up to four years, and a deficit of credits could be "borrowed" from anticipated generation up to three years into the future. A credit deficit would lead to a penalty that would be set as the lesser of 4.5 cents/kwh or 300% of the average market value of the credits. A credit cost cap (adjusted for inflation) would be set as the lesser of 3.0 cents/kwh or 200% of the average market value of the credits. The governor of a state may petition DOE to allow up to 25% of a retail supplier's requirement to be met by submitting federal energy efficiency credits associated with eligible ("qualifying") electricity savings. Eligible electricity savings from end-use energy efficiency actions would include customer facility savings, reductions in distribution system losses, output from new combined heat and power systems, and recycled energy savings obtained from commercial and industrial systems. In each case, the electricity savings would have to meet the measurement and verification requirements that would be set out in DOE regulations. States would be allowed to have stronger RPS requirements. DOE would be required to engage the National Academy of Sciences to evaluate the RPS program. As Table 1 shows, S.Amdt. 1537 and H.Amdt. 748 have some similarities but differ in several important aspects. The two proposals have nearly identical conditions for overall target percentage, eligible resources, base amount, multiple credits, and state policy coordination. However, the proposals have notable differences in the exemption criterion, inclusion of 4% energy efficiency in target percentage, sunset date, tradable credit cost cap, and flexibility mechanisms. H.Amdt. 748 includes a program evaluation provision and S.Amdt. 1537 did not. Both proposals have a state grant provision. The grant provision in S.Amdt. 1537 had an additional focus on states with a low renewable energy resource capacity. The grant provision in H.Amdt. 748 allows funding to be used for grants, production incentives, and other state-approved mechanisms for renewable energy and energy efficiency. The following discussion describes some key aspects of the Senate floor debate over S.Amdt. 1537 to H.R. 6 , which proposed a 15% national RPS requirement. In the Senate RPS debate, opponents argued that regional differences in availability, amount, and types of renewable energy resources could make a federal RPS unfair. To support this point, a letter was introduced from the Southeastern Association of Regulatory Utility Commissioners that stated: The reality is that not all States are fortunate enough to have abundant traditional renewable energy resources, such as wind, or have them located close enough to the load to render them cost-effective. This is especially true in the Southeast and large parts of the Midwest.... Our retail electricity customers will end up paying higher electricity prices, with nothing to show for it. Further, a fact sheet prepared by the Edison Electric Institute (EEI) elaborated on the point about the potential impact on electricity prices: A federal RPS requirement could cost electricity consumers billions of dollars in higher electricity prices, but with no guarantee that additional renewable generation will actually be developed. Because many retail electric suppliers will not be able to meet an RPS requirement through their own generation, they will be required to purchase higher cost renewable energy from other suppliers or purchase renewable energy credits. Thus a nationwide RPS mandate will mean a massive wealth transfer from electric consumers in states with little or no renewable resources to the federal government or states where renewables happen to be more abundant. Proponents counterargued that a national system of tradable credits would enable retail suppliers in states with less abundant resources to comply at the least cost by purchasing credits from organizations in states with a surplus of low-cost production. Also, supporters pointed out that S.Amdt. 1537 provided that funds collected from payments for alternative compliance and penalties would be used to provide grants: ... to states in regions which have a disproportionately small share of economically sustainable renewable energy generation capacity.... The proponents also noted that in addition to many environmental and public interest groups, the RPS proposal was supported by some electric and natural gas utility companies as well as several corporations, including BP America and General Electric. Perhaps most importantly, RPS proponents countered by citing a study prepared by the Department of Energy's Energy Information Administration (EIA). The report examined the potential impacts of the 15% RPS proposed in S.Amdt. 1537 . Regarding resource availability, the report found that: Biomass generation, both from dedicated biomass plants and existing coal plants co-firing with biomass fuel, grows the most by 2030, more than tripling from 102 billion kilowatt-hours (kwh) in the reference case to 318 billion kwh with the RPS policy. In a follow-up fact sheet to that study, EIA noted that "the South has significant biomass potential." Compared with other regions of the country, EIA found that the South would not be "unusually reliant on purchases of allowances from other regions or the federal allowance window...." Further, EIA found that the net requirement for the core region of the South defined by the Southern Electric Reliability Corporation (SERC)--after subtracting exemptions for small retailers and adjusting the baseline generation for pre-existing hydropower and municipal solid waste facilities--was "below the national average requirement across all regions." Regarding electricity prices, RPS proponents also cited findings from the EIA study. EIA estimated that, relative to its base case projections for retail electricity prices, the 15% RPS would likely raise retail prices by slightly less than 1% over the 2005 to 2030 period. Further, the report estimated that relative to its base case projections for retail natural gas prices, the RPS would likely cause retail natural gas prices to fall slightly over the 2005 to 2030 period. EIA qualified the report's findings on potential electricity price impacts. It noted that projected impacts of an RPS on expenditures for electricity and natural gas in end-use sectors are sensitive to assumptions about the projected baseline generation fuel mix in its reference case. A higher share of natural gas in the generation mix would allow an RPS to displace proportionally more natural gas. Thus, to the extent that natural gas contributes a larger share of the future generation mix, the 15% RPS would have more economically favorable impacts. To the extent that natural gas contributes a smaller share, the opposite effect would be more likely. Opponents also contended that the proposed 15% RPS could impose indirect costs for transmission. EEI stressed that costly new high-voltage transmission lines would be needed, especially for wind turbines, which are often located far from population centers. EEI further notes that delays are likely and transmission infrastructure issues have posed significant challenges to the growth of renewable generation. Some analysts have suggested that even if plans and financing were in place now to develop the national transmission capacity needed to meet a 15% (or higher) RPS, the construction could not take place quickly enough to meet the 2020 target date. The American Wind Energy Association (AWEA) has acknowledged the transmission issue, pointing to ongoing efforts to address it. For example, the Texas RPS is driving a boom in wind development. To address transmission constraints there, the state recently established "competitive renewable energy zones," and directed the Electric Reliability Council of Texas (ERCOT) to develop transmission plans for up to 25,000 megawatts of new wind capacity. RPS proponents note that transmission may be much less of an issue for biomass power development in the South. For co-firing in existing coal plants, new biomass generation may not require any new transmission infrastructure. Even for new biomass plants, transmission needs may involve shorter distances, smaller volumes, and lower costs than that which may be required for more remote wind farm locations in the Midwest regions. Opponents of RPS brought an alternative measure to the Senate floor that they argued would address their concerns about resource hardship, transmission needs, and electricity price increases. That measure, S.Amdt. 1538 , proposed expanding the RPS concept to include energy efficiency measures and other energy production facilities. The "Clean Portfolio Standard," or CPS, would have started the requirement at 5% in 2010 and increased to 20% by 2020. Eligible resources would have been expanded beyond renewables to include energy efficiency, fuel cells, new nuclear power plants, and new coal power plants that include carbon dioxide capture and storage equipment. RPS proponents argued against the CPS proposal. They asserted that the main purpose of the RPS was to stimulate the market development of new pre-commercial and near-commercial renewable energy equipment. The CPS, they said, would not require any real change in the energy mix, and would mainly add an incentive to expand the use of conventional nuclear energy and fossil energy with carbon capture. In conclusion, RPS proponents contended that the CPS proposal would eliminate any real requirement to produce additional power from renewables. S.Amdt. 1538 was tabled by a vote of 56 to 39. In House floor action on H.R. 3221 , an RPS amendment ( H.Amdt. 748 ) was added by a vote of 220 to 190. The bill subsequently passed the House by a vote of 241 to 172. The RPS amendment would set a 15% target for 2020, and would allow up to 4 percentage points of the requirement to be met with energy efficiency measures. The issues in debate, and the constellation of proponents and opponents, were similar to the elements of the preceding Senate floor debate over S.Amdt. 1537 . The arguments in opposition to H.Amdt. 748 echoed those raised in the Senate RPS floor debate. The National Association of Manufacturers (NAM) and the Edison Electric Institute (EEI) expressed their opposition to RPS. Both NAM and EEI stated that the RPS could create hardship for states and regions with low amounts of renewable resources, impose burdens for electricity transmission and reliability, and raise electricity prices for consumers. Both also stated support for a long-term extension of federal tax credits for renewables, which they contended would be the most effective form of support. On the House floor, RPS opponents decried the absence of support for nuclear power facilities and said the RPS proposals would undermine coal facilities. They contended that it was unfair to exempt electric cooperatives, municipal utilities, and the state of Hawaii. Opponents to RPS argued further that some states with fewer resources would be burdened with additional electricity costs. Opponents also contended that biomass power technologies were not yet ready for commercial use and that certain usable forms of biomass had been left out of the definition of eligible biomass resources. The American Wind Energy Association stated that a national RPS is needed "to fully reap the benefits of renewable energy," and cited broad support for RPS. Also, the Union of Concerned Scientists (UCS) said it used EIA's computer model to examine the potential effects of an RPS and found somewhat larger savings for cumulative electricity and natural gas bills than EIA's study. An EIA report observed that in the early years after its creation in 1992, the federal renewable energy electricity production tax credit (PTC) "had little discernable effect on the wind and biomass industries it was designed to support." In a subsequent report, EIA found that, after the late 1990s, the combined effect of the PTC with state RPS programs had been a major spur to wind energy growth. On the House floor, RPS proponents argued that all states have sufficient renewable energy resources and that the RPS had been recalibrated to include energy efficiency measures to make it even more flexible. Supporters also cited a study by Wood Mackenzie Corporation that showed RPS would lead to a net reduction in natural gas an electricity prices. They contended that cooperatives and municipal utilities had been excluded in order to make the target easier to achieve. On the House floor, RPS opponents also contended that biomass power technologies were not yet ready for commercial use and that certain usable forms of biomass were excluded. Proponents acknowledged that there is a need to expand the definition of biomass resources, and offered to do so in conference committee. In November 2007, the DOE Energy Information Administration (EIA) submitted a report that describes the potential impacts of the 15% RPS provision in H.R. 3221 (Title IX, Subtitle H). The report found that the RPS provision: ... is similar in many respects to RPS proposals that have previously been analyzed by EIA. Our analysis shows that the RPS, taken alone, tends slightly to increase projected electricity prices and costs by 2030, while tending to reduce the use of natural gas for electricity generation and natural gas prices. Cumulative discounted residential energy expenditures through 2030, which are projected to total $2,874 billion in the reference case, are unchanged or fall slightly, with a reduction of approximately $400 million (.01 percent) in one of the two RPS cases modeled. The report examined a case A, which assumed that energy efficiency credits would be claimed to the maximum extent possible and would not result in significant sales reductions. Case B assumed that no claims would be made for energy efficiency credits. The results for both cases showed that RPS "tends to reduce projected natural-gas-fired electricity generation relative to the EIA reference case." EIA found that overall natural gas prices would be lower in the RPS cases and that residential expenditures would be relatively flat, until late in the period, and would grow by 0.4% to 0.8% by 2030. EIA includes a caveat about its findings: ... it should be noted that the RPS proposal was modeled on a standalone basis, so its possible interactions with other policy changes proposed in H.R. 3221 or other bills were not considered. For example, proposals to increase the use of transportation fuels derived from biomass could increase competition for the biomass supplies utilized in this analysis to comply with the RPS targets. After the House completed action on H.R. 3221 , informal bipartisan negotiations over the omnibus energy bills began between the House and Senate. The RPS provision (Title IX, Subtitle H) in the H.R. 3221 continues to be key issue. On December 1, 2007, the Ranking Member of the Senate Committee on Energy and Natural Resources stated that the House Leadership's intent to include an RPS led him to cease negotiations. Further, on December 3, 2007, the White House reportedly announced that it may veto the negotiated bill, if it includes an RPS and certain other provisions. On December 4, 2007, United Press International reported that, in a press conference, DOE Secretary Bodman warned against the inclusion of "a narrow, one-size-fits-all renewable portfolio standard."

Under a renewable energy portfolio standard (RPS), retail electricity suppliers (electric utilities) must provide a minimum amount of electricity from renewable energy resources or purchase tradable credits that represent an equivalent amount of renewable energy production. The minimum requirement is often set as a percentage share of retail electricity sales. More than 20 states have established an RPS, with most targets ranging from 10% to 20% and most target deadlines ranging from 2010 to 2025. Most states have established tradable credits as a way to lower costs and facilitate compliance. State RPS action has provided an experience base for the design of a possible national requirement. RPS proponents contend that a national system of tradable credits would enable retail suppliers in states with fewer resources to comply at the least cost by purchasing credits from organizations in states with a surplus of low-cost production. Opponents counter that regional differences in availability, amount, and types of renewable energy resources would make a federal RPS unfair and costly. In Senate floor action on H.R. 6 in the 110th Congress, S.Amdt. 1537 proposed a 15% RPS target. The proposal triggered a lively debate, but was ultimately ruled non-germane. In that debate, opponents argued that a national RPS would disadvantage certain regions of the country, particularly the Southeastern states. They contended that the South lacks a sufficient amount of renewable energy resources to meet a 15% renewables requirement. They further concluded that an RPS would cause retail electricity prices to rise for many consumers. RPS proponents countered by citing a study by the Energy Information Administration (EIA). The report examined the potential impacts of the 15% RPS proposed in S.Amdt. 1537. It indicated that the South has sufficient biomass generation, both from dedicated biomass plants and existing coal plants co-firing with biomass fuel, to meet a 15% RPS. EIA noted further that the estimated net RPS requirement for the South would not make it "unusually dependent" on other regions and was in fact "below the national average requirement...." Regarding electricity prices, EIA estimated that the 15% RPS would likely raise retail prices by slightly less than 1% over the 2005 to 2030 period. Further, the RPS would likely cause retail natural gas prices to fall slightly over that period. In House floor action on an RPS amendment (H.Amdt. 748) to H.R. 3221, key points and counterpoints of the Senate RPS debate were repeated. The RPS was added (220 to 190), and the bill passed the House (241 to 172). The RPS amendment would set a 15% target for 2020, and would allow up to 4 percentage points of the requirement to be met with energy efficiency measures. After House action, informal bipartisan House-Senate negotiations began. The House RPS provision (SS9006) continues to be key issue. On December 1, 2007, the Ranking Member of the Senate Energy and Natural Resources Committee stated that the House Leadership's intent to include an RPS led him to cease negotiations. Further, the White House has reportedly announced that it would veto the bill if it includes an RPS.

The Fair Labor Standards Act (FLSA), enacted in 1938, is the federal legislation that establishes the general minimum wage that must be paid to all covered workers. A full discussion of the coverage of the minimum wage is beyond the scope of this report, which provides only a broad overview of the topic. In general, th e FLSA mandates broad general minimum wage coverage. It also specifies certain categories of workers who are not covered by FLSA wage standards, such as workers with disabilities or certain youth workers. The act was enacted because its provisions were meant to both protect workers and stimulate the economy. The FLSA also created the Wage and Hour Division (WHD), within the Department of Labor (DOL), to administer and enforce the act. In 1938, the FLSA established a minimum wage of $0.25 per hour. The minimum wage provisions of the FLSA have been amended numerous times since then, typically for the purpose of expanding coverage or raising the wage rate. Since its establishment, the minimum wage rate has been raised 22 separate times. The most recent change was enacted in 2007 ( P.L. 110-28 ), which increased the minimum wage from $5.15 per hour to its current rate of $7.25 per hour in three steps. For employees working in states with a minimum wage different from that of the federal minimum wage, the employee is entitled to the higher wage of the two. The FLSA extends minimum wage coverage to individuals under two types of coverage--"enterprise coverage" and "individual coverage." An individual is covered if they meet the criteria for either category. Around 130 million workers, or 84% of the labor force, are covered by the FLSA. The first category of coverage is at the business or enterprise level. To be covered, an enterprise must have at least two employees and must have annual sales or "business done" of at least $500,000. Annual sales or business done includes all business activities that can be measured in dollars. Thus, for example, retailers are covered by the FLSA if their annual sales are at least $500,000. In non-sales cases, such as enterprises engaged in leasing property, gross amounts paid by tenants for property rental will be considered "business done" for purposes of determining enterprise coverage. In addition, regardless of the dollar volume of business, the FLSA applies to hospitals or other institutions primarily providing medical or nursing care for residents; schools (preschool through institutions of higher education); and federal, state, and local governments. The second category of coverage is at the individual level. Although an enterprise may not be subject to minimum wage requirements if it has less than $500,000 in annual sales or business done, employees of the enterprise may be covered if they are individually engaged in interstate commerce or in the production of goods for interstate commerce. The definition of interstate commerce is fairly broad. To be engaged in "interstate commerce," employees must produce goods (or have indirect input to the production of those goods) that will be shipped out of the state of production, travel to other states for work, make phone calls or send emails to persons in other states, handle records that are involved in interstate transactions, or provide services to buildings (e.g., janitorial work) in which goods are produced for shipment outside of the state. The FLSA covers most, but not all, private and public sector employees. Certain employers and employees are exempt from all or parts of the FLSA minimum wage provisions, either through the individual or enterprise coverage or through specific exemptions included in the act. In addition, the FLSA provides for the payment of subminimum wages (i.e., less than the statutory rate of $7.25 per hour) for certain classes of workers. The FLSA statutorily exempts various workers from FLSA minimum wage coverage. Some of the exemptions are for a class of workers (e.g., executive, administrative, and professional employees), while others are more narrowly targeted to workers performing specific tasks (e.g., workers employed on a casual basis to provide babysitting services). The list below is not exhaustive but is intended to provide examples of workers who are not covered by the minimum wage requirements of the FLSA: bona fide executive, administrative, and professional employees; individuals employed by certain establishments operating only part of the year (e.g., seasonal amusement parks, organized summer camps); individuals who are elected to state or local government offices and members of their staffs, policymaking appointees of elected officeholders of state or local governments, and employees of legislative bodies of state or local governments; employees who are immediate family members of an employer engaged in agriculture; individuals who volunteer their services to a private, nonprofit food bank and who receive groceries from the food bank; agricultural workers meeting certain hours and job duties requirements; individuals employed in the publication of small circulation newspapers; domestic service workers employed on a casual basis to provide babysitting; individuals employed to deliver newspapers; and certain employees in computer-related occupations. The FLSA also allows the payment of subminimum wages for certain classes of workers, including the following: Youth. Employers may pay a minimum wage of $4.25 per hour to individuals under the age of 20 for the first 90 days of employment. Learners. Employers may apply for special certificates from the Wage and Hour Division of DOL that allow them to pay students who are receiving instruction in an accredited school and are employed part-time as part of a vocational training program a wage at least 75% of the federal minimum wage ($5.44 at the current minimum wage). Full-Time Students. Employers may apply for special certificates from the Wage and Hour Division of DOL that allow them to pay full-time students who are employed in retail or service establishments, an agricultural occupation, or an institution of higher education a wage at least 85% of the federal minimum wage ($6.16 at the current minimum wage). Individuals with Disabilities. Employers may apply for special certificates from the Wage and Hour Division of DOL that allow them to pay wages lower than the otherwise applicable federal minimum to persons "whose earning or productive capacity is impaired by age, physical or mental deficiency, or injury." As elaborated in regulations, disabilities that may affect productive capacity include, but are not limited to, blindness, mental illness, mental retardation, cerebral palsy, alcoholism, and drug addiction. There is no statutory minimum wage required under this provision of the FLSA, but pay is to be broadly commensurate with pay to comparable non-disabled workers and related to the individual's productivity. Tipped Workers. Under Section 203(m) of the FLSA, a "tipped employee"--a worker who "customarily and regularly receives more than $30 a month in tips"--may have his or her cash wage from an employer reduced to $2.13 per hour, as long as the combination of tips and cash wage from the employer equals the federal minimum wage. An employer may count against his or her liability for the required payment of the full federal minimum wage the amount an employee earns in tips. The value of tips that an employer may count against their payment of the full minimum wage is known as the "tip credit." Under the current federal minimum wage and the current required minimum employer cash wage, the maximum tip credit is $5.12 per hour (i.e., $7.25 minus $2.13). Thus, all workers covered under the tip credit provision of the FLSA are guaranteed the federal minimum wage. The most recent data available (2016) indicate that there are approximately 2.2 million workers, or 2.7% of all hourly paid workers, whose wages are at or below the federal minimum wage of $7.25 per hour. Of these 2.2 million workers, approximately 700,000 earn the federal minimum wage of $7.25 per hour, and the other 1.5 million earn below the federal minimum wage. As the Bureau of Labor Statistics (BLS) notes, the large number of individuals earning less than the statutory minimum wage does not necessarily indicate violations of the FLSA but may reflect exemptions or misreporting. The "typical" minimum wage earner tends to be female, age 20 or older, part-time, and working in a food service occupation. The data in Table 1 below show selected characteristics of the workers earning at or below the federal minimum wage. The data are based on the universe of the estimated 2.2 million workers who earn $7.25 per hour or less. States may also choose to set labor standards that are different from federal statutes. The FLSA establishes that if states enact minimum wage, overtime, or child labor laws more protective of employees than those provided in the FLSA, the state law applies. In the case of minimum wages, this means that if an individual is covered by the FLSA in a state with a higher state minimum wage, the individual is entitled to receive the higher state minimum wage. On the other hand, some states have set minimum wages lower than the FLSA minimum. In those cases, an FLSA-covered worker would receive the FLSA minimum wage and not the lower state minimum wage. As of January 1, 2017, 29 states and the District of Columbia have minimum wage rates above the federal rate of $7.25 per hour. These rates range from $7.50 per hour in New Mexico to $11.00 in Massachusetts and Washington State and $12.50 in Washington, DC. Two states have minimum wage rates below the federal rate and five have no minimum wage requirement. The remaining 14 states have minimum wage rates equal to the federal rate. In the states with no minimum wage requirements or wages lower than the federal minimum wage, only individuals who are not covered by the FLSA are subject to those lower rates. The literature on the effects of the minimum wage is vast and represents one of the more well-studied issues in labor economics. As such, this topic has resulted in hundreds of academic and non-academic publications. It is beyond the scope of this section to summarize or synthesize this literature. Broadly speaking, there is not universal consensus on the causal relationship between changes in minimum wage and other economic outcomes. This section presents a brief summary of the primary arguments that proponents and opponents make regarding minimum wage increases. Proponents of an increase in the minimum wage often assert that raising wages can be a component in reducing poverty for individuals and families and a direct way to increase earnings for lower-income workers. Assuming the minimum wage earner does not suffer a loss of employment, hours, or other wage supplements as a result of the increase, then an increased minimum wage should close the gap between earnings and the poverty line. For example, a single parent with two children who works full-time, year-round at the current minimum wage has earnings of about 78% of the poverty line. An increase in the minimum wage to $9 per hour would raise that family's earnings to about 97% of the poverty line and an increase to $12 per hour would increase family earnings to 129% of the poverty line. Proponents of minimum wage increases also argue that additional income for individuals will result in increased aggregate demand in the economy. Adult minimum wage households have a higher marginal propensity to spend additional income than higher-income households. Therefore, to the extent that minimum wage increases raise the income of adult minimum wage households, a minimum wage increase could have a stimulative effect on the economy. Proponents of an increase in the minimum wage argue that it could help reduce earnings inequality by setting a higher floor at the lower end of the wage scale. At the level of an individual business, wage compression might occur if the minimum wage increases at the low end of the pay scale were offset by freezes or reductions in pay at higher levels of pay. That is, the spread between the lowest earners and the highest earners at a business might narrow if the business adjusted to higher pay for minimum wage earners by keeping flat or reducing pay for higher earners. Economy-wide, the size of the gap between low-wage earners and middle and high earners might decrease depending on how widely wage compression was used as a channel of adjustment to minimum wage increases. A higher wage may lead workers to choose to stay in their jobs longer than they otherwise would have under a lower wage. Because high turnover is costly to businesses, proponents of minimum wage increases argue that an increase in the minimum wage may be offset by lower turnover costs. Much of the popular discussion about the effects of a minimum wage increase focuses only on one channel of adjustment--employment. In particular, opponents of a minimum wage or of minimum wage increases assert that increases in the minimum wage will result in increased unemployment, either broadly or for particular subpopulations of the labor market (e.g., youth, less skilled or experienced workers), or a reduction in hours worked. In a standard competitive model of the labor market, the introduction of or increase in the minimum wage (a price increase) results in employment losses (demand decrease). Because the minimum wage is not targeted to workers in low-income households, it is possible that the minimum wage does not reduce poverty to the extent a targeted policy might (e.g., tax credit). The minimum wage is a relatively blunt anti-poverty policy as it may raise wages for people not in poverty such as suburban teenagers who live in a middle- or high-income household. Another way minimum wage increases might be absorbed is through changes in prices. Specifically, employers facing a higher mandated minimum wage might choose, if possible, to pass on the extra costs of labor to the consumers through higher prices. If minimum wage increases result in an increase in the aggregate price level, then the inflationary effects would erode some of the purchasing power of both those receiving raises and everyone else in the economy. A decrease in profits could be another means of adjustment to an increase in the minimum wage. The ability of any given business to lower profits to pay for mandated increases depends on the profit margins of that firm.

The Fair Labor Standards Act (FLSA), enacted in 1938, is the federal legislation that establishes the minimum hourly wage that must be paid to all covered workers. The minimum wage provisions of the FLSA have been amended numerous times since 1938, typically for the purpose of expanding coverage or raising the wage rate. Since its establishment, the minimum wage rate has been raised 22 separate times. The most recent change was enacted in 2007 (P.L. 110-28), which increased the minimum wage to its current level of $7.25 per hour. In addition to setting the federal minimum wage rate, the FLSA provides for several exemptions and subminimum wage categories for certain classes of workers and types of work. Even with these exemptions, the FLSA minimum wage provisions still cover the vast majority of the workforce. Despite this broad coverage, however, the minimum wage directly affects a relatively small portion of the workforce. Currently, there are approximately 2.2 million workers, or 2.7% of all hourly paid workers, whose wages are at or below the federal minimum wage of $7.25 per hour. Most minimum wage workers are female, are age 20 or older, work part time, and are in food service occupations. Proponents of increasing the federal minimum wage argue that it may increase earnings for lower income workers, lead to reduced turnover, and increase aggregate demand by providing greater purchasing power for workers receiving a pay increase. Opponents of increasing the federal minimum wage argue that it may result in reduced employment or reduced hours, lead to a general price increase, and reduce profits of firms paying a higher minimum wage.

I n the wake of the 2016 election, concerns have been raised with respect to the legal regime governing foreign influence in domestic politics. The central law concerning the activities of the agents of foreign entities acting in the United States is the Foreign Agents Registration Act (FARA or the Act). FARA generally requires "agents of foreign principals" undertaking certain activities on behalf of foreign interests to register with the U.S. Department of Justice (DOJ); to file copies of informational materials that they distribute for a foreign principal; and to maintain records of their activities. The Act contains several exemptions to these registration, disclosure, and recordkeeping requirements. Although FARA has not been litigated extensively, courts have recognized a compelling governmental interest in requiring agents of foreign principals to register and disclose foreign influence in the domestic political process, resulting in a number of constitutional challenges being rejected over the decades since FARA's initial enactment. This report examines the nature and scope of the current regulatory scheme, including the scope of FARA's application to agents of foreign principals; what the statute requires of those covered under the Act; exemptions available under the statute; and methods of enforcement. The report concludes by discussing various legislative proposals to amend FARA in the 115th Congress. Enacted originally in 1938 to promote transparency with respect to foreign propaganda, FARA has evolved in its breadth and application over the course of subsequent decades. Consistently throughout its history, however, the statute has not prohibited representation of foreign interests (or other related activities) or limited distribution of foreign propaganda. Instead, the Act provides only for public disclosure of any such activities. FARA's legislative history indicates that Congress believed such disclosure would best combat foreign influence by informing the American public of the actions taken and information distributed on behalf of foreign sources. Thus, FARA addresses the concerns of foreign influence by " bring[ing] the activities of persons engaged in disseminating foreign political propaganda in this country out into the open ... mak[ing] known to the Government and the American people the identity of any person who is engaged in such activities, the source of the propaganda and who is bearing the expense of its dissemination in the United States." The impetus for FARA was the global political dynamics of the 1930s. Specifically, in 1935, the House of Representatives convened a special committee tasked with investigating the existence and effects of Nazi and other propaganda efforts in the United States and the use of "subversive propaganda" distributed by foreign countries. At that time, Congress perceived a need to oversee efforts to influence the American government by foreign sources in light of threats that had been posed to governments elsewhere in the world due to the political and economic unrest during the interwar era. In particular, legislators highlighted concerns about the unfettered distribution of Nazi and communist propaganda in the United States by foreign entities. Congress has since amended the statute, shifting its focus toward the promotion of transparency of an agent's lobbying activities on behalf of its foreign client. As a report issued by the Senate Committee on Foreign Relations explained when considering amendments to the Act in 1965: The original target of foreign agent legislation--the subversive agent and propagandist of pre-World War II days--has been covered by subsequent legislation, notably the Smith Act. The place of the old foreign agent has been taken by the lawyer-lobbyist and public relations counsel whose object is not to subvert or overthrow the U.S. Government, but to influence its policies to the [satisfaction] of his particular client. In the 1990s, Congress again amended FARA as part of a broader effort to reform lobbying disclosure laws known as the Lobbying Disclosure Act (LDA). The amendments generally limited FARA's registration requirements to agents of foreign governments and foreign political parties and allowed agents of other foreign entities to register under the LDA's disclosure requirements. Because FARA prohibits a "person" from acting as an "agent of a foreign principal" without first registering with DOJ, and because FARA's disclosure and recordkeeping requirements are imposed on those "persons" required to register under the Act, the central issue when considering the application of FARA to foreign lobbying is whether a person qualifies as an agent of a foreign principal for purposes of the statute. FARA expressly defines the term person for purposes of the statute to include individuals, partnerships, associations, corporations, organizations, or any other combination of individuals. Identifying whether such individuals or entities are agents of foreign principals involves two determinations: whether that person is acting as an agent and whether the agent is acting for a foreign principal . FARA generally defines the term agent to mean "any person who acts as an agent, representative, employee, servant, or any person who acts in any other capacity at the order, request, or under the direction or control" of a foreign principal. DOJ regulations have not provided further clarification on the scope of the agency requirement under FARA, resulting in some confusion about the requirements by the few courts that have interpreted what agency requires under the Act. Case law interpreting FARA suggests that the agent-foreign principal relationship identified by the statute does not appear to require that the parties expressly enter into a contract establishing the relationship. Additionally, it appears that financial support from a foreign principal standing alone is insufficient to establish a relationship subject to FARA. Courts, however, have disagreed on the precise standard by which an agent-foreign principal relationship is established. In 1945, the U.S. Court of Appeals for the Third Circuit (Third Circuit) applied a common law standard to determine agency, holding that agency should be based on whether the intended agent and the foreign principal consent to a relationship in which the agent will act on the foreign principal's behalf and subject to its control. In 1981, however, the U.S. Court of Appeals for the Second Circuit (Second Circuit), without referencing the Third Circuit's decision, rejected the common law standard for determining agency under FARA. The Second Circuit instead favored a standard that contemplated the nature of the agency relationship intended for regulation under FARA, explaining that "[i]n determining agency for purposes of [FARA, the] concern is not whether the agent can impose liability upon his principal but whether the relationship warrants registration by the agent to carry out the informative purposes of the Act." The Second Circuit cautioned against broadly construing the agency relationship to include instances in which a person merely acts at the "request" of a foreign principal, explaining that "[s]uch an interpretation would sweep within the statute's scope many forms of conduct that Congress did not intend to regulate." Rather, according to the Second Circuit, agency depends upon whether a specific person has been asked to take a specific action on behalf of a foreign principal. To illustrate, the Second Circuit offered two examples. First, with regard to whether a specific person was requested to act, if a foreign government requested donations to aid victims of a natural disaster, members of a large group who respond with contributions or support do not become agents of the foreign government for the purposes of FARA. On the other hand, if a particular individual or limited group of individuals were solicited, the surrounding circumstances might indicate the possibility that FARA would require registration. Second, with regard to whether a specific action was requested, the court explained that if the government issued a "general plea for political or financial support," such a request would be less likely to require registration than "a more specific instruction." FARA requires registration even if the individual or entity is not yet acting as an agent but "agrees, consents, assumes or purports to act as [ ... ] or holds himself out to be [ ... ] an agent." However, the Act does not require that agents be compensated for their action on the foreign principal's behalf, meaning that the registration requirement applies to both paid and volunteer agents. Furthermore, unlike other lobbying disclosure statutes, FARA does not include any threshold requirements and, thus, requires any individual or entity acting as an agent of a foreign principal to register regardless of whether the time or expenses involved are de minimis. For example, the federal statute regulating disclosure of advocacy activities for domestic interests does include threshold requirements, generally requiring lobbyists to disclose their activities only if they are compensated for their services; make more than one lobbying contact; and spend at least 20% of their time over a three-month period lobbying. Embedded within the Act's definition of the term "agent," agents of foreign principals are subject to FARA if they engage in any of the enumerated actions under FARA within the United States. Specifically, an agent must comport with the Act if he or she takes the following actions in the United States on behalf of the foreign principal: engages in political activities; acts as public relations counsel, publicity agent, information-service employee, or political consultant; solicits, collects, or disburses things of value (i.e., contributions, loans, money); or represents the foreign principal's interest before federal agencies or officials. As noted in Table 1 below, Congress expressly defined many of the terms used to establish the broad scope of activities for which agents must register. Relevant to the definition of "political activities," DOJ regulations indicate that "formulating, adopting, or changing" policy also includes "any activity which seeks to maintain any existing domestic or foreign policy of the United States." Furthermore, DOJ has explained that routine inquiries of government officials are not "political activities" and therefore are outside the scope of FARA if the agent's inquiries relate to matters in which existing domestic or foreign policy is not in question. Because FARA requires registration by agents who act on behalf of any individual or entity "any of whose activities are directly or indirectly supervised, directed, controlled, financed, or subsidized in whole or in major part by a foreign principal," a significant question that arises in relation to the scope of FARA's application involves what entities qualify as foreign principals. The statutory definition of foreign principal includes: governments of foreign countries; foreign political parties; individuals outside of the United States who are not U.S. citizens domiciled in the United States; and entities organized under the laws of a foreign country or having their principal place of business in a foreign country. Regulation of the influence of foreign principals within the United States, therefore, is not limited only to foreign states or foreign state actors. Rather, any individual or entity acting as an agent for a foreign private entity may also be subject to FARA, unless that agent is covered by an applicable exemption. In its current form, FARA includes three key provisions that generally apply to agents of foreign principals: registration requirements, disclosure requirements, and recordkeeping requirements. The primary mechanism of FARA's regulatory scheme is its requirement that agents of foreign principals register with the U.S. government. FARA's registration requirement requires agents of foreign principals to file a registration statement with DOJ within 10 days of becoming such an agent. The registration statement must include information about: the agent and the agent's business; the agreement to represent the foreign principal; and income and expenditures related to the activities performed. Specifically, the registration statement must include inter alia: names, contact information, and nationality of the agent; "comprehensive" descriptions of the nature of the agent's business, including a list of employees and every foreign principal for whom the agent acts; copies of agreements regarding the terms and conditions of the agent's representation of the foreign principal and detailed statements of any activity undertaken or agreed to that would require registration; nature and amounts of any income received by the agent in the preceding 60 days from each foreign principal, whether received as compensation or for disbursement; and detailed statements of expenditures during the preceding 60 days made in connection with activities requiring registration or in connection with elections for political office. Following initial registration, agents of foreign principals covered by FARA must submit supplemental information updating the original filing at six-month intervals. Such information must be filed generally within 30 days of the six-month period, except changes to information under some categories must be filed within 10 days after such changes occur. According to several reports, agents of foreign principals as a matter of practice have registered under the Act retroactively in some cases. Any agent of a foreign principal who is required to register and who distributes "informational materials" on behalf of a foreign principal must also file copies of those materials with DOJ within 48 hours of beginning the process of distribution. This disclosure requirement applies to any such materials that are distributed through interstate or foreign commerce and that take a form that would reasonably be expected to be distributed to two or more persons. In addition to disclosing the existence of such materials to DOJ, the agent must also include "a conspicuous statement that the materials are distributed by the agent on behalf of the foreign principal" when the materials are transmitted in the United States. Relatedly, FARA also requires agents representing foreign principals who transmit political propaganda or solicit information related to political interests from U.S. agencies or officials to include with such transmittals or solicitations "a true and accurate statement" identifying the person as an agent of a foreign principal. FARA also requires agents of a foreign principal who are required to register to maintain records with respect to their activities and make any such records available for government inspection to ensure compliance. Agents must maintain such records for three years after terminating their representation of their foreign principal, and the records must be available for inspection at any reasonable time. Concealment or destruction of any records required to be kept under the act constitutes an express violation of FARA. Certain categories of individuals or entities that would otherwise be recognized as agents of foreign principals under FARA are not subject to the statute under a series of exemptions adopted by Congress since FARA's enactment. N ews organizations . By definition, FARA excludes from regulation as an agent of a foreign principal "any news or press service or association organized" under domestic laws or any publication that is distributed for "bona fide news or journalistic activities." To qualify for this exemption, the ownership stake of U.S. citizens in the news organization must be at least 80% and its officers and directors must be U.S. citizens as well. Furthermore, the organization or publication cannot be "owned, directed, supervised, controlled, subsidized, or financed, and none of its policies are determined by any foreign principal [as defined under FARA]." Otherwise, the news organization in question must register under and otherwise comply with FARA. Officials of f oreign g overnments , diplomatic or consular officers, and members of diplomatic and consular staff . FARA includes several exemptions for officials, diplomatic officers, and certain staff of foreign governments if those individuals are acting exclusively within their official capacities. Officials of foreign governments may be exempt if the foreign government is one that is recognized by the United States. To qualify for this exemption, the official cannot be acting as a public-relations counsel, publicity agent, information-service employee, or be a U.S. citizen. Diplomatic and consular officers of a foreign government may be exempt if he or she is "duly accredited" and the U.S. State Department has recognized the individual as such an officer. Additionally, members of diplomatic and consular officers' staff may be exempt if they are not serving as public-relations counsel, publicity agents, or information-service employees. Agents engaged in p rivate and nonpolitical activities , including commerce, charitable solicitations, and religious, scholastic or scientific pursuit . Individuals and entities may be exempt from registration requirements if the activities in which they engage are either (1) private and nonpolitical activities that further bona fide commercial interests of a foreign principal; (2) other activities that do not predominantly serve a foreign interest; or (3) solicitations of contributions that are used only for certain charitable purposes such as food, clothing, and medical aid. Additionally, agents of foreign principals who engage only in activities to further bona fide interests in religion, academia, science, or the fine arts are not subject to the registration requirement. The scope of these exemptions is unclear and has not been further defined in administrative guidance. For example, some commentators have argued that there is "considerable uncertainty regarding the reach and boundaries of [the] commercial exemption." Agents representing foreign countries with defense interests vital to the defense of the United States . Agents who represent governments of foreign countries deemed to be vital to the defense of the United States are exempt from the registration requirement during the time that the individual or entity engages in activities that serve the joint interests of the countries and do not conflict with U.S. policies. This exemption requires that communications disseminated by such agents relate to such activities and that the agent believes the information contained within those communications is truthful and accurate. It is unclear whether any entity has relied on this exemption. Practicing attorneys acting in the course of legal representation . Individuals or entities that are qualified to practice law are exempt from the registration requirements in the course of their legal representation of a foreign principal before a court of law or a federal agency. FARA, however, expressly states that this exemption does not extend to any such lawyer's "attempts to influence or persuade agency personnel or officials other than in the course of judicial proceedings, criminal or civil law enforcement inquiries, investigations, or proceedings, or agency proceedings required by statute or regulation to be conducted on the record." At least one court has examined the potential tension between (1) FARA's disclosure requirement with respect to information about the relationship between an attorney and a foreign client and (2) the attorney-client privilege, which is an evidentiary privilege that generally prevents the disclosure of communications between an attorney and client involving legal advice. In that case, the court, while recognizing that FARA's exemption for practicing attorneys "does not include all communications that have been traditionally protected by an attorney-client privilege," highlighted that the scope of the legal representation exemption would likely protect confidential communications related to the representation at issue in that case. Agents o therwise r egistered under the Lobbying Disclosure Act . FARA currently includes an exemption that permits agents of certain foreign principals who register under the Lobbying Disclosure Act of 1995 (LDA) --a disclosure statute designed to regulate the influence of domestic lobbyists--to not have to register under FARA. The LDA established certain criteria and thresholds for determining when a lobbyist must register its activities, and its registration requirements are not as broad in scope as the requirements under FARA. To qualify for this exemption, agents of foreign principals first must represent foreign principals other than foreign governments and foreign political parties. Second, those agents must have engaged in lobbying activities for purposes of the LDA and registered under that statute. Any person who willfully violates FARA--including failure to register as an agent of a foreign principal, making false statements of material fact, or omitting material facts or documents--may be subject to civil and criminal penalties upon conviction. Violations may result in fines of up to $10,000 or imprisonment for no more than five years, depending on the violation. Additionally, the Attorney General may seek injunctive relief to enjoin actions in violation of the Act. Destruction or concealment of an agent's records during the time period for which such recordkeeping is required is unlawful under the statute. Enforcement actions may be undertaken only at the discretion of the Attorney General, because the statute does not confer a private right of action for enforcement by private parties. In 2016, the Office of the Inspector General at DOJ issued a report on DOJ's enforcement of FARA, finding that the agency lacked a comprehensive strategy for enforcement. Among the criticisms highlighted in that report were the lack of enforcement actions brought by DOJ as well as issues of vagueness in the terms and breadth of the statute. The report highlighted what DOJ characterized as a sharp decline in registrations under the Act beginning in the mid-1990s. Some Members of Congress have introduced legislation to amend FARA following the Inspector General's report and other allegations that potential misconduct by foreign agents is not currently policed under the statute. Amendments proposed in the 115th Congress have addressed a range of issues, including: Future Representation of Foreign Principals by Political Appointees. H.R. 484 would prospectively bar any individual who has served as a political appointee from serving as an agent of a foreign principal. In other words, any individual whose political appointment terminates after the bill would be enacted would be subject to a lifetime ban on representing foreign principals in the United States. Breadth of the Disclosure Requirement . S. 1679 would expand the applicability of FARA's disclosure requirement by requiring agents to file copies of materials transmitted to "any other person." Furthermore, S. 1679 would require agents to provide additional information when filing any distributed materials with DOJ, including the name of each original recipient and the original date of distribution. Separately, H.R. 2811 / S. 625 generally would apply the disclosure requirement to electronic transmittals (e.g., email and social media) and align the filing deadlines of the disclosure requirement with those of the registration requirement. Repeal of the Exemption for Agents Registering Under the LDA . H.R. 4170 / S. 2039 would repeal the exemption that currently allows agents of foreign principals in the private sector to register under the LDA instead of under FARA. Repeal of the exemption for agents representing foreign principals in the private sector would require all activities covered under FARA to be subject to the standards of that Act, regardless of whether the foreign principal is a government, political party, or individual or entity in the private sector. For agents of foreign principals whose activities may require registration under FARA and the LDA, H.R. 4170 / S. 2039 would also align all filing deadlines after the initial registration for FARA to coincide with the deadlines of the LDA. Provision of Civil Investigative Demand Authority . Both the Foreign Agents Registration Modernization and Enforcement Act (FARMEA; H.R. 2811 / S. 625 ) and the Disclosing Foreign Influence Act (DFIA; H.R. 4170 / S. 2039 ) would authorize the Attorney General to compel individuals or entities to produce documents relevant to a FARA investigation before initiating civil or criminal enforcement proceedings. Such authority would augment DOJ's authority to investigate potential violations of agents of foreign principals who may be required to register under FARA. Availability of Civil Fines . S. 1679 would authorize the Attorney General to enforce FARA violations by means of civil fines based on the number of offenses, as well as providing the Attorney General discretion to consider the severity and frequency of the violations. Reporting Requirements. H.R. 2811 / S. 625 would expand the categories of information that DOJ must submit in its semiannual reports to Congress. FARA currently requires DOJ's reports to identify FARA registrations and the nature, sources, and content of materials distributed by agents of foreign principals. Under H.R. 2811 / S. 625 , DOJ would also report the number of investigations of potential violations involving officers and directors of any entity serving as an agent of a foreign principal and the number of those investigations that were referred to the Attorney General for prosecution. Oversight of FARA Enforcement and Administration . H.R. 4170 / S. 2039 would require the Attorney General to "develop and implement a comprehensive strategy to improve the enforcement and administration of [FARA]," which would be subject to review by the Inspector General of DOJ and Congress. Additionally, it would require the Comptroller General to analyze the effectiveness of enforcement and administration of FARA within three years of enactment of the legislation.

In the wake of the 2016 election, concerns have been raised with respect to the legal regime governing foreign influence in domestic politics. The central law concerning the activities of the agents of foreign entities acting in the United States is the Foreign Agents Registration Act (FARA or Act). Enacted in 1938 to promote transparency with respect to foreign influence in the political process, FARA generally requires "agents of foreign principals" undertaking certain activities on behalf of foreign interests to register with and file regular reports with the U.S. Department of Justice (DOJ). FARA also requires agents of foreign principals to file copies of informational materials that they distribute for a foreign principal and to maintain records of their activities on behalf of their principal. The Act contains several exemptions, including exemptions for news organizations, foreign officials, and agents who register under domestic lobbying disclosure laws. Failure to comply with FARA may subject agents to criminal and civil penalties. Although FARA has not been litigated extensively, courts have recognized a compelling governmental interest in requiring agents of foreign principals to register and disclose foreign influence in the domestic political process, resulting in a number of constitutional challenges being rejected over the decades since FARA's initial enactment. In 2016, the Office of the Inspector General at DOJ issued a report on DOJ's enforcement of FARA, finding that the department lacked a comprehensive strategy for enforcement. Among the criticisms highlighted in that report were the lack of enforcement actions brought by DOJ, as well as issues of vagueness in the terms and breadth of the statute. Some Members of Congress have introduced legislation to amend FARA following the Inspector General's report and other allegations that potential misconduct by foreign agents is not currently policed under the statute. For example, the Disclosing Foreign Influence Act (H.R. 4170; S. 2039) would repeal the FARA exemption that allows foreign agents to file under domestic lobbying regulations in lieu of the Act; would provide DOJ with authority to make civil investigative demands to investigate potential FARA violations; and would require DOJ to develop a comprehensive enforcement strategy for FARA, with review of its effects by the agency's Inspector General and the Government Accountability Office. The bills' sponsors have explained that the bills are intended to address "ambiguous requirements for those lobbying on behalf of foreign governments," which "has, over the years, led to a sharp drop in the number of registrations and the prospect of widespread abuses." This report examines the nature and scope of the current regulatory scheme, including the scope of FARA's application to agents of foreign principals; what the statute requires of those covered under the Act; exemptions available under the statute; and methods of enforcement. The report concludes by discussing various legislative proposals to amend FARA in the 115th Congress.

Under U.S. immigration law, foreign nationals are legally admitted into the United States as immigrants to live permanently or as nonimmigrants to stay on a temporary basis. The terms "immigrant" and "nonimmigrant" are not used in the Internal Revenue Code (IRC). Instead, a foreign national, whether in the United States as an immigrant, nonimmigrant or unauthorized (illegal) alien, is classified as a resident or nonresident alien for federal tax purposes. For federal tax purposes, alien individuals are classified as resident or nonresident aliens. The classification has important consequences for determining whether income is subject to U.S. taxation, what is the appropriate tax rate, and whether an individual is covered by a tax treaty. In general, an individual is a nonresident alien unless he or she meets the qualifications under either residency test: 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, 1/3 of the qualifying days in the immediate preceding year, and 1/6 of the qualifying days in the second preceding year. 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 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 that may be treated as nonresident aliens even if they 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, aliens in transit through the United States, and athletes participating in charitable sporting events. A residency definition in an income tax treaty will override these residency rules. If an individual is defined as a resident of a foreign country under a treaty, then he or she is a nonresident alien for purposes of determining his or her U.S. tax liability regardless of whether the "green card" or "substantial presence" test is met. The Internal Revenue Code (IRC) does not have a special classification for individuals who are in the United States without authorization (commonly referred to as "illegal aliens"). Instead, the Code treats these individuals in the same manner as other foreign nationals--they are subject to federal taxes and classified for tax purposes as either resident or nonresident aliens. An unauthorized individual who has been in the United States long enough to qualify under the "substantial presence" test is classified as a resident alien; otherwise, the individual is classified as a nonresident alien. This classification is for tax purposes only and does not affect the individual's immigration status. While most taxpayers file tax returns using their Social Security number (SSN) as an identifier, individuals who are ineligible to receive an SSN file their returns using an individual taxpayer identification number (ITIN). Thus, unauthorized aliens who file tax returns will generally use an ITIN. One consequence of this is that they will be ineligible to claim the earned income tax credit (EITC) since the IRC requires that taxpayers claiming the EITC provide SSNs for themselves, their spouses (if filing a joint return), and their qualifying children. A similar rule applied to the temporary refundable tax credit ("recovery rebate") provided under the Economic Stimulus Act of 2008. Furthermore, in the 112 th Congress, legislation has been introduced that would impose, with some differences, an SSN requirement for claiming the additional child tax credit, any part of the child tax credit, or any credit or refund (e.g., H.R. 1196 ). Two of these bills-- H.R. 3630 and H.R. 5652 --have been passed by the House; however, H.R. 3630 was enacted into law ( P.L. 112-96 ) without the SSN provision. The mechanism of using an SSN requirement for restricting the eligibility of unauthorized aliens to claim tax credits may be imprecise. There remains the possibility that attempts to claim a credit could be made by resident aliens who legally received SSNs but are currently not legally present in the United States, in addition to unauthorized aliens using fraudulent SSNs. At the same time, the SSN requirement may deny the credits to families that do not include any unauthorized aliens but have at least one member without an SSN. For example, after it came to light that overseas military members with foreign spouses would be ineligible for the 2008 recovery rebate, Congress exempted military members from the SSN requirement. Resident aliens are generally subject to the same federal income tax laws as citizens of the United States. Like U.S. citizens, resident aliens are subject to tax on all income earned in the United States and abroad. Resident aliens file a tax return using the Form 1040 series, may claim deductions and credits, and are taxed at the same graduated rates as U.S. citizens. They are also subject to income tax withholding. Nonresident aliens are taxed on income from sources within the United States but generally not on income from foreign sources. Sections 861, 862, 863, 864, and 865 of the Internal Revenue Code define income that is from sources within and outside the United States. Compensation for services performed in the United States is U.S. source income. A nonresident alien's U.S. source income is taxed at different rates depending on whether it is "effectively connected" with a trade or business in the United States. An individual must generally be engaged in a trade or business in the United States to have "effectively connected" income. The term generally includes compensation for the performance of personal services in the United States. Nonresident aliens with F-, J-, M-, or Q-visas are considered to be engaged in a trade or business in the United States. Income that is effectively connected with a trade or business in the United States is generally taxed by the same rules and at the same graduated rates as the income of U.S. citizens and resident aliens. In general, income that is not effectively connected may not be reduced by deductions and is subject to tax at a flat rate of 30%. Nonresident aliens file a return using the Form 1040NR series and are subject to the same collection procedures as U.S. citizens and resident aliens. Furthermore, they are generally subject to withholding on personal service compensation and non-effectively connected income. There are limited circumstances in which a nonresident alien's U.S. source income is not subject to U.S. taxation. For example, some interest income that is not connected with a U.S. trade or business (e.g., portfolio interest) is exempt from U.S. tax. Another example is that compensation for services performed in the United States is not subject to U.S. tax if the services are for a foreign employer or office, the alien is in the United States for not more than 90 days during the tax year, and the compensation does not exceed $3000. A nonresident alien with an F-, J-, or Q-visa is not taxed on compensation received from a foreign employer. Employees of foreign governments and international organizations and crew members of foreign vessels and aircraft may qualify to exempt their compensation from tax. Additionally, income may be exempt from U.S. tax under a treaty (see below). Aliens leaving the United States usually must obtain a certificate of compliance ("sailing permit") from the IRS that shows he or she "has complied with all the obligations imposed upon him by the income tax laws." The IRS may subject aliens who attempt to leave without one to examination at the point of departure and require payment of any taxes whose collection would be jeopardized by the departure. Tax treaties provide benefits to nonresident aliens and, in certain situations, resident aliens. Benefits vary by treaty. Typical provisions include the reduction of the 30% flat rate applied to non-effectively connected U.S. source income and the exemption of gain from the sale of personal property. Treaties often exempt personal service compensation from taxation if a nonresident alien is in the United States for less than a stated period of time (e.g., 90, 180, or 183 days) or the compensation is less than a specified amount (generally between $3,000 and $10,000) and paid by a foreign employer. Treaty provisions may also exempt the compensation of specific groups of employees (e.g., students, teachers, athletes, and employees of foreign governments). The United States has income tax treaties with Armenia, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Bulgaria, Canada, China, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Malta, Mexico, Moldova, Morocco, the Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, Trinidad, Tunisia, Turkey, Turkmenistan, Ukraine, the United Kingdom, Uzbekistan, and Venezuela. Resident aliens are subject to Social Security and Medicare taxes on wages (FICA taxes) and on self-employment income (SECA taxes) in the same manner as U.S. citizens. In general, nonresident aliens are subject to FICA taxes on compensation from work within the United States under the rules applicable to U.S. citizens and resident aliens, but are not subject to SECA taxes. A list of exempted services in IRC SS3121(b) is generally applicable to all who work in the United States. Examples include services performed by foreign workers temporarily admitted to the United States to perform agricultural labor and services performed by employees of foreign governments and qualifying international organizations. Also exempted are services performed by individuals with F-, J-, M-, or Q-visas that meet the purpose of admittance and services performed in Guam by H-2 visa holders who are residents of the Philippines. The United States has entered into totalization agreements with numerous countries that have social security programs. The intent of these agreements is to provide individuals who work in two countries with the opportunity to qualify for social security benefits in one country and to avoid double coverage and taxation. With respect to the issue of double coverage and taxation, agreements generally provide that individuals are only covered by the social security program (and therefore only subject to the program's taxes) in the country where they are working, although individuals who are covered in their home country and temporarily assigned by their employer to work in the other country are exempt from coverage in that country. A self-employed individual generally is covered and pays social security taxes in the country where he or she resides. The United States has entered into totalization agreements with Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, South Korea, Sweden, Switzerland, and the United Kingdom. In 2004, the United States signed an agreement with Mexico, which has been controversial. It has not yet been transmitted to Congress. The Consolidated Appropriations Act, 2012 prohibits the Social Security Commissioner or Social Security Administration (SSA) from using any of the funds appropriated by the act to pay compensation to SSA employees to administer Social Security benefit payments under any U.S.-Mexico totalization agreement that would not otherwise be payable. Other legislation has been introduced, the Loophole Elimination and Verification Enforcement Act (or LEAVE Act), that would state it is the sense of the House that the U.S.-Mexico totalization agreement "is inappropriate public policy and should not take effect." Another bill introduced in the 112 th Congress would address a constitutional issue with the existing totalization agreement process. Under current law, once an agreement is transmitted to Congress, it becomes effective at the end of the period during which at least one house has been in session 60 days, unless either house adopts a resolution of disapproval. This is a legislative veto, and the Supreme Court held such vetoes to be unconstitutional. The Social Security Totalization Agreement Reform Act of 2011 (or STAR Act) would, among other things, address the legislative veto problem by implementing a new approval process.

A question that often arises is whether unauthorized aliens and other foreign nationals working in the United States are subject to U.S. taxes. The federal tax consequences for these individuals are dependent on (a) whether an individual is classified as a resident or nonresident alien and (b) whether a tax treaty or totalization agreement exists between the United States and the individual's home country. In general, an individual is a resident alien if he or she is a lawful permanent U.S. resident or is in the United States for a substantial period of time during the current and past two years (the "substantial presence" test). Otherwise, he or she will typically be classified as a nonresident alien. Resident aliens are generally taxed in the same manner as U.S. citizens. Nonresident aliens are subject to different treatment, such as generally being taxed only on income from U.S. sources. Exceptions exist for aliens with specific types of visas or employment. An individual who is in the country unlawfully is, like any other alien, classified as either a resident or nonresident alien. This classification is for tax purposes only, and it does not affect the individual's immigration status. These individuals' eligibility to claim the earned income tax credit is restricted because the tax code requires that taxpayers claiming the credit provide their Social Security number (SSN), as well as those of their spouse and dependents. Unauthorized aliens are ineligible for SSNs, and therefore file their tax returns using an individual taxpayer identification number (ITIN). In the 112th Congress, legislation has been introduced that would, with some differences, impose an SSN requirement for claiming the additional child tax credit (e.g., H.R. 3630, H.R. 5652, H.R. 3275, and H.R. 1956), for claiming any part of the child tax credit (H.R. 3444 and S. 577), or for claiming any credit or refund (e.g., H.R. 1196). Two of these bills--H.R. 3630 and H.R. 5652--have been passed by the House; however, H.R. 3630 was enacted into law (P.L. 112-96) without the provision. Finally, the provisions of an income tax treaty or totalization agreement may reduce or eliminate taxes owed to the United States. An income tax treaty is a bilateral agreement between the United States and another country that addresses the income tax treatment of each country's residents while in the other country, primarily with the intent of reducing the incidence of double taxation. Totalization agreements are bilateral treaties that address social security taxes. In 2004, the United States signed a totalization agreement with Mexico, but it has not yet been transmitted to Congress for review. In the 112th Congress, the Consolidated Appropriations Act, 2012 prohibits the Social Security Commissioner or Social Security Administration (SSA) from using any of the funds appropriated by the act to pay compensation to SSA employees to administer Social Security benefit payments under any U.S.-Mexico totalization agreement that would not otherwise be payable. Other legislation has been introduced that would state it is the sense of the House that the U.S.-Mexico totalization agreement "is inappropriate public policy and should not take effect" (H.R. 1196), or address a constitutional issue with the manner in which totalization agreements are disapproved by Congress (S. 181).

U.S. greenhouse gas (GHG) emission levels remain a topic of interest among policy makers and stakeholders. On June 25, 2013, President Obama affirmed his commitment to reduce U.S. GHG emissions by 17% below 2005 levels by 2020 if all other major economies agreed to limit their emissions as well. In addition, during a November 2014 trip to China, President Obama and President Xi of China made a bilateral announcement concerning GHG emissions. President Obama announced a new policy target to reduce U.S. net GHG emissions by 26%-28% by 2025. President Xi agreed to "peak" Chinese carbon dioxide (CO 2 ) emissions around 2030, perhaps earlier, and to increase the non-fossil share of China's energy to around 20% by 2030 compared to 2005 levels. A question for policy makers is whether U.S. GHG emissions will remain at current levels, decrease to meet the President's 2020 and 2025 goals, or increase to former (or even higher) levels. Multiple factors, including socioeconomics, technology, and climate policies, may impact GHG emission levels. The human-related GHG emission and related data in this report are from publicly available sources, particularly reports and tables produced regularly by the Environmental Protection Agency (EPA) and the Energy Information Administration (EIA). This first section of this report provides current levels and recent trends in U.S. GHG emissions. The second section takes a closer look at some of the key factors that influence emission levels. The third section discusses the challenges in making GHG emission projections by comparing observed emissions with preobserved emission estimates. As Figure 1 illustrates, U.S. GHG emissions increased during most of the years between 1990 and 2007, and then decreased substantially in 2008 and 2009. Although emissions increased in 2010, levels decreased again in 2011 and 2012, eventually reaching levels comparable to those in 1995. In terms of the President's 2020 emissions target (17% below 2005 levels), U.S. GHG emissions in 2012--the most recent year with available GHG emission data--were approximately 10% below 2005 levels. GHG emissions are generated throughout the United States by millions of discrete sources: smokestacks, vehicle exhaust pipes, households, commercial buildings, livestock, etc. Figure 2 illustrates the breakdown of U.S. GHG emissions by gas and type of source. The figure indicates that CO 2 from the combustion of fossil fuels--petroleum, coal, and natural gas--accounted for 78% of total U.S. GHG emissions in 2012. The next section examines CO 2 emissions from fossil fuel combustion. In the context of GHG emission reduction programs and legislative proposals, CO 2 emissions from the combustion of fossil fuels have received the most attention. CO 2 emissions are fairly easy to verify from large stationary sources, like power plants. For almost 20 years, measurement devices have been installed in smokestacks of large facilities, reporting electronic information to EPA and the appropriate state. For smaller sources, CO 2 emissions are a relatively straightforward and accurate calculation based on the carbon content of fossil fuels consumed. In addition, according to EPA, "changes in emissions from fossil fuel combustion have been the dominant factor affecting U.S. emission trends." Figure 3 illustrates the CO 2 emission contributions by sector from the combustion of fossil fuels. The largest contribution (40%) is from electricity generation. The generated electricity is distributed almost equally to the residential, industrial, and commercial sectors. Multiple variables impact U.S. GHG emission levels. One approach often taken in climate change analysis is to examine several broad energy-related factors that influence GHG emission levels, including population, income--measured here as per capita gross domestic product (GDP), energy intensity--measured here as energy use per gross domestic product, and carbon intensity--measured here as CO 2 emissions per energy use. As illustrated in the equation below, GHG emission levels can be approximated by multiplying together these four factors. Although decreases in population and/or per capita income would contribute to lowering U.S. GHG emissions, policies that would seek to directly limit these emissions drivers are essentially outside the bounds of U.S. public policy. Thus the most relevant factors in terms of climate change policy are energy intensity and carbon intensity, which are discussed below. Energy intensity is the amount of energy consumed--often measured in metric tons of oil equivalent (toe) or British thermal units (Btus)--per a level of economic output such as GDP. Figure 4 illustrates the U.S. total energy consumption and GDP between 1990 and 2013. The figure indicates that energy use increased from 1990 to 2000 at an annual average rate of 1.6%, and then remained relatively constant (excepting some annual fluctuations) through 2013. In contrast, U.S. GDP (in 2009$) has increased at an average annual rate of approximately 2.5% from 1990 through 2013. Thus, U.S. energy intensity declined between 1990 and 2013. Figure 5 compares the energy intensities of the United States, the European Union (28 nations), and China between 1990 and 2011. As the figure illustrates, U.S. energy intensity has been declining by about 2% each year for two decades: the U.S. energy intensity in 2011 was 31% lower than it was in 1990. However, the energy intensity in the United States was 42% higher in 2011 than in the European Union. The degree to which the U.S. economy is composed of industries with relatively high energy intensities likely plays a role in determining the energy intensity of United States. Figure 6 indicates that the percentage contribution to the U.S. GDP from selected energy-intensive industries decreased from 4.2% in 1998 to 3.2% in 2011. Figure 6 includes 44 industries in the six-digit North American Industry Classification System (NAICS). These industries have an energy intensity of at least 5%, measured by dividing energy expenditures by the value of an industry's shipments. In this report, carbon intensity measures the amount of CO 2 emissions generated during energy use, which includes fuel combustion for electricity generation and transportation purposes. Energy sources (e.g., coal, natural gas, petroleum, nuclear, and renewables) vary dramatically in the amount of carbon released per unit of energy supplied. As indicated in Table 1 , coal generates approximately 80% more CO 2 emissions per unit of energy than natural gas, and approximately 28% more emissions per unit of energy than crude oil. Moreover, other energy sources, such as nuclear or specific renewable sources, do not directly generate any CO 2 emissions. Figure 7 illustrates the U.S. carbon content of energy use--CO 2 emissions per Btu--between 1990 and 2013. This includes energy used (i.e., consumed) in the electricity, industrial, transportation, commercial, and residential sectors. The figure indicates that this measure remained relatively constant from 1990 to 2005, when it began to decline. By 2013, the carbon content of energy use was approximately 8% lower than it was in 2005. This decline is largely related to the recent change in the portfolio of fuels consumed for energy purposes. Figure 8 compares the consumption percentage of different energy sources in the United States. The figure indicates that the trajectories of coal and natural gas have diverged in recent years. Since 2008, coal's percentage contribution has decreased from 23% to 19%. In contrast, natural gas's percentage contribution has increased from 24% to 27% during that time frame. In addition, renewable energy's share of total energy consumption has increased substantially over the past decade. The recent changes in energy consumption are partially explained by changes in the energy sources used to generate electricity, because the electric power sector accounts for approximately 40% of total energy use. As an illustration of recent changes in the electricity sector, Figure 9 compares electricity generation by energy source between 2004 and 2013. The figure indicates a substantial decrease in coal use with a simultaneous increase in natural gas. Moreover, the percentage share of renewable sources increased from 2% to 6%, and petroleum decreased from 3% to less than 1%. Accurately forecasting future GHG emission levels is a complex and challenging, if not impossible, endeavor. Consequently, analysts often provide a range of emissions based on different scenarios or assumptions. As discussed above, several broad energy-related factors influence emission levels. In addition, other variables have impacts in ways that cannot be accurately predicted. Such variables may include technological developments, energy price fluctuations, availability of less carbon-intensive energy sources (e.g., hydroelectric, other renewables, and nuclear power), seasonal weather and temperature patterns, and policy changes in the United States and abroad. EIA provides annual forecasts of CO 2 emissions in its Annual Energy Outlook (AEO) publications. Regarding its various estimates, EIA states the following: The projections in the AEO are not statements of what will happen but of what might happen, given assumptions and methodologies. The AEO Reference case projection assumes trends that are consistent with historical and current market behavior, technological and demographic changes, and current laws and regulations. The potential impacts of pending or proposed legislation, regulations, and standards are not reflected in the Reference case projections. Figure 10 compares actual CO 2 emissions between 1990 and 2012 with selected EIA emission projections made in past years. In general, actual emissions have remained well below projections, particularly the projections made in 2008 or earlier. For example, the AEO from 2000 projected CO 2 emissions would be almost 6.7 billion metric tons in 2012, about 20% higher than has been observed. By comparison, the more recent projections (AEO 2012 and 2014) indicate that CO 2 emissions will remain relatively flat over the next decade.

On June 25, 2013, President Obama affirmed his commitment to reduce U.S. greenhouse gas (GHG) emissions by 17% below 2005 levels by 2020 if all other major economies agreed to limit their emissions as well. In addition, during a November 2014 trip to China, President Obama announced a new policy target to reduce U.S. net GHG emissions by 26%-28% by 2025. Whether these objectives will be met is uncertain, but emission levels and recent trends remain a topic of interest among policy makers. U.S. GHG emissions increased during most of the years between 1990 and 2007, and then decreased substantially in 2008 and 2009. Although emissions increased in 2010, levels decreased again in 2011 and 2012, eventually reaching levels comparable to those from 1995. In terms of the President's 2020 emissions target, in 2012, U.S. GHG emissions were approximately 10% below 2005 levels--more than halfway toward the 2020 target. In the United States, GHG emissions are generated by millions of discrete sources, including smokestacks, vehicle exhaust pipes, commercial buildings, and households. However, carbon dioxide (CO2) emissions from the combustion of fossil fuels--petroleum, coal, and natural gas--have received the most attention because they account for the vast majority of human-related GHG emissions: 78% of total U.S. GHG emissions in 2012. In addition, (1) CO2 emissions from large stationary sources are easy to measure and have been tracked for almost 20 years, and (2) CO2 emissions from smaller sources can be estimated through relatively straightforward calculations. In 2012, the percentage contributions of CO2 emissions by sector were as follows: 40% from electricity, 35% from transportation, 15% from industrial, 6% from commercial, and 4% from residential. Although multiple factors have some level of influence on U.S. GHG emission levels, it may be instructive to examine several broad energy-related factors including population, income, energy intensity (energy use per economic output such as gross domestic product, or GDP) and carbon intensity (CO2 emissions per unit of energy use). Although decreases in population and/or income would contribute to reducing U.S. GHG emissions, policies that would seek to directly limit these emissions drivers are essentially outside the bounds of U.S. public policy. Therefore, this report focuses on the impacts of energy intensity and carbon intensity on GHG emission levels. As energy use has grown at a slower rate than the economy, U.S. energy intensity declined by about 2% each year for more than two decades. Between 1990 and 2013, U.S. GDP (in 2009$) increased at an average annual rate of approximately 2.5%. Energy use, in contrast, increased from 1990 to 2000 at an annual average rate of 1.6%, but then remained relatively constant (excepting some annual fluctuations) through 2013. The U.S. carbon content of energy use remained relatively constant from 1990 to 2005, but by 2013, it was approximately 8% lower than in 2005. In this report, carbon intensity measures the amount of CO2 emissions generated per unit of energy used. Energy sources--coal, natural gas, petroleum, nuclear, renewables--vary dramatically in the amount of carbon released per unit of energy supplied. For example, coal combustion accounts for almost twice the carbon content per unit of energy than natural gas, and some energy sources, when consumed, do not directly generate any emissions. This recent decrease in the carbon content of energy use is partially explained by changes in the energy sources used to generate electricity, because the electric power sector accounts for approximately 40% of total energy use. For example, between 2004 and 2013, the percentage of electricity from coal generation decreased from 50% to 39%, while the percentage of electricity generated using natural gas increased from 18% to 28%. In addition, renewable energy use increased by 100%, and the use of petroleum to generate electricity decreased by approximately 100%.

Poland has had an eventful political evolution in recent years. Since 2001, five prime ministers have held office. Although the last government, led by the Democratic Left Alliance (SLD), steered the nation into the EU and nurtured a strong, export-based economy, its reputation was seriously damaged by a series of high-profile scandals. In Poland's last parliamentary elections, held in September 2005, voters registered their disappointment and the SLD suffered defeat--maintaining Poland's post-1989 track record of turning out the ruling party. Although polls during the campaign suggested that the centrist, pro-market Civic Platform (PO) would take the most votes, the nationalist conservative Law and Justice party (PiS) wound up winning a plurality seats in the lower house of parliament, the Sejm . During the campaign, PiS emphasized family values and social justice and pledged to assert Poland's interests internationally. PiS portrayed itself as the agent for change that would bring about a new era in Poland, and spoke of creating a "Fourth Republic." True to its name, Law and Justice has placed priority on improving the judicial system and aggressively rooting out corruption. Although conservative in outlook on most social issues, PiS favors social spending and distrusts privatization--and especially foreign ownership--of certain "strategic" state assets. PiS was founded in 2001 by identical twin brothers, Jaroslaw and Lech Kaczynski. Former Warsaw mayor Lech became the successful PiS presidential candidate, defeating PO's Donald Tusk in an October 2005 runoff vote. The victory surprised many, as Tusk had held a strong lead in the polls. The two men had served together in the Solidarity party in the 1990s, but their brands of conservatism differed--a reflection of their parties' orientations. Kaczynski, for example, espoused economic nationalism and active government intervention, while Tusk believed that further market-based reforms would ensure prosperity. Analysts attribute the election results to voter approval of Kaczynski's strong anti-corruption policies; his support came mainly from older and less affluent Poles in rural areas, while Tusk appealed to younger and urban voters. Jaroslaw initially declared that he would not serve as prime minster; analysts argue that he did so before the presidential elections in the hopes of helping Lech by defusing potential voter unease over having two siblings run the country. The premiership went instead to Kazimierz Marcinkiewicz. In mid-July 2006, however, Marcinkiewicz, the country's most-trusted office-holder, stepped down; some observers believe that the Kaczynskis, concerned over Marcinkiewicz' growing popularity and independence, may have engineered his departure. In addition, Marcinkiewicz was said to be frustrated that he had not been consulted over recent cabinet changes. After Lech named his twin brother to replace Marcinkiewicz, an opinion poll showed that only 21% of the public approved the appointment of Jaroslaw, whom many viewed as "divisive." After the elections, PiS and PO were expected to form a coalition, but talks soon collapsed. PiS initially decided to rule from a minority position, with informal support from two smaller parties--the rural-based Self Defense (SO) party led by populist Andrzej Lepper, and the League of Polish Families (LPR), an ultra-conservative party aligned with the Catholic church. In April 2006 the three parties entered into a formal coalition with a majority in parliament. The formation of the coalition has had both domestic and continental repercussions: Poland's Foreign Minister tendered his resignation in protest, and in June, the European Parliament stated that the leaders of LPR "incite people to hatred and violence." In September 2006, amid budget disagreements, SO left the coalition, but rejoined the government a few weeks later. Over the following months, additional high level government officials either resigned or were sacked, and the Kaczynskis reportedly consolidated their power by appointing loyalists to those posts. On July 9, 2007, Lepper was dismissed from his cabinet posts on corruption charges, but SO remained in the coalition for the time being. Out of concern that they would either lose seats or be unable to muster enough votes to pass the 5% minimum threshold necessary to stay in parliament, SO and LPR merged to form the League and Self Defense Party (LiS). The new party then proposed conditions for remaining in the coalition. On July 30, PiS rejected those terms. Observers believe the dispute will be resolved after August 22, when parliament reconvenes after recess. Early elections are possible. Poland's economy is among the most successful transition economies in east central Europe; all of the post-1989 governments have generally supported free-market reforms. Today the private sector accounts for over two-thirds of economic activity. In recent years, Poland has enjoyed rapid economic development; GDP grew by 3.4% in 2005 and 5.3% in 2006, and is predicted to rise by 6.3% in 2007. Unemployment, though still high at 12.4% in July 2007, is at its lowest level in several years. To keep a lid on the federal budget deficit, PiS has been struggling with its coalition partners, who have sought additional funding for social programs. In the area of monetary policy, some analysts are concerned over PiS's apparent willingness to reduce the independence of the country's central bank. Leszek Balcerowicz, the respected former governor of the bank, criticized the desire of some in government to push for a reduction in interest rates; under his leadership, the bank geared its policies toward meeting the criteria for joining the euro, whereas PiS and its allies reportedly wished to stimulate demand and growth through rate cuts. Unlike several new EU members, the Polish government has not yet set a firm target date for adopting the euro; Prime Minister Kaczynski stated that "it is very risky and that is why I think we can only consider it when the economy has significantly strengthened." Warsaw reportedly asked Brussels for additional time to bring down its deficit so that it may continue to receive EU assistance and eventually be able to qualify for euro adoption. In January 2007, Balcerowicz' term expired, and parliament approved Slawomir Skrzypek, a Kaczynski ally with little experience in monetary policy, as the new central banker. In July 2007, he announced the creation of an office to study the costs and benefits of joining the eurozone; in the meantime, Mr. Skrzypek said, the central bank would remain neutral on the issue. Despite its center-right label, PiS has been characterized as having a somewhat statist approach toward governance, particularly in its economic policies. For example, it espouses that "national champions" in certain sectors be identified and nurtured. In addition, some have speculated that PiS may seek to overturn earlier, SLD-approved reforms that sought to introduce greater flexibility in the labor code. Also, PiS reportedly would like to introduce vertical integration of the parts of the energy sector that are still owned by the state. To reduce dependence upon Russia, which supplies a large part of Poland's gas and oil, the government has instituted talks with Norway over laying a pipeline and constructing LNG (liquefied natural gas) terminals on the Baltic coast. In addition, Poland and the Baltic states are exploring a joint nuclear power project. Over the past two years, Poland has contributed a significant number of troops to the U.S.-led operation in Iraq. Observers note that the deployment is providing the Polish military with invaluable experience, not the least of which includes commanding a multinational division. However, Poland's presence in Iraq remains unpopular at home. The government has said that Poland will maintain its 900 troops there until the end of 2007. Poland also has sharply stepped up the size of its contingent of soldiers in Afghanistan, to 1,000. In addition, Warsaw contributed 260 troops to the U.N. peacekeeping mission in Lebanon. Poland has been a member of the European Union (EU) since May 2004 and has already experienced economic benefits from membership, particularly in the agricultural sector. Nevertheless, the Polish government was not reluctant to assert itself in a number of issue areas before joining the EU, and has been even less hesitant to do so now that it is a member. The new Polish government has sometimes been skeptical of the EU. It favors the eventual widening (to include Ukraine and Belarus) but not necessarily the deepening of the Union. At an EU meeting in Berlin in early 2006, Poland declined to support a plan to craft an energy agreement with Russia, which in January 2005 had temporarily halted gas deliveries to Ukraine and disrupted deliveries to Europe. Poland proposed instead the creation of an energy security treaty among EU and NATO countries, which would not include Russia, but would acknowledge that Russia would remain a major supplier. Some European analysts argued that Russia should be excluded, as it supplies such a large part of Europe's energy. However, citing past instances of energy cutoffs, Poland contended that Russia is unreliable. In November 2006, frustrated over Russia's energy policies and its year-long Russian ban on Polish agricultural products, Warsaw vetoed talks over the renewal of an EU-Russia partnership agreement. In 2007, attention focused on Poland's efforts to influence the EU voting system, which was under revision as part of a new treaty for the Union. Warsaw maintained that the proposed formula was skewed toward the largest countries, and proposed instead that voting strength be based upon the square root of each country's population; only the Czech Republic supported Poland's solution, which the Kaczynskis claimed was "worth dying for." During the negotiations, Prime Minister Kaczynski also argued that Poland's population would have been 66 million rather than the current 38 million had it not been for Germany's World War II invasion and occupation. A compromise--a delay of the introduction of the new formula--was reached eventually. Warsaw later stated that it would seek to revisit the voting issue during Portugal's EU presidency, but then backed away from that demand. Poland's behavior during the negotiations came in for strong criticism. According to the Financial Times , Jean-Claude Junker, Prime Minister of Luxembourg, "said Poland's stance at last week's summit was 'very near to having been unacceptable.'" Under the new government Poland's relations with Germany and Russia have been strained at times. Many Polish officials were incensed over the Russo-German agreement to construct a natural gas pipeline through the Baltic Sea, rather than overland, through the Baltics and Poland. During the 2005 presidential campaign, Lech Kaczynski said that, if elected, he would maintain a "firm but friendly" relationship with Russia. He also reminded Poles of the devastation wrought by Germany during World War II, but denied that raising this issue was an attempt to influence the election outcome. In June 2006, the German newspaper Tageszeitung ran a satire on the Kaczynski brothers. The Polish government demanded that the German government take action against the newspaper and apologize for the article, but Berlin, citing freedom of the press, responded that intervention would be illegal and an apology inappropriate. The article is believed to have prompted Lech to cancel his attendance of a summit meeting with France and Germany. Poland and the United States have historically close relations. Since 9/11, Warsaw has been a reliable supporter and ally in the global war on terrorism and, as noted earlier, has contributed troops to the U.S.-led coalitions in Afghanistan and in Iraq. Poland also has cooperated with the United States on "such issues as democratization, nuclear proliferation, human rights, regional cooperation ... and UN reform." During Prime Minister Jaroslaw Kaczynski's September 2006 visit to Washington, D.C., Secretary of State Condoleezza Rice described the two countries as "the best of friends." Early in 2007, after years of informal discussions, the Bush Administration began formal negotiations with Poland and the Czech Republic over a proposal to establish missile defense facilities on their territory to protect against missiles from countries such as Iran and North Korea; the plan would entail placing tracking radar in the Czech Republic and interceptor launchers in Poland. If agreements are struck, and if the Polish and Czech parliaments approve the projects, construction on the sites would likely begin in 2008, with initial deployments expected in 2011. Some Poles believe their country should receive additional security guarantees in exchange for assuming a larger risk of being targeted by rogue state missiles because of the presence of the U.S. launchers on their soil. In addition, many Poles are concerned about Russia's response. The Polish government reportedly has been requesting that the United States provide batteries of Patriot missiles to shield Poland against short- and medium-range missiles. Polls show the Polish public is opposed to such a base. Nevertheless, during a July 2007 meeting in Washington, D.C. with President Bush, President Lech Kaczynski reportedly indicated continued support for the program, and also emphasized the need to bolster Poland's security. In September 2006, President Bush publicly acknowledged the existence of a secret CIA program to detain international terror suspects worldwide. Earlier media reports alleged that Poland and Romania were among the countries that had hosted secret CIA prisons, although officials of both governments have denied these allegations. A European Parliament probe conducted throughout 2006 cited no clear proof of prison sites in Europe, but could not rule out the possibility that Romania had hosted detention operations by U.S. secret services. However, in June 2007 a Council of Europe report claimed to have evidence that U.S. detention facilities had been based in the two countries. President Kaczynski has stated that, since he assumed office, "there has been no secret prison--I am 100 percent sure of it," and that he had been "assured there were never any in the past either." Some Poles have argued that, despite the human casualties and financial costs their country has borne in Iraq and Afghanistan, their loyalty to the United States has gone largely unrewarded. Many have hoped that the Bush Administration would respond favorably by providing increased military assistance and particularly by changing its visa policy, which currently requires Poles to pay a $100 non-refundable fee, and then submit to an interview at a U.S. embassy or consulate--requirements that are waived for most western European countries.

Poland held presidential and parliamentary elections in the fall of 2005. After several months, a ruling coalition consisting of three populist-nationalist parties was formed; the presidency and prime minister's post are held by Lech and Jaroslaw Kaczynski, identical twin brothers who have increasingly consolidated their power. Their government's nationalist policies have caused controversy domestically, in both the political and economic arenas, and in foreign relations as well. Relations with some neighboring states and the European Union have been strained at times, but ties with the United States have not undergone significant change. Some observers believe that a recent dispute within the coalition may spark early elections. This report may be updated as events warrant. See also CRS Report RL32967, Poland: Foreign Policy Trends, and CRS Report RL32966, Poland: Background and Current Issues, both by [author name scrubbed].

Willie Davis was a passenger in a car stopped by police in Greenville, Alabama, for a traffic violation. The police arrested Davis for giving a false name. After handcuffing him and placing him in the back of a patrol car, the police searched the passenger compartment of the car in which Davis had been riding. The police found a gun inside Davis's jacket, and Davis was convicted of possessing a firearm as a convicted felon. At the time of the search, the police were acting in conformity with Eleventh Circuit precedent. The Eleventh Circuit had adopted the widely accepted interpretation of the Supreme Court's decision in New York v. Belton , which entitled police to conduct a warrantless and suspicionless search of a vehicle's passenger compartment after arresting one of its passengers. After Davis was convicted, however, the Supreme Court held in Arizona v. Gant that this type of suspicionless vehicle search incident to arrest violated the Fourth Amendment to the U.S. Constitution. The Fourth Amendment provides a right against "unreasonable searches and seizures." It secures privacy interests in one's person and property against unreasonable incursions by state and federal officials. However, the parameters of Fourth Amendment protection have significantly changed during the last century and continue to evolve in response to Supreme Court decisions. As the Court's Fourth Amendment jurisprudence shifts, so does its approach to related questions, such as when and how courts should remedy Fourth Amendment violations. Although the Supreme Court has often framed civil liberty and the rule of law as requiring that a legal remedy accompany every legal right, the Court did not announce a remedy for Fourth Amendment violations until 1914. Then, in Weeks v. United States , the Court held that unconstitutionally obtained evidence could be excluded at trial to remedy a Fourth Amendment violation. This remedy, subsequently termed the "exclusionary rule," initially only applied to Fourth Amendment violations by federal actors, but, in 1961, the Court extended it to violations by state actors as well. The scope of the exclusionary rule has narrowed since these early decisions. The exclusionary rule, for example, is no longer treated as a constitutional doctrine. Instead, the Supreme Court has described the rule as a pragmatic doctrine that only applies when the benefits of evidentiary suppression exceed its costs to the justice system. The Court has also articulated several exceptions to the exclusionary rule's applicability. The "good-faith exception," which renders the exclusionary rule inapplicable to evidence that the police obtained illegally but in "good-faith," is arguably the most significant of these exceptions. Today, the good-faith exception applies in such a wide number of circumstances that its application appears to be the norm from which evidentiary exclusion is the exception. Under recent Supreme Court jurisprudence, the good-faith exception applies to all illegally obtained evidence that was not seized as a result of "deliberate" and "culpable" police misconduct. The Court emphasized this standard in its decision in Davis , confirming that police culpability is now the dispositive factor in determining the exclusionary rule's applicability. Courts apply the exclusionary rule to deter Fourth Amendment violations by suppressing unconstitutionally seized evidence. The rule was initially conceived as a constitutionally required remedy for--rather than a deterrent of--illegal searches and seizures, but recent Supreme Court cases have emphasized that the exclusionary rule is neither rooted in nor required by the U.S. Constitution. This shift in judicial thinking may reflect a move toward textualism on the Supreme Court as well as concern that the exclusionary rule impedes the criminal justice system by barring probative evidence of a criminal defendant's guilt from admission at trial. The Supreme Court has narrowed the reach of the exclusionary rule over the years. Today, the exclusionary rule is applied only if the benefits of its application--primarily its deterrent effect on unconstitutional police conduct--outweigh the costs to law enforcement and the administration of justice. The Court has also articulated several exceptions to the exclusionary rule's operability. Arguably the good-faith exception is the most significant exception to the exclusionary rule. It permits the unconstitutionally obtained evidence to be introduced at trial when it was seized in "good-faith" by law enforcement officers. As it was initially articulated in United States v. Leon , the good-faith exception seemed to apply only when the police acted in "objectively reasonable reliance" on the legal error of an authority other than the police. These authorities included state legislatures and magistrate judges. However, the Supreme Court subsequently extended the good-faith exception to good-faith reliance on a clerical error within the police department--namely, a mistake in a police database file regarding the status of the suspect's arrest warrant. In Herring v. United States , the Court held in 2009 that "to trigger the exclusionary rule, police conduct must be sufficiently deliberate that exclusion can meaningfully deter it, and sufficiently culpable that such deterrence is worth the price paid by the justice system." Supporters of the exclusionary rule criticized the decision for undermining the Fourth Amendment by expanding the good-faith exception's applicability. However, the Court wrote that "the flagrancy of the police misconduct" has always "constituted an important step in the calculus" of the exclusionary rule, and it characterized the exclusionary rule's evolution as a series of cases excluding evidence obtained as a result of flagrant or deliberate violations of suspects' rights. United States v. Davis was the first case in which the Supreme Court was asked to apply the Herring standard and determine whether particular police conduct was "culpable." Prior to the Supreme Court's opinion, the federal circuit courts of appeals had reached conflicting decisions about the admissibility of evidence seized in an unconstitutional search that, at the time it was conducted, complied with precedent. The Supreme Court held that this evidence is admissible because police do not act culpably by conducting an unconstitutional search that conformed with "binding appellate precedent." The case confirms that, under the Herring test, police culpability is now the sole relevant factor in determining whether the exclusionary rule applies. In United States v. Davis , Davis contended that police culpability was only one relevant factor in determining whether the exclusionary rule applies. He contended that the exclusionary rule can also apply for other reasons, including (1) if doing so is constitutionally mandated under the retroactivity doctrine, which requires courts to apply recently announced Fourth and Fifth Amendment rules retroactively to certain cases on direct review, and (2) if its application would facilitate the development of Fourth Amendment law by incentivizing future appeals. As discussed below, the Court rejected Davis's approach and assessed the exclusionary rule's applicability solely with reference to the culpability standard prescribed in Herring . The Court determined that the police had not acted wrongfully by complying with appellate precedent, and it therefore held that the exclusionary rule did not apply. One Justice concurred in the judgment and two dissented. As to Davis's first argument, the Supreme Court drew a distinction between retroactively applying a new judicial rule for the conduct of criminal prosecutions and deciding how to remedy a violation of that rule. According to the retroactivity doctrine, Article III of the U.S. Constitution requires the retroactive application of a new Supreme Court precedent on criminal procedure to all cases not yet final. Davis relied on this doctrine to argue that, when a new Fourth Amendment rule is announced, both the new rule and the method of redress used to remedy the wrong suffered by the defendant in that case should both be applied retroactively on appeal. He drew support from language in the Supreme Court's opinion in Danforth v. Minnesota describing retroactivity as "about remedies, not rights" and a question of "redressability." However, the Court rejected Davis's contention as mischaracterizing the retroactivity jurisprudence so as to conflate it with the case law applying the good-faith exception. The Court wrote that the retroactivity doctrine and its case law determine "whether a new rule is available on direct review as a potential ground for relief ... [not] what 'appropriate remedy' (if any) the defendant should obtain." Having defined the retroactivity doctrine as a determining the appropriate rule and the exclusionary rule as a determining the appropriate remedy in a given case, the Court considered whether the exclusionary rule was applicable in Davis . Davis contended that the appropriate test for the exclusionary rule's application balanced the benefits of applying the exclusionary rule's application with its costs. Davis further argued that the benefits outweighed the costs because its application would, in addition to deterring unconstitutional police searches, facilitate the development of Fourth Amendment law. While the two dissenters found this argument persuasive, the Court held that it could not be reconciled with exclusionary rule precedent. Ensuring that defendants have incentives to challenge erroneous lower-court case law is not, the Court wrote, a relevant consideration in an exclusionary rule case. The Court emphasized that the exclusionary rule has only one purpose, deterring culpable police conduct, and it neither applies nor should apply for any other reason. However, the Court also left open the possibility that, in a future case, it "could, if necessary, recognize a limited exception to the good-faith exception for a defendant who obtains a judgment overruling ... Fourth Amendment precedents." Instead of following Davis's approach, the Court assessed the exclusionary rule's applicability solely with reference to the culpability standard prescribed in Herring . Under this standard, a defendant benefits from the exclusionary rule's application only if his Fourth Amendment rights were violated "deliberately, recklessly, or with gross negligence" or as a result of "recurring or systemic negligence" by law enforcement. The Court found that Davis had not met this high standard because the police had "acted in strict compliance with binding precedent." Applying the exclusionary rule in this case, the Court wrote, would transform the exclusionary rule into "a strict liability regime" that penalizes police officers for unintentional constitutional violations. Accordingly, the Court determined that the exclusionary rule was inapplicable. Supreme Court Justice Sotomayor found that Davis did not determine whether the exclusionary rule applies when the law governing the constitutionality of a particular search is unsettled. In its earlier opinion in Davis , the Eleventh Circuit had reached a similar conclusion, but it had adopted a different rationale than the one Justice Sotomayor put forth in her concurrence. The Eleventh Circuit confined its holding in Davis to a police officer's good-faith reliance on clear and unambiguous appellate precedent because, in its view, police officers engage in deliberate and culpable conduct when they try to conduct legal analysis. According to the Eleventh Circuit, police are ill-equipped to analyze precedent and answer legal questions, and therefore their attempts to perform this type of legal reasoning should be viewed as culpable conduct. The Eleventh Circuit also stated that requiring police to engage in more limited police action pending decisive judgments from the U.S. Supreme Court maintains a necessary "incentive to err on the side of constitutional behavior." In contrast, Justice Sotomayor stated in her concurrence that the Court's opinion in Davis would not control cases in which police had relied on ambiguous precedent because the facts in Davis did not present the Court with the opportunity to determine whether exclusion in those circumstances would be warranted. Justice Sotomayor did not adopt the Eleventh Circuit's view that a police officer's attempt at legal analysis is, necessarily, deliberate and culpable conduct. Moreover, unlike the Eleventh Circuit, she rejected the view that an officer's culpability is dispositive of the exclusionary rule's applicability. She wrote that she reads the exclusionary rule precedents as requiring evidentiary exclusion when it would "appreciably deter Fourth Amendment violations." While she said she had found that exclusion in Davis would not appreciably deter future Fourth Amendment violations, this did not determine "whether exclusion would appreciably deter Fourth Amendment violations when the government law is unsettled." Justice Breyer, joined by Justice Ginsburg, dissented from the majority opinion. The dissent criticized the majority for engaging in a formalistic and ultimately unworkable analysis, violating important principles of constitutional adjudication, and vitiating the exclusionary rule. First, the dissent contended that by distinguishing between the applicable rule of criminal procedure and the applicable remedy, the majority engaged in an overly formalistic analysis that would prove unworkable in practice. Davis will burden courts with the responsibility for determining when appellate precedent is sufficiently "binding" for police officers to have acted reasonably by complying with it. While this may be a simple analysis in Davis because the petitioner conceded the point, the dissent suggested that, in the future, it will be much more difficult for courts to assess whether a previous case was "binding." By way of illustration, the dissent wondered whether a case would be "binding" if its facts were readily distinguishable or its holding expressly limited to the facts presented in that particular case. Because the definition of "binding" is difficult to reduce to a single bright-line rule, the dissent argued lower courts' application of Davis is likely to confuse and confound police operations. Second, the dissent expressed concern for the justice of the majority's opinion. The dissent pointed out that the defendant in Davis suffered the same legal wrong as the defendant in Gant , and, therefore, principles of fairness entitled the defendant in Davis to benefit from the same legal remedy as the defendant in Gant . It recognized that the majority had suggested that this unfairness could be avoided in the future by refusing to apply the exclusionary rule to the defendant in the case in which the new rule was announced. However, the dissent argued that this approach would have even more harmful effects. It would, the dissent contended, vitiate the appellate function of the federal circuit courts and the U.S. Supreme Court in Fourth Amendment cases by eliminating the sole incentive for defendants to appeal lower court decisions. This would threaten the role of the U.S. Supreme Court in harmonizing constitutional law across the circuits by essentially eliminating Fourth Amendment cases from its docket. Finally, the dissent criticized the Court's adherence to the culpability standard for the exclusionary rule. The exclusionary rule, it argued, does not--and was not intended to--punish police officers for violating a defendant's Fourth Amendment rights, and, therefore, an officer's culpability should not determine the exclusionary rule's applicability. If, as the majority strongly suggested, the culpability standard is dispositive, then the good-faith exception effectively swallows the exclusionary rule. In turn, the dissent warned, "ordinary" Americans would lose their primary source of protection against unreasonable searches and seizures. Congress has occasionally considered supplementing the Supreme Court's exclusionary rule jurisprudence with legislation codifying the exclusionary rule or the good-faith exception. Over the years, some Members have expressed displeasure that the exclusionary rule substantially interferes with law enforcement and the conviction of criminal defendants against whom there is probative evidence that they have committed a crime. However, congressional efforts to curtail the exclusionary rule's reach have encountered resistance over concerns that, in the name of fighting crime, these efforts will result in the violation of the rights of innocent people. In 1968, Congress codified the exclusionary rule to a limited extent with respect to information obtained illegally through interceptions of certain wire or oral communications. More recently, the 104 th Congress considered codifying a good-faith exception to the exclusionary rule in the Exclusionary Rule Reform Act of 1995. Notably, Congress would not be able to curtail the exclusionary rule's application in circumstances in which it is constitutionally required. However, the Supreme Court has consistently emphasized that the rule has no constitutional basis. It is therefore widely accepted that Congress has broad authority to bar (or require) the exclusionary rule in federal cases, and the Court's opinion in Davis supports this position. Nevertheless, legislation barring the exclusionary rule might carry implications for the operability of "state exclusionary rules" and raise questions about whether and how Fourth Amendment violations should be deterred and/or remedied in the future. Davis v. United States was the first case in which the Supreme Court applied the "deliberate" and "culpable" Herring standard for the good-faith exception's application. The Supreme Court held that evidence seized in an unconstitutional search that, at the time it was conducted, complied with precedent is admissible because police do not act culpably when they conform with "binding appellate precedent." The case also suggests that police culpability is the sole relevant factor in determining whether the exclusionary rule applies. Although the majority and dissent in Davis disagreed over whether the holding would dramatically limit the number of cases in which the exclusionary rule applies, Davis fits within a body of case law that, as a whole, narrows the rule's applicability. On one hand, this trend suggests that the exclusionary rule's opponents may no longer be motivated to reform the rule legislatively, and therefore any push to codify the exclusionary rule will originate with the rule's supporters. However, legislative reform may not only be motivated by a desire to see the exclusionary rule apply--or not apply--to remedy Fourth Amendment violations, it may also be motivated by a perceived need to provide clarity and predictability to police operations. Exclusionary rule jurisprudence has been described as so "severely contorted" and "complicated" as to be nearly impossible for police officers, who need to make quick decisions about the legality of their actions, to apply in the field. Drawing on this concern, the dissent in Davis suggested that the Court's decision would confound police operations by further complicating this jurisprudence and requiring courts and police to make difficult distinctions between "binding" and non-binding appellate precedent. However, supporters of the Court's opinion in Davis would presumably disagree with this assessment and contend that Davis clarified the exclusionary rule jurisprudence by restricting the rule's application to only the most flagrantly violative searches.

In Davis v. United States, the Supreme Court held that evidence seized in violation of the defendant's Fourth Amendment rights is admissible at trial when the police seized the evidence in good-faith reliance on "binding appellate precedent." The petitioner in that case, Willie Davis, was a passenger in a car that was stopped by police for a traffic violation. The police arrested the driver for driving while intoxicated and Davis for giving a false name. After handcuffing Davis and placing him in the back of a patrol car, the police searched the passenger compartment of the car in which Davis had been riding. The police found a revolver inside Davis's jacket, and Davis was convicted of possessing a firearm as a convicted felon. At the time of the search, the police were acting in conformity with controlling Eleventh Circuit precedent. However, after Davis was convicted and had filed an appeal, the Supreme Court ruled that this type of vehicle search incident to arrest was unconstitutional under the Fourth Amendment. Nevertheless, when Davis's appeal reached the Court, it held that even though the search was unconstitutional, the gun it produced was admissible under the good-faith exception to the exclusionary rule. The exclusionary rule bars evidence obtained in an unconstitutional search from being introduced at trial. The rule is a pragmatic doctrine intended to deter Fourth Amendment violations. It traditionally applies when (1) no exception, such as the good-faith exception, bars its operability; (2) exclusion will achieve "appreciable deterrence" of Fourth Amendment violations; and (3) the benefits of evidentiary suppression outweigh its burdens on the justice system. In 2009, the Supreme Court broadened the good-faith exception when it announced in Herring v. United States that unconstitutionally obtained evidence is admissible at trial unless the evidence was the product of "deliberate" and "culpable" police misconduct. Davis was the first Supreme Court case to apply the Herring standard. The case furthers the impression that police culpability is now the sole relevant factor in determining whether the exclusionary rule applies. The Court rejected Davis's contentions that other relevant factors include whether the exclusionary rule's application would facilitate the development of Fourth Amendment law and whether a recently announced Fourth and Fifth Amendment rule applies retroactively. Two Justices dissented from the Court's opinion. One Justice concurred in the judgment but rejected the Court's view that police culpability is the dispositive factor in an assessment of whether the exclusionary rule applies. Congress has occasionally considered legislation codifying the exclusionary rule or its good-faith exception. The scope of Congress's authority to enact or modify exclusionary rule jurisprudence depends on the extent to which the exclusionary rule is constitutionally required. The Supreme Court in Davis emphasized that the exclusionary rule's application is not constitutionally mandated by either the Fourth Amendment or the retroactivity doctrine. Accordingly, Davis supports the view that Congress has substantial authority to mandate the exclusionary rule's applicability or inapplicability in federal court cases.

Since 1984, a number of acts named after former Congressman Carl D. Perkins have been the main federal laws authorized to support the development of career and technical education (CTE) programs aimed at students in secondary and postsecondary education. The Carl D. Perkins Career and Technical Education Act of 2006 (Perkins Act; P.L. 109-270 ), the most recent reauthorization of the federal CTE law, was passed in 2006 and authorized appropriations through FY2012. The authorization of appropriations was extended through FY2013 under the General Education Provisions Act, and the Perkins Act has continued to receive appropriations through annual appropriations acts through FY2017. During the 114 th Congress, the House Committee on Education and the Workforce marked up and unanimously reported the Strengthening Career and Technical Education for the 21 st Century Act ( H.R. 5587 ), which would have provided for a comprehensive six-year reauthorization of the Perkins Act. H.R. 5587 was subsequently passed by the House of Representatives on September 13, 2016, by a vote of 405-5. No further action was taken on the bill. In the 115 th Congress, a new act, also named the Strengthening Career and Technical Education for the 21 st Century Act ( H.R. 2353 ), was introduced and marked up by the House Committee on Education and the Workforce. H.R. 2353 is similar to H.R. 5587 from the 114 th Congress but contains several modified provisions. The committee reported the bill unanimously on May 17, 2017. H.R. 2353 was passed by the House under suspension of the rules on June 22, 2017. H.R. 2353 would authorize appropriations through FY2023. This report does not attempt to provide a comprehensive analysis of H.R. 2353 . Rather, it provides an overview of the primary changes that would be made by H.R. 2353 . Table 1 compares provisions in current law side-by-side with new or revised provisions in H.R. 2353 . It also contains a section that highlights selected definitions that would be significantly revised or are introduced in H.R. 2353 . Table A-1 depicts the authorizations of appropriations for CTE programs authorized under H.R. 2353 . Table 1 highlights the differences between current law and H.R. 2353 , as passed by the House Committee on Education and the Workforce in May 2017. The table is organized topically, focusing on the areas of current law that would see the most significant changes under H.R. 2353 . These areas include the following: overall structure and funding levels, state and local funding formula provisions, state and local plan provisions, accountability and improvement provisions, state and local use of funds provisions, national activities, prohibitions, general provisions, selected revised definitions, and selected new definitions.

Since 1984, a number of acts named after former Congressman Carl D. Perkins have been the main federal laws authorized to support the development of career and technical education (CTE) programs aimed at students in secondary and postsecondary education. The Carl D. Perkins Career and Technical Education Act of 2006 (Perkins Act; P.L. 109-270), the most recent reauthorization of the federal CTE law, was passed in 2006 and authorized appropriations through FY2012. The authorization of appropriations was extended through FY2013 under the General Education Provisions Act, and the Perkins Act has continued to receive appropriations through annual appropriations acts through FY2017. During the 114th Congress, the House Committee on Education and the Workforce marked up and unanimously reported the Strengthening Career and Technical Education for the 21st Century Act (H.R. 5587), which would have provided for a comprehensive reauthorization of the Perkins Act. H.R. 5587 was subsequently passed by the House of Representatives on September 13, 2016, by a vote of 405-5. No further action was taken on the bill. In the 115th Congress, a new act, also named the Strengthening Career and Technical Education for the 21st Century Act (H.R. 2353), was introduced and marked up by the House Committee on Education and the Workforce. H.R. 2353 is similar to H.R. 5587 from the 114th Congress but contains several modified provisions. The committee reported the bill unanimously on May 17, 2017. H.R. 2353 was passed by the House under suspension of the rules on June 22, 2017. H.R. 2353 would make a number of major changes to current law. Some of these include repealing the Tech Prep program, which provided funds to consortia of secondary and postsecondary CTE providers but has not been funded since FY2010; gradually raising total authorized appropriation levels for CTE, reaching a total of $1.21 billion in FY2023, compared to the FY2017 actual appropriations of $1.12 billion; introducing a change to the state allocation formula that would require that states receive an allocation of no less than 90% of their previous year's allocation starting in FY2021; permitting states to reserve up to 15% of their Basic State Grants funds for innovative CTE activities in rural areas or areas with higher numbers or concentrations of CTE students; allowing states to set their own annual targets on the core indicators of performance at both the secondary and postsecondary education levels without approval from the Secretary of Education; replacing the local plan required from CTE providers with a comprehensive needs assessment meant to align the CTE programs being offered with local workforce needs; removing the ability of the Secretary of Education to withhold state funds due to a lack of improved performance; and revising and introducing a number of new definitions, including common definitions for terms already defined in the Workforce Innovation and Opportunity Act. This report highlights the key provisions in H.R. 2353 and explains the major differences between it and current law.

In 2008, oil prices nearly doubled, reaching record levels, before falling back to below $40 per barrel by the end of the year. In the 110 th Congress, proposals included a number of legislative initiatives to increase domestic oil production. These proposals fell into two broad categories: to (1) open areas of the Outer Continental Shelf (OCS) which were under a leasing moratoria; and to (2) encourage companies holding oil and gas leases to diligently develop leases to bring them into production. Proponents of these initiatives argued that promising areas should be open for exploration to maximize domestic oil production as soon as possible. This report provides a review of selected legislative initiatives in the 110 th Congress, examines oil production and resource data, and discusses oil development concerns on federal lands, both onshore and on the OCS. Legislation on oil and gas development on federal lands has not yet been introduced for the 111 th Congress. As the 111 th Congress begins, Congress is faced with issues such as enhancing domestic energy supply and security while assessing areas of environmental concern. The Bush Administration lifted the OCS moratoria on July 14, 2008 and Congress allowed its annual OCS moratoria (see details below) to expire on September 30, 2008 under a continuing resolution--Continuing Appropriations Act for 2009 ( P.L. 110-329 ). The continuing resolution expires on March 6, 2009 or when a permanent appropriations bill for FY2009 is enacted. Based on the executive branch relaxation of the OCS ban, the Bush Administration began the process of preparing the OCS five-year leasing program in August of 2008, two years ahead of schedule. The Draft Proposed OCS Oil and Gas Leasing Program, 2010-2015 was published in early January 2009. This draft proposal, if finalized, would supersede the current five-year program which runs from 2007-2012. The Obama Administration has not yet made a decision to move forward with the proposal. If the early draft is finalized by the Administration, Congress can accept or reject the plan. Under current law, the primary onshore oil and gas lease term is for 10 years. Offshore lease terms are 5,8, or 10 years depending on water depth. If the lease is not producing oil or gas in commercial quantities by the end of its primary term, the lease reverts back to the government for a possible future lease sale--unless the lessee is granted an extension. Extensions are granted for onshore lessees under 43 CFR 3107 for a one-time, two-year period. Offshore extensions are granted under 30 CFR 250.180. The regulation for offshore extensions does not specify the length of the extension. Also, it is not clear how often the Bureau of Land Management(BLM) or Minerals Management Service (MMS) grant extensions. On July 17, 2008, an energy proposal that reached the House floor ( H.R. 6515 , Drill Responsibly in Leased Lands Act of 2008), was defeated under a suspension of the rules vote (which requires a two-thirds majority) by 244-173. This act was said to promote an "expeditious and environmentally responsible" development of the National Petroleum Reserve in Alaska (NPRA) and would have denied new leases to lessees that were not diligently developing their leases, producing oil or gas, or relinquishing non-producing leases. Proponents of this bill argued that many of the lessees are "sitting" on federal leases, and not producing oil or gas. Although both bills, H.R. 6515 , and H.R. 6251 , retained the 10-year primary oil and gas lease term, language removed from an earlier version of H.R. 6251 would have reduced the primary lease term (for onshore and deepwater offshore) from a 10-year term to five years (with extensions possible). On June 26, 2008, under suspension of the rules, H.R. 6251 was also defeated by a vote of 223-195 (two-thirds needed for passage). These two bills were referenced as "use it or lose it" proposals, supported by policymakers who argued that it was unnecessary to lift the OCS moratorium because there were millions of acres already leased that could yield crude oil production, but which were presently inactive. It is unclear how much, and how quickly, additional production would take place on non-producing leases. Some critics of "use it or lose it" proposals argued that these proposals could create a disincentive for companies to seek leases, and/or result in lower bonus bids on new leases. A "use it or lose it" policy, critics of the bills argued, would not necessarily lead to additional production sooner; it might, in fact, undercut that objective. As noted, implementation of "use it or lose it" legislation could result in fewer bids or lower bid offers if a more stringent timeline were to be imposed on all leases held. However, by maintaining the 10-year primary term, as both bills would have done, more federal funds might be appropriated for permitting, and other required environmental reviews. A similar bill in the Senate ( S. 3239 , Responsible Federal Oil and Gas Lease Act) would have denied lessees new leases unless lessees were producing oil or gas on currently held leases; if lessees did not diligently develop each lease, they would have been required to relinquish them. The House and Senate proposals would have required the Secretary of the Interior to define diligent development as it relates to oil and gas leases. U.S. crude oil production peaked at 9.637 million barrels per day in 1970. The Energy Information Administration (EIA) of the Department of Energy projects that U.S. oil production will increase from today's 5.1 million barrels per day (mbd) to 6.3 mbd by 2018, then decline to 5.6 mbd by 2030, but EIA did not factor-in possible changes in lease management. EIA projected that offshore crude oil production would increase from about 1.4 mbd to 2.2 mbd by 2030. When the EIA included access to the OCS, without the leasing moratoria, production was projected to rise by an additional 200,000 barrels per day by 2020 with no significant impact on prices. Based on mean resource estimates by the MMS, an ICF International report prepared for the American Petroleum Institute estimates an increase in OCS production of 286,000 barrels per day in 2030 with increased access to the OCS. When ICF assumed a much larger resource base for the OCS (and without the leasing moratoria), oil production was estimated to increase 900,000 barrels per day in 2030. An anticipated rise in U.S. domestic production on federal lands is seen as coming primarily from deepwater offshore areas as shallow water and onshore oil fields are in decline. According to the MMS, deepwater oil already accounts for more than 70% of offshore production and 18.5 % of total U.S. crude oil production. Since 2002, shallow water lease sales have dropped from 418 to 264 while deepwater lease sales rose from 281 to 633. Deepwater lease sales spiked in 1997 at 1,110, following the Deepwater Royalty Relief Act of 1995. Further, it is notable that there has been increasing exploration activity and an increase in reported finds in the Gulf of Mexico in very deep waters since 2003. Given that oil prices are set in a world market, any additions to U.S. oil supply must be seen in the context of additions to oil supply worldwide. According to the Department of the Interior agencies (Bureau of Land Management and the Minerals Management Service), there are approximately 67 million acres of "active" (meaning that the lease is still in its primary term) oil and gas leases on federal lands that are not in production. About 33 million acres are located onshore and an additional 34 million acres are located offshore. Approximately 12 million acres onshore and about 10.5 million acres offshore are in producing status, (i.e., producing commercial volumes) (see Table 2 below). For offshore oil, under the Known Resources category, (proved reserves, unproved reserves, and reserve appreciation), the Minerals Management Service (MMS) estimates oil reserves in the OCS to be 8.55 billion barrels. In addition, the MMS categorizes 6.88 billion barrels of oil as Reserve Appreciation. In the Undiscovered Technically Recoverable Resources category, the MMS estimates oil resources to be near 86 billion barrels. Within the Undiscovered Resources category, about 41 billion barrels of oil would potentially come from the Gulf of Mexico and about 25.3 billion possible barrels of oil would come from Alaska. With that total, roughly 66.4 billion possible barrels out of 84.24 billion possible barrels are available (about 79%) for leasing in the current MMS five-year leasing program. MMS estimates the amount unavailable at around 17.8 billion possible barrels. Federal onshore proved oil reserves are estimated at 5.3 billion barrels, plus about 6.3 billion barrels in reserve appreciation according to a recent survey of onshore federal lands. Further, there is an estimated, 24.2 billion possible barrels of undiscovered technically recoverable oil resources [see note above] on federal lands, of which 19.0 billion possible barrels of oil are offlimits. The Energy Policy Act of 2005 (EPACT-05) enacted several provisions that were aimed at expediting the development of oil and gas on public lands, particularly concerned with the approval of applications for permits to drill (APDs) (see Table 2 ). Some critics of EPACT-05 believe that the permitting is moving too fast without adequate environmental review. A number of concerns arise in the oil and gas leasing process that might delay or prevent oil and gas development from taking place, or might account for the large number of leases held in non-producing status. Below is a list of often-cited issues which, individually or in combination, are used to explain why more leases are not producing. Rig or equipment availability, particularly offshore Higher capital costs Skilled labor shortages Leases in the development cycle (e.g., conducting environmental reviews, permitting, or exploring) but not producing Legal challenges that might delay or prevent development No commercial discovery on a lease tract Holding leases (because of the lack of capital or as "speculators") to sell or "farm out" at a later date Ability to secure extensions on non-producing leases Securing and being able to hold large number of lease tracts, often contiguous, to maximize return on their investment Many leases expire before exploration or production occurs. Data from the BLM or MMS on the development status for existing leases has not been made available; thus, it is difficult to classify the amount of acreage that has had no activity, is in the permitting stage, or is under exploration but not producing. Under an annual Congressional funding prohibition (in the Interior, Environment, and Related Agencies appropriation bill) and a Presidential Withdrawal, oil and gas leasing and development has been banned in the offshore OCS areas along the U.S. Atlantic and Pacific coasts. However, on July 14, 2008, under a Presidential Directive, the Bush Administration lifted the Executive OCS moratoria that had been in place since 1990, first imposed by President George H.W. Bush, and extended to 2012 by President Bill Clinton. The Congressional ban began in 1981 and was expanded and continued through the annual appropriations process since that time. Each year Congress must approve language that would prohibit funding for pre-leasing and leasing activity in designated areas of the OCS. However, separate withdrawals might be enacted legislatively, such as provided in the Gulf of Mexico Energy Security Act of 2006 (GOMESA, P.L. 109 - 432 ) which placed nearly all of the Eastern Gulf of Mexico under a leasing and drilling moratorium until 2022. The Eastern Gulf of Mexico was not part of the Executive OCS ban that was recently lifted by President Bush or the annual congressional ban that Congress allowed to expire on September 30, 2008. Over the past several years, there have been many legislative proposals to lift the congressional ban, some of which have been successful, on part or all of the OCS. For example, GOMESA removed a small section of the Central Gulf of Mexico (an area south of lease sale area 181; under a previous boundary configuration, the area was located in the Eastern Gulf of Mexico). In 2003, Congress omitted language from the FY2004 Interior appropriation bill that would have prevented lease sales in the North Aleutian Basin Planning Area of Alaska. The President concurred with congressional actions, thus making that area open for a future lease sale. The recent congressional action approving the Continuing Appropriations Act for FY2009 ( P.L. 110 - 329 , enacted September 30, 2008), that continued the funding of government activities through March 6, 2009, or until a regular appropriations bill is enacted, omitted language that provided for the congressional OCS moratoria along the Atlantic and Pacific coasts. Those areas may now be made available for preleasing, leasing, and related activity that could lead to oil and gas development.

Over the past year, crude oil prices have nearly doubled, reaching record levels, before falling below $40 dollars per barrel by the end of the year. In the 110th Congress, proposals included a number of legislative initiatives to increase domestic oil production. These proposals fell into two broad categories: (1) to open areas of the Outer Continental Shelf (OCS) which were under a leasing moratoria; and (2) to encourage companies holding oil and gas leases to diligently develop leases to bring them into production. Two bills were introduced that would have denied new leases to those lessees who were not developing their leases or producing oil or gas (H.R. 6251 and H.R. 6515). The two bills, which included similar provisions, were introduced under suspension of the rules in the House and both failed to achieve the necessary two-thirds support. Comparable legislation was introduced in the Senate (S. 3239). As the 111th Congress begins, Congress is faced with issues such as enhancing domestic energy supply and security while assessing areas of environmental concern. The Bush Administration lifted the OCS moratoria on July 14, 2008 and Congress allowed its annual OCS moratoria (see details below) to expire on September 30, 2008 under a continuing resolution--Continuing Appropriations Act for 2009 (P.L. 110-329). The continuing resolution expires on March 6, 2009 or when a permanent appropriations bill for FY2009 is enacted. Under an annual Congressional funding prohibition (in the Interior, Environment, and Related Agencies appropriation bill) and a Presidential Withdrawal, oil and gas leasing and development has been banned in the offshore OCS areas along the U.S. Atlantic and Pacific coasts. However, on July 14, 2008, under a Presidential Directive, the Bush Administration lifted the Executive OCS moratoria that had been in place since 1990. The recent congressional action approving the Continuing Appropriations Act for FY2009 (P.L. 110-329, enacted September 30, 2008), that continued the funding of government activities through March 6, 2009, or until a regular appropriations bill is enacted, omitted language that provided for the congressional OCS moratoria along the Atlantic and Pacific coasts. Those areas may now be made available for preleasing, leasing, and related activity that could lead to oil and gas development. The moratorium, however, would remain in place for nearly all of the Eastern Gulf of Mexico as it was placed off-limits separately under the Gulf of Mexico Energy Security Act of 2006 (P.L. 109-432) until 2022. Based on the executive branch relaxation of the OCS ban, the Bush Administration began the process of preparing the OCS five-year leasing program in August of 2008, two years ahead of schedule. The Draft Proposed OCS Oil and Gas Leasing Program, 2010-2015 was published in early January 2009. This draft proposal, if finalized, would supersede the current five-year program which runs from 2007-2012. The Obama Administration has not yet made a decision to move forward with the proposal. If the early draft is finalized by the Administration, Congress can accept or reject the plan.

As of February 11, 2009, a total of 240 persons have served for 30 years or more in the United States Congress as Representative or Senator. That number is only 2% of the 11,893 men and women who have represented their states and congressional districts since the First Congress convened on March 4, 1789. Of the 240 Members serving 30 years or more, 139 served only in the House of Representatives; 29 served only in the Senate; and 72 served in both chambers. Four of the 240 Members are women, three of whom have served in the House and Senate. Over time, the number of Members serving 30 years or more has grown. Only two Members with over 30 years of service began serving in Congress in the 18 th century: Nathaniel Macon began his service in 1791; Samuel Smith, in 1793. Seven served entirely during the 19 th century. By 1967 (90 th Congress), a total of 100 Members had served 30 years or more. As of February 11, 2009, (111 th Congress) that number had risen to 240. Among Members of the 111 th Congress, 16 incumbent Senators and 18 incumbent Representatives have served 30 years or longer. Table 1 lists Members who have served 30 years or longer in descending order of the length of their congressional service, as measured in days. For each Member, the table presents the Member's party and state represented; dates of the Member's first and last day of service, by chamber; days of service in each chamber; and total days of congressional service. Total service is also presented in years and fractions of years. Calculations of days of service varied according to the pattern of a Member's service. For example-- Clarence A. Cannon of Missouri served in one continuous period from 3/4/1923 through 5/12/1964. The elapsed time from one date to the other was 15,045, but because Representative Cannon served for each of the elapsed days and on the first day, we add one day to the elapsed time for a total of 15,046 days. Justin Morrill served in both the House and the Senate, continuously from 3/4/1855 to 3/3/1867 in the House (4,383 days) and from 3/4/1867 to 12/28/1898 in the Senate (11,623 days). Morrill's total congressional service was the sum of those two periods, 16,006 days. Henry Jackson of Washington also served continuously in both the House and the Senate, but because of a statutory change there is an overlap of one day in his official dates of service. Jackson served in the House from 1/3/1941 through 1/3/1953, but his first day in the Senate was also on 1/3/1953. If we simply added his House service (4,384 days) and his Senate service (11,199 days), we would double-count 1/3/1953; so we add the days of service in each chamber (15,583 days) and subtract one day from that sum for Jackson's total days of congressional service (15,582 days). Alternately, we could simply count the days from when his House service started through the date of the day when his Senate service ended. Samuel Smith served in the House, then in the Senate, then again in the House, and then once again in the Senate. His first period of service (in the House) did not overlap with the second (in the Senate). There was a break between his first period of Senate service and his second period of House service, but there is an overlapping day (12/17/1822) when he moved finally from the House again to the Senate. Accordingly, we add the days of each period of service and subtract one day from the sum for a total of 14,276 days of congressional service. Table 1 draws the dates of congressional service from the Biographical Directory of the United States Congress, 1774-Present ; the "Table of United States Senators" in U.S. Congress, Senate, Senate Manual , S. Doc. 104-1; and various editions of the Congressional Directory (Washington: GPO). When a date in the Biographical Directory was unclear, CRS consulted other sources for clarification, as shown in notes to Table 1 .

This report identifies the 240 Members of Congress who have served in Congress for at least 30 years, as of February 11, 2009. Those 240 Members are only 2% of the 11,893 individuals who have represented their states and congressional districts in Congress since 1789. Of the 240 Members with at least 30 years of congressional service, 139 have spent all of their congressional careers in the House; 29 have spent all of their careers in the Senate; and 72 have had combined service in the House and Senate. Among Members of the 111th Congress, 16 Senators and 18 Representatives have served 30 years or more. This report supercedes CRS Report RL30370, by [author name scrubbed], Specialist in American National Government. This report will not be updated.

Large-scale deployment of concentrating solar power (CSP), a renewable energy technology for generating electricity, has the potential to affect the availability of water resources in the Southwest for other uses. Because the water demand of CSP is highly dependent on the type of CSP facilities constructed (e.g., whether thermal storage is included and whether wet cooling is used) and their locations, and because the data for these evolving technologies are preliminary, there remains much uncertainty about the impacts of CSP on Southwest water use. Water resource constraints are likely to prompt adoption of more freshwater-efficient technologies, or decisions not to site CSP facilities in certain locations. However, water constraints do not necessarily preclude CSP in the Southwest, given the ability to reduce the freshwater use at CSP facilities. This report presents a brief primer on CSP, then discusses the potential water implications of CSP deployment in the Southwest. CSP comprises a set of technologies that convert thermal solar energy into electricity. The quantity of electricity produced at these facilities, the water intensity per unit of electricity generated, and the local and regional constraints on freshwater will shape the cumulative effect of CSP deployment on southwestern water resources, and the long-term sustainability of CSP as a renewable energy technology. As the 111 th Congress considers energy and climate legislation, and as individual states take actions such as adopting renewable energy portfolios and identifying geographic regions suitable for renewable energy development, the implications of large-scale adoption of renewable technologies are receiving greater attention. How large-scale expansion of solar generation in the Southwest may affect the people, economy, land, protected species, and water resources of the region are being analyzed in order to compare the local, regional, and national advantages and disadvantages of CSP compared to other electricity options. Site-specific and cumulative water resource implications are among many factors (e.g., cost, climate and air pollution emissions, land and ocean impacts, wildlife and the environment impacts) to be weighed when judging the tradeoffs between different energy options. CSP--or solar thermal power, as it is also known--typically employs large arrays of ground-based mirrors to concentrate sunlight onto a heat transfer medium (e.g., oil, salt, or water), which is heated above 212degF (100degC) to roughly 662degF (350degC), depending on the medium. The heat is used to generate steam via a heat exchanger to spin a steam turbine. Alternatively, steam can be generated directly by the mirror arrays. Photovoltaic (PV) solar is a separate class of solar technology that uses panels of solar cells to convert sunlight directly into electricity. Operation of CSP and PV facilities to generate electricity does not directly release greenhouse gases. There remains significant uncertainty about the future rate and level of CSP deployment. In some CSP installations, sunlight is concentrated from the mirror arrays onto a single, central location atop a tall solar tower where the heat typically melts salt or boils water. In other CSP installations, solar parabolic-mirror troughs, also known as solar troughs , focus sunlight on miles of piping running through a field of mirrors, heating the heat transfer fluid (usually oil). Pressurized steam, produced by the heat transfer medium, then drives a turbine-generator producing electricity. Other less common CSP technologies exist; this report focuses on solar trough and solar tower CSP technologies. CSP currently is better suited than PV installations for larger facilities, and the steam-cycle used in CSP is more familiar to utility engineers. Electricity from a large CSP plant is estimated to cost $0.10 per kilowatt-hour (kWh) over a facility's operating life; electricity from a large PV facility is estimated at $0.26/kWh given current technologies. In terms of cost, both PV and CSP facilities at the scale now being developed (generally between 50 megawatts (MW) and 1,200 MW) are at an early stage in their commercial adoption and use; these early facilities are anticipated to produce electricity at more than twice the cost of conventional coal plants. CSP generation costs are expected to decrease as more solar plants are installed and technologies and operations improve. As of March 2009, 11 large solar trough facilities were operating in the United States (1 in Arizona, 1 in Nevada, and 9 in California), with a total capacity of 339 MW. An additional 16 large-scale solar trough and solar tower plants are planned. The 15 in the West - 1 in Arizona, 2 in Nevada, and 12 in California - have planned capacities totaling 4.0 gigawatts (GW). The one in Florida is planned as a 75 MW facility. Adding heat storage, such as molten salt storage, can improve the economics of CSP operation because it allows the heat retained in storage to produce electricity into the night hours. The availability of thermal storage technologies gives CSP an additional advantage over PV. The CSP facility currently operating in Arizona has plans to add thermal storage. The first large-scale CSP plant with thermal storage began operations in Granada, Spain, in November 2008; the facility is a 50 MW plant with seven hours of thermal storage. CSP technologies generate power via the same steam cycle as coal or nuclear power plants; the main difference is the fuel used to turn water into steam. There are two major water processes in a steam turbine system--the steam cycle and the cooling process. Most of the water is consumed during cooling, and the choice of cooling technology largely determines how much water is actually consumed at a facility. Fossil and nuclear power plants use the same wet-cooling technologies as those for CSP. Water is used to produce steam to turn the steam turbines; this water is recycled for the generation of steam in the "closed-loop" steam cycle. Theoretically, water is not lost in the steam production cycle (though real-world imperfections necessitate some "make-up" water to compensate for leaks in the system). Steam is cooled in a condenser and condensed back to a liquid water state to be reused. The condenser itself is then cooled. For wet cooling of the condenser, the most common technology is to use a separate circuit of water to remove the heat from the condenser; this water then flows to an evaporative cooling tower that dissipates the collected heat energy to the environment. Most of this cooling water is lost as clouds of water vapor to the atmosphere as the condenser water contacts the air and the cooling tower. Alternatively, wet cooling can also occur by sending the condensed steam directly to the cooling tower. The 11 large-scale CSP facilities operating in the United States all use wet cooling. In areas where water supplies are constrained, dry cooling technologies may be used, which blow air over extensive networks of steam pipes designed with convective cooling fins to dissipate the heat energy over their surface area. No water is used or consumed in dry cooling. Air, however, has a much lower capacity to carry heat than water; therefore, dry cooling generally is less efficient than wet cooling in removing heat. Often, massive cooling fans are used to remove the heat from the pipe array in dry cooling. These fans consume a portion of the electricity generated by the power plant. Although dry cooling reduces water use, its consumption of energy for cooling fans and reduction of thermal efficiency of the steam turbines, especially on the hottest days of the year, when summer-peaking utilities most need power, is a significant factor impeding its adoption. It may be possible to offset the effect of dry cooling on net electricity generation by using bigger solar collecting fields or perhaps PV systems to run cooling fans. Where efficiency is a concern and water is constrained, a hybrid combination of wet and dry cooling technologies may be used. (See " Reducing the CSP Water Footprint ," below, for more information on hybrid cooling.) CRS was not able to identify any operating large-scale CSP facility in the United States or the world that uses dry cooling, but the technology is being considered as new CSP proposals are being developed in water-constrained areas, such as Southern California counties. Further research on materials and the thermal properties of the heat transfer medium in solar installations may allow the medium to reach higher temperatures, producing hotter steam for the turbines and greater electricity output. However, steam turbine operating characteristics are constrained by the materials used to manufacture the turbines. These materials will then determine how well the turbine is able to accommodate high pressures. Another alternative to increase output would be to add a combustion turbine to the existing solar cycle. If higher-temperature steam can be produced, then combustion turbines operating at lower pressures can be used to augment the solar steam turbines, resulting in more efficient energy output. Ongoing research at the U.S. Department of Energy's National Renewable Energy Lab (NREL) has shown that an integrated solar combined cycle plant would have efficiencies higher than those of a solar-only plant, and potentially higher than those in a fossil-fuel combined-cycle plant. It also has costs 25% to 75% lower than those of a solar-only plant, and offers the lowest cost of solar electric energy among hybrid options. In arid and semi-arid regions like the Southwest, or other areas with intense water demand, water supply is an issue for locating any thermoelectric power plant, not only CSP. The cumulative impact of installing multiple thermoelectric power plants in a region with existing water constraints raises numerous policy questions. As previously noted, there is significant uncertainty about the future rate and location of CSP deployment; this uncertainty significantly restricts the ability to evaluate the extent and location of potential water resource implications of CSP deployment. Additional data and analysis on where CSP may deploy and how it may affect local water availability would benefit federal, state, and local decision-makers when evaluating the potential consequences of general policies and individual permitting and siting decisions. The analysis presented in this report is based on available projections for CSP deployment at the county level. The Electric Power Research Institute (EPRI) developed an index of the susceptibility of U.S. counties to water supply constraints. The index was derived by combining information on the extent of development of available renewable water supply, groundwater use, endangered species, drought susceptibility, estimated growth in water use, and summer deficits in water supply. EPRI produced Figure 1 , which shows the susceptibility to constrained water supplies. Comparing the water constraint index to NREL's projection of CSP deployment by 2050, in Figure 2 , shows overlap, particularly in Arizona and California. NREL's analysis did not consider water availability as a constraint on CSP deployment. This overlap represents a policy issue for local, state, and federal decision-makers: should the federal government promote electricity generation given local water resource constraints and demands, and if so, how? For example, what kinds of solar technologies are most appropriate for counties susceptible to water supply constraints? Figure 2 represents one projection of where CSP may be deployed based on federal and state policies, prices, and costs at the time of the analysis. These model inputs are dynamic, and the models are being improved. In particular, when, where, and how much CSP is installed by 2050 and the technologies used are sensitive to state and federal policies. Consequently, NREL plans to release updated projected deployments based on changes in these inputs, as well as proposed changes (e.g., analyses of the impacts of climate change bills on CSP deployment). The Western Governors' Association (WGA) is producing a map of potential renewable energy zones taking into consideration renewable resources, transmission, and wildlife issues. The WGA analysis focuses on transmission feasibility, while the NREL deployment projections were based on a CSP market analysis. Because of these differences, the initial results of the WGA mapping effort show a different depiction of potential locations for solar facilities ( Figure 3 ). For example, Figure 3 identifies more opportunities for solar deployment in Utah and Colorado. Like the NREL analysis used to develop Figure 2 , the WGA mapping effort does not consider water availability or water resource impacts when designating the areas for renewable development. Many of the counties with solar development zones in the draft preliminary WGA map are the same counties that EPRI found to be highly and moderately susceptible to water supply constraints (see Figure 1 ). The WGA map also shows potential for CSP deployment in areas somewhat susceptible to water supply constraints (e.g., Utah). As shown in Figure 2 and Figure 3 , CSP is likely to be concentrated in the Southwest, while new fossil fuel thermoelectric facilities would be more dispersed across the country. This concentration of CSP in a region of the country with water constraints has raised questions about whether, and how, to invest in large-scale deployment of CSP. Most electricity generation requires and consumes water (see Table 1 ). Wind is an exception, and PV consumes water only for washing mirrors and surfaces. The water consumed per megawatt-hour (MWh) of electricity produced is referred to as the energy technology's water intensity . Why is there concern specifically about the CSP water footprint? CSP using wet cooling (i.e., solar trough and solar tower) consumes more water per MWh than some other generation technologies, as shown in Table 1 . The water intensity of electricity from a CSP plant with wet cooling generally is higher than that of fossil fuel facilities with wet cooling. However, its water intensity is less than that of geothermal-produced electricity. As previously discussed and as shown by comparing the second and third columns in Table 1 , the majority of water consumption at a CSP facility occurs during the cooling process. The fourth column in Table 1 depicts the water consumed in producing the fuel source; this water consumption generally does not occur at the same location as generation. Although CSP cooling technologies are generally the same as those used in traditional thermoelectric facilities, the CSP water footprint is greater due to CSP's lower net steam cycle efficiency. Options exist for reducing the water consumed by thermoelectric facilities, including CSP facilities; however, with current technology, these options reduce the quantity of energy produced and increase the energy production cost. Because water use is a function of electricity produced, a key factor determining the amount of water used at a CSP facility is the amount of electricity to be produced during a period of time. How much electricity a CSP facility will generate in a year depends on the amount of time the facility operates. The utilization of a facility is measured by its capacity factor , which is expressed as a percent. This is the ratio of the amount of power generated at a facility to the maximum amount of power the facility could have generated if it operated at continuously at maximum output. Capacity is the maximum potential instantaneous power output rate at a facility. A capacity factor allows for electricity estimates to be made using information on a plant's capacity. Notably, many of the goals for solar deployment are being stated in capacity terms, that is, in kilowatts (kW), MW, or GW, not in terms of electricity generated (kilowatt-hours or MWh). Baseload plants typically have capacity factors of more than 70%, and peaking plants of about 25% or less; cycling plants fall in the middle. For most CSP facilities currently proposed in the Southwest using wet cooling, the capacity factor ranges from 25% for solar troughs without storage to greater than 40% for solar troughs with six hours of thermal storage. Capacity factors for CSP plants with storage are highly uncertain given the early stage of CSP storage technology. As the cost of thermal storage is reduced, future parabolic trough plants could yield capacity factors greater than 70%, competing directly with future baseload combined cycle plants or coal plants. Increased capacity factors mean more energy is generated at a facility, and represent an increase in the quantity of water consumed for each MW of installed capacity. Therefore, without knowing the capacity factor, projections of installed capacity in the Southwest provide incomplete information for producing reliable estimates of the water that may be required for future CSP installations. The trend for new thermoelectric generation, including CSP, in water-constrained areas is toward more freshwater-efficient cooling. These technologies may reduce, but not eliminate, the water resource impacts of CSP deployment or other expansion of electricity generation in the Southwest. Among the factors likely to push adoption of more freshwater-efficient cooling at some CSP facilities are the scale of projected deployment, growing awareness of the water use of CSP, and ongoing research on more freshwater-efficient cooling alternatives. A February 2009 memo from the Regional Director of the Pacific West Region of the National Park Service (NPS) to the Acting State Director for Nevada of the Bureau of Land Management illustrates the trend toward more freshwater-efficient cooling. The memo identifies water availability and water rights issues as impacts to be evaluated in permitting of renewable energy projects on federal lands. The memo states: "In arid settings, the increased water demand from concentrating solar energy systems employing water-cooled technology could strain limited water resources already under development pressure from urbanization, irrigation expansion, commercial interests and mining." The memo also cites rulings in 2001 and 2002 by the Nevada State Engineer identifying reluctance to grant new water rights for water-cooled power plants. The Western Governors' Association has established a goal of 8 GW by 2015 for solar energy capacity. If this goal is achieved through wet-cooled CSP without storage (i.e., with a 25% capacity factor), the water requirements would be roughly 43 thousand acre-feet per year (ka-f/year). If the premium solar sites are selected for these first investments, they likely would be concentrated in Arizona and California. To provide a sense of scale for this water consumption, it can be compared to the overall state-level water consumption. For example, if all of the 8 GW was constructed in Arizona, the increased water demand would represent roughly 1% of the state's consumptive water use. NREL projected as part of its Concentrating Solar Deployment System (CSDS) that 55 GW of CSP would be deployed by 2050 and assumed that the CSP facilities would all have six hours of storage. NREL estimated the mean capacity factor for these facilities at 43%. If 55 GW of capacity by 2050 is achieved using wet cooling, the water requirements would be roughly 505 ka-f/year. CSP water use would be less if more water-efficient cooling is employed and if not all the facilities under the 55 GW deployment projection have thermal storage. Alternatively, electricity generated and water use could be higher if 12 hours of thermal storage are employed in some or all facilities. Some states, like Arizona and New Mexico, currently produce more electricity than they consume, and export the surplus. CSP deployment is likely to significantly increase the electricity exports from these states. According to NREL's analysis, significant amounts of the 55 GW generated would be transmitted outside of the CSP-generating states, thereby resulting in a virtual export of the water resources of the producing states to the consuming states. The higher the water consumed per kilowatt-hour, the more the Southwest's limited water resources would be virtually exported to other regions. The virtual export of water raises policy questions about concentrating electricity generation and its impacts in a few counties and states while its benefits are distributed more broadly. Virtual water imports and exports, however, are not unique to electricity. For example, water is embedded in locally produced agricultural products and manufactured goods that are distributed nationally or globally. Regional estimates of water use of CSP do not fully capture what deployment may mean for water use in the states and counties with the CSP facilities. How CSP may affect existing water uses will depend on the level of CSP capacity located in a county, the capacity factor of the facilities, and the existing consumptive use in the county. Many of the counties identified as potential locations for CSP also were identified by EPRI as having some level of susceptibility to water supply constraints. The potential use of water by CSP in moderately constrained counties (e.g., Grant and Luna, NM) and in highly constrained counties (e.g., La Paz and Maricopa, AZ) may lead to the adoption of or requirement for more freshwater-efficient CSP facilities. For some Southwest counties with relatively low water use, large-scale deployment of CSP, even with water-efficient cooling technologies, could significantly increase the demand for water in the county (e.g., Grant, NM, and Mineral, NV). Without new water supplies becoming available and assuming that most water supplies in these arid regions are already allocated to existing uses, the water used by CSP may be purchased from existing water rights holders, or a CSP facility might develop its own supplies from impaired waters. The most likely source of water rights to purchase would come from the agricultural sector of these states. If policy makers choose to require that CSP not consume the water quantities described above, CSP facilities could reduce their freshwater footprint by employing more water-efficient cooling technologies or by cooling using alternate water supplies (i.e., impaired water supplies such as saline groundwater). Alternatives to wet cooling can significantly reduce the freshwater footprint of CSP. Emerging cooling technologies that have the potential to consume much less freshwater include dry cooling (previously discussed), hybrid dry-wet cooling, cooling with fluids other than freshwater, and more innovative technologies (e.g., wet-surface air coolers, advanced wet cooling). The alternatives receiving most attention in the development of proposals for new thermoelectric facilities in water-constrained areas are dry and hybrid cooling. A Department of Energy (DOE) report, Concentrating Solar Power Commercial Application Study: Reducing Water Consumption of Concentrating Solar Power Electricity Generation , found that dry cooling could reduce water consumption to roughly 80 gal/MWh for solar troughs and 90 gal/MWh for solar towers, compared to the cooling water consumption shown in Table 1 . However, DOE also found that electricity generation at a dry-cooled facility dropped off at ambient temperatures above 100degF. Dry cooling, thus, would reduce generation on the same hot days when summer peak electricity demand is greatest. For parabolic troughs in the Southwest, the benefit in the reduction in water consumption from dry cooling resulted in cost increases of 2% to 9% and a reduction in energy generation of 4.5% to 5%. The cost and energy generation penalties for dry cooling depend largely on how much time a facility has ambient temperature above 100degF. In order to weigh the tradeoffs in energy generation, cost, and water use, DOE researched hybrid cooling processes that combine dry and wet cooling. The hybrid system consists of parallel wet and dry cooling facilities, with the wet cooling operating only on hot days. By using wet cooling in parallel with dry cooling on hot days, losses of thermal efficiency from dry cooling can be reduced. How often the wet cooling is used determines how much water is consumed and the effect of hot days on thermal efficiency. DOE found that a hybrid cooling system in the Southwest using 50% of the water of wet cooling would maintain 99% of the performance of a wet-cooled facility. A hybrid cooling system using 10% of the water of wet cooling would maintain 97% of the energy performance. There also may be opportunities to reduce the freshwater footprint by using alternative water supplies, such as saline water or water with otherwise impaired quality. However, information on the feasibility of alternative water supplies for cooling is limited. For large sections of the areas shown in Figure 2 for CSP deployment, data on the depth to saline groundwater supplies is unavailable. More extensive and updated information may be forthcoming in a future assessment of brackish groundwater required by Section 9507 of P.L. 111-11 , the Omnibus Public Land Management Act of 2009. Other alternative water supplies, such as effluent from municipal or industrial wastewater treatment facilities, are less likely options for CSP because most of the anticipated sites for CSP deployment are remote from urban development. Growing populations and changing values have increased demands on water supplies and river systems, resulting in water use and management conflicts throughout the country, particularly in the West. In many western states, agricultural water needs can be in direct conflict with urban needs, as well as with water for thermoelectric cooling, threatened and endangered species, recreation, and scenic enjoyment. Debate over western water resources revolves around the issue of how best to plan for and manage the use of this renewable, yet sometimes scarce and increasingly sought after, resource. Traditional users of water supplies often are wary of new water demands that may compete or result in reduced deliveries to farms (leading to lost agricultural production). Deployment of CSP would add an additional demand to existing freshwater competition in the Southwest. As indicated in the analysis herein, there remains significant uncertainty about where, how much, and what type of CSP capacity may be installed. Technological advances in CSP, thermal storage, and cooling technologies also may change the water intensity of any CSP that is deployed. Water resource data gaps on current and projected non-CSP water consumption and on availability of impaired water supplies add uncertainty to analyses of the potential significance of CSP freshwater use and alternatives to its use. For these reasons, any estimate of how much water may be consumed by CSP at the regional, state, or county level is highly uncertain. Any shift of freshwater resources to CSP from an existing use would have costs and benefits. For example, if the water is shifted from agricultural use to CSP cooling, the region would forgo the benefits of that agricultural production. Alternatively, the water could also become available for use in CSP through improvements in agricultural or municipal and industrial water efficiency. CSP, however, would bring jobs and investments to the Southwest while producing electricity (without significant greenhouse gas emissions) that could be put to use by municipal, industrial, and other consumers in a broader area of the country. How to manage existing and new water demands is largely up to the states. Most electricity siting and water planning, management, and allocation decisions are delegated to the states. Federal agencies support state water management efforts through data collection and technology research. Whether and how the federal government should promote water conservation, efficiency, markets, and regional- and state-level planning and collaboration is a matter of debate, and actions in these areas often occur on a piecemeal or ad hoc basis. At the same time, federal policies (e.g., energy, agriculture, and tax policies) can affect water-related investments and water use, and operations of federal facilities can affect the water available for allocation. CRS analyzed NREL's CSP deployment scenario for 2050 in order to evaluate potential state and local water resource implications. CRS chose NREL's scenario as the basis for this analysis because it provided county-level deployment estimates; other available renewable deployment projections are at much larger geographic scales, typically at the region or state level. A major drawback of using a deployment scenario that extends to 2050 is that it is highly speculative. At the same time, water resource planning, projects, and decisions often are performed and evaluated on time scales encompassing many decades. Illustrative Scenario of State Water Use Under 2050 Deployment Projection NREL projected as part of its Concentrating Solar Deployment System (CSDS) that 55 GW of CSP would be deployed by 2050 and assumed that the CSP facilities would all have six hours of storage. NREL estimated the mean capacity factor for these facilities at 43%. If 55 GW of capacity by 2050 is achieved using wet cooling, the water requirements would be roughly 505 thousand acre-feet per year (ka-f/year). CRS developed a scenario, shown in Table A-1 , for how the 55 GW of CSP capacity might be distributed across the five states that are identified for CSP deployment in Figure 2 . Table A-1 shows an illustrative scenario of water use in each state if wet cooling is used. CSP water use would fall if more water-efficient cooling is employed and if not all the facilities under the 55 GW deployment projection have thermal storage. Alternatively, water use could be higher if 12 hours of thermal storage are employed in some facilities. The scenario used in Table A-1 is based on the NREL projection in Figure 2 ; as more current projections of how much and where CSP may be deployed are released, any estimates of state water use impacts would change. For example, if updated projections show that New Mexico, Texas, and Colorado have more CSP deployment than shown in Figure 2 , the CSP water footprint may be greater in those states than shown in Table A-1 . Similarly, if deployment in Arizona and California is less than shown in Figure 2 , the CSP water footprint in these states would be smaller. That is, if CSP deployment by 2050 in Arizona were to be 9 GW, rather than the 18 in the scenario in Table A-1 , CSP water use would be half of the 3.9%. The illustrative scenario of potential water consumption from the 55 GW is sensitive to the capacity factor used. The total water consumption varies from 483 ka-f/year for a capacity factor of 41% to 541 ka-f/year for a capacity factor of 46%; these capacity factors were the upper and lower ends of the range used in NREL's 55 GW analysis. NREL varied the capacity factor to capture differences in energy production anticipated based on the solar resource at the different locations in the Southwest. Uncertainty about where CSP facilities might be constructed, whether these facilities will perform at the capacity factors currently assumed, and which types of cooling technologies these facilities will use contribute to there being little known about the future water resource impacts of CSP deployment. Illustrative Scenario of County Water Use Under 2050 Deployment Projection The state-level scenarios in Table A-1 do not fully capture what a 55 GW deployment may mean for water use in the counties with the CSP facilities. CRS used Figure 2 to develop a scenario of county-level CSP deployment and its water use for a sample of counties. The results, shown in Table A-2 , illustrate that the local effect will depend on the capacity located in the county, the capacity factor of the facilities, the type of cooling used, and the existing consumptive use in the county. Table A-2 illustrates that, for a number of counties, the potential water demand of wet-cooled CSP could be significant in 2050. The calculations in Table A-2 demonstrate why there is interest in using non-freshwater sources and in adopting more water-efficient cooling techniques, and why regulators in some states, such as California, may be reluctant to permit wet-cooled facilities. All of the counties in Table A-2 were identified to have some susceptibility to water supply constraints. Table A-2 illustrates that, in some counties (e.g., Grant, NM, and Mineral, NV), water use of CSP under the NREL deployment projections may result in a notable change in county water use even if dry cooling is employed. The potential use of water by CSP in moderately constrained counties (e.g., Grant and Luna, NM) and in highly constrained counties (e.g., San Bernardino, CA , and La Paz and Maricopa, AZ) may lead to the adoption of or requirement for freshwater-efficient CSP facilities.

As the 111th Congress considers energy and climate legislation, the land and water impacts of renewable technologies are receiving greater attention. The cumulative impact of installing numerous thermoelectric power plants on the water resources of the Southwest, a region with existing water constraints, raises policy questions. Solar Abundance and Water Constraints Converge. Many Southwest counties are premium locations for siting solar electricity facilities, but have constrained water supplies. One policy question for local, state, and federal decision-makers is whether and how to promote renewable electricity development in the face of competing water demands. A principal renewable energy technology being considered for the Southwest is concentrating solar power (CSP), which uses ground-based arrays of mirrors to concentrate thermal solar energy and convert it into electricity. The steam turbines at CSP facilities are generally cooled using water, in a process known as wet cooling. The potential cumulative impact of CSP in a region with freshwater constraints has raised questions about whether, and how, to invest in large-scale deployment of CSP. Much uncertainty about the water use impacts of CSP remains because its water demand is highly dependent on the location and type of CSP facilities constructed (e.g., whether thermal storage is included and whether wet cooling is used), and because the data for these evolving technologies are preliminary. Water Consumption and Electricity Generation Tradeoffs. In arid and semi-arid regions like the Southwest or in other areas with intense water demand, water supply is an issue for locating any thermoelectric power plant, not only CSP. The trend is toward more freshwater-efficient cooling technologies for CSP and other thermoelectric generation. Why is there concern specifically about the CSP water footprint? CSP facilities using wet cooling can consume more water per unit of electricity generated than traditional fossil fuel facilities with wet cooling. Options exist for reducing the freshwater consumed by CSP and other thermoelectric facilities. Available freshwater-efficient cooling options, however, often reduce the quantity of electricity produced and increase electricity production costs, and generally do not eliminate water resource impacts. The quantity of electricity produced at these facilities, the water intensity per unit of electricity generated, and the local and regional constraints on freshwater will shape the cumulative effect of CSP deployment on southwestern water resources and the long-term sustainability of CSP as a renewable energy technology. Water resource constraints may prompt adoption of more freshwater-efficient technologies or decisions not to site CSP facilities in certain locations. Next Steps. Water constraints do not necessarily preclude CSP in the Southwest, given the alternatives available to reduce the freshwater use at CSP facilities. Moreover, water impacts are one of many factors (e.g., cost, climate and air pollution emissions, land and ocean impacts, wildlife and the environmental impacts) to be weighed when judging the tradeoffs between different energy options. States are responsible for most water planning, management, and allocation decisions and electricity siting decisions. Whether and how the federal government should promote water conservation, efficiency, markets, and regional- and state-level planning and collaboration is a matter of debate. At the same time, federal policies (e.g., energy, agriculture, and tax policy) can affect water-related investments and water use, and operations of federal facilities can affect the water available for allocation.

The Bureau of Reclamation (Reclamation), part of the Department of the Interior, operates the multipurpose federal Central Valley Project (CVP) in California, one of the nation's largest water conveyance systems (see Figure 1 ). The CVP extends from the Cascade Range in Northern California to the Kern River in Southern California. In an average year, it delivers approximately 5 million acre-feet of water to farms (including some of the nation's most valuable farmland), 600,000 acre-feet to municipal and industrial (M&I) users, 410,000 acre-feet to wildlife refuges, and 800,000 acre-feet for other fish and wildlife needs, among other purposes. The project is made up of 20 dams and reservoirs, 11 power plants, and 500 miles of canals, as well as conduits, tunnels, and other storage and distribution facilities. A separate major project operated by the state of California, the State Water Project (SWP), delivers about 70% of its water to urban users (including water for approximately 25 million users in the South Bay [San Francisco Bay], Central Valley, and Southern California); the remaining 30% is used for irrigation. Two federal and state pumping facilities in the southern portion of the Sacramento and San Joaquin Rivers Delta (Delta) near Tracy, CA, are a hub for water deliveries from both systems. The confluence of the Sacramento and San Joaquin Rivers and the San Francisco Bay is often referred to as the Bay-Delta. After five years of drought, rain and snowstorms in Northern and Central California in the winter of 2016-2017 improved water supply conditions in the state in 2017. According to the U.S. Drought Monitor, as of April 18, 2017, less than 1% of the state was in severe drought conditions. This represents a drastic improvement from one year ago, when 73% of the state was in severe drought conditions, and two years ago, when 92% fell under this designation. The stress on water supplies due to the drought resulted in cutbacks in water deliveries to contractors receiving water from the CVP and SWP. In 2015, California Governor Jerry Brown mandated the first-ever 25% statewide reduction in water use for nonagricultural users. On May 18, 2016, California's State Water Resources Control Board (SWRCB) adopted a new regulation that replaces the prior percentage reduction-based water conservation standard with a localized "stress test" approach, which remains in effect. On April 7, 2017, the governor lifted the statewide drought emergency, but maintained a number of prior executive actions aimed at saving water. After several consecutive years of cutbacks, in a series of announcements in spring 2017, Reclamation provided its estimated water allocations for CVP contractors in water year 2017 (October 2016 through September 2017). For the first time in years, water allocations for most CVP water contractors were 100%. Although some contractors south of the Sacramento and San Joaquin Rivers' Delta (Bay Delta) received a lower allocation in the initial March 2017 announcement (65% for agricultural contractors and 90% for municipal and industrial contractors, respectively), Reclamation subsequently revised these allocations upward to 100% in April. Legislation enacted in the 114 th Congress (Subtitle J of S. 612 , the Water Infrastructure Improvements for the Nation ([WIIN] Act) incorporated provisions from multiple California drought-related bills that had been considered dating to the 112 th Congress. These provisions directed pumping to "maximize" water supplies for the CVP (in accordance with applicable biological opinions), allowed for increased pumping during certain high water events, and authorized expedited reviews of water transfers. It is unclear the extent to which these provisions were used prior to 2017 allocations. The 115 th Congress is considering legislation that proposes additional changes to CVP operations. H.R. 23 , the Gaining Responsibility on Water Act (GROW Act), incorporates a number of provisions that were included in legislation during the 112 th -114 th Congresses, including those that were proposed in the 114 th Congress but were not included in the final version of the WIIN Act. The current Congress may consider these and other related changes, as well as oversight of CVP operations and implementation of WIIN Act CVP provisions. This report provides high-level summary information on recent hydrologic conditions in California and their impact on state and federal water management, with a focus on deliveries related to the federal CVP. It also summarizes some of the issues pertaining to CVP operations that are being debated in the 115 th Congress. As of April 18, 2017, less than 1% of California was in severe drought, as defined by the U.S. drought monitor. This amount represents a dramatic improvement from this time one year ago, when 73% of the state was subject to severe drought conditions, and two years ago, when 92% fell under this designation. The improvement was in large part due to heavy rain and snowfall in the winter of 2016-2017. As of March 2017, rainfall and snow-water content was 221% of average for the current water year. The April 1 snow-water equivalent is another important measure of California's water supplies. As of that date in 2017, statewide snow-water equivalent was approximately 164% of the historical average. As a result of increased precipitation, water levels at several of California's largest reservoirs also continued to rebound in 2017 relative to prior years (see Figure 2 ). In March 2017, all five of California's largest reservoirs were at more than 100% of their historical average and 73%-99% of their total capacity at this time. For the reservoirs specifically serving the CVP (i.e., Shasta, Trinity, Folsom, New Melones, Millerton Lake, and the federal half of San Luis ), water year 2017 began with a total of 4.9 million acre-feet in storage but by mid-March this amount had almost doubled, with more than 9 million acre-feet in storage. Proposals and debates related to water allocations in California typically revolve around the two major water projects that serve the state's agricultural and municipal water suppliers: the federal CVP and the state of California's SWP. Although these projects supply water to users throughout the state, the major CVP and SWP pumps that supply water for Central and Southern California are located at the southern end of the Bay-Delta. Thus, an important distinction when discussing CVP water allocations and deliveries is between "North-of-Delta" (NOD) and "South-of-Delta" (SOD) water users. Each year, Reclamation announces estimated deliveries for its CVP contractors in the upcoming water year. The CVP--which covers approximately 400 miles in California, from Redding to Bakersfield--supplies water to hundreds of thousands of acres of irrigated agriculture throughout the state, including some of the most valuable cropland in the country. It also supplies water supplies to some wildlife refuges and municipal and industrial (M&I) water users. More than 9.5 million acre-feet of water per year is potentially available for delivery from the CVP to its contractors. This figure includes water that is available for delivery based on prior agreements with the holders of water rights that predate the CVP (i.e., Sacramento River Settlement Contractors, San Joaquin River Exchange Contractors ) or contracts with CVP agricultural and M&I water service contractors. Figure 3 , below, depicts an approximate division of maximum available delivery amounts, by percentage. The largest contract holders by percentage are CVP's Friant Division contractors (24%), located on the east side of the San Joaquin Valley; the Sacramento River Settlement Contractors (22%), located on the Sacramento River; CVP SOD water service contractors (22%), located in the project area south of the Sacramento and San Joaquin River's Delta; and the San Joaquin River Exchange Contractors (9%), located west of the San Joaquin River. In a normal water year, the CVP delivers much less than the maximum contracted amount. On average, approximately 7 million acre-feet of water is made available to CVP contractors (including 5 million acre-feet to agricultural contractors). In recent years, Reclamation has made significant cutbacks to water deliveries for many CVP contractors due to the drought, among other factors. In a series of announcements in February, March, and April 2017, Reclamation provided its initial allocations for the 2017 water year (see Table 1 , below). Reclamation announced that for 2017, it expected that a total of 8.8 million acre-feet of supplies would be available. In contrast to recent years, Reclamation estimated that it would be able to provide 100% of CVP water supplies for most water rights contractors with senior water rights predating the project, including Sacramento River Settlement Contractors and San Joaquin River Exchange Contractors. NOD CVP agricultural and M&I water service contractors also were expected to receive their full contract allotments in 2017, as were Friant Division contractors. Most CVP SOD agricultural water service contractors, including those in many of the state's largest and most prominent agricultural areas, received an initial allocation of 65% of contracted supplies, and SOD M&I contractors initially received a 90% allocation for 2017. However, these allocations were subsequently revised upward to 100% in April 2017. Prior to 217, the last time these users received 100% of their maximum contract allocations was 2006, and they have received their full maximum contract allocations only three times since 1990. Reclamation previously had noted that its lower initial allocation for SOD agricultural water service contractors was largely a result of two factors: (1) a conservative estimate of water supplies expected to be added to the system for the remainder of the year (thus, if the remainder of the year is not abnormally dry, the initial allocation might increase) and (2) limits to available water supplies in the federal half of San Luis Reservoir (an important provider of SOD water storage) due to rescheduled and carryover water from 2016. Reclamation noted that for 2017, environmental restrictions (e.g., Endangered Species Act and state water quality requirements) were expected to account for a relatively small share of cutbacks relative to prior years. To minimize future limitations on storage and allocations associated with the second item above, Reclamation stated that it plans to limit the availability of water to be carried over to the 2018 contract year to a maximum of 150,000 acre-feet. In increasing its 2017 allocation for SOD contractors up to 100%, Reclamation noted that the carryover limit of 150,000 would remain in place. The other major water project serving California, the SWP, is operated by the state of California's Department of Water Resources (DWR). As stated previously, the SWP primarily provides water to M&I users and some agricultural users. For 2016 and 2017, SWP water deliveries were significantly higher than they were in 2015 (when deliveries were limited to 20%). In April 2016, DWR estimated that SWP would be able to meet 60% of requested deliveries for water year 2016, or 2.5 million acre-feet. In April 2017, DWR increased its 2017 allocation estimate from 60% of requested supplies to 85%. Recent SWP allocations are shown in Table 2 . Widespread drought conditions over the previous five years--coupled with low water supplies in the state's major reservoirs and regulatory restrictions on CVP and SWP operations--affected sectors and areas throughout California. In 2015 and 2016, total statewide farm receipts declined sharply; cities and counties were required to institute major cutbacks and even water rationing in some cases. Many plant and animal populations declined, and a number of major wildfires occurred throughout the state. Some of these effects may linger for years. Thus, considerable attention is likely to be paid to CVP and SWP allocations in 2017 and beyond. Although agriculture constitutes a much smaller percentage of California's economy now than it did in the early and mid-20 th century, California agriculture is still the nation's largest producer in terms of cash farm receipts--accounting for 12.5% of the U.S. total in 2015, the last year for which national data are available. According to the U.S. Department of Agriculture/National Agricultural Statistics Service Crop Year Report, California farm and ranch receipts totaled $47 billion in 2015, down from $57 billion and $55 billion in 2014 and 2013, respectively. Although some agricultural users with access to groundwater or other supplies may have seen receipts grow despite the drought, others had to fallow land or uproot trees and shrubs. Some livestock producers had to purchase supplemental hay and grain. Fruit and nut orchards largely rely on irrigation to keep trees alive, and hundreds of thousands of acres were fallowed because sufficient water was not available. In addition to agriculture, water flows are also critical for hydropower, recreation, and fish and wildlife. For example, cool temperatures are needed in waterways and lakes to maintain aquatic ecosystems and species viability. Some salmon runs experienced a 95% loss of eggs laid in 2015 due to warm water temperatures, and surveys of Delta smelt in June 2016 found 13 adult smelt, the lowest catch in the history of the survey (the total population is estimated at 13,000--a record low. Although recent rains and projected runoff may improve conditions for salmon and smelt, poor ocean conditions in 2015 and 2016 will affect adult returns for coho and Chinook salmon; thus, 2017 returns remain uncertain. In addition to fisheries, recreational reservoirs, river-rafting opportunities, and recreational and commercial fisheries are all potentially at risk during a drought. California wetlands, which might adversely be affected by drought, also provide Pacific Flyway habitat, which is critical to migrating birds. Thus, some observers pay close attention to the allocations not only for irrigators but also to wildlife refuges and species. Complicating the hydrologic situation and water supply allocations is a complex web of state and federal regulatory requirements on CVP and SWP operations. These requirements affect how much water is delivered from the projects. They address releases of water from reservoirs and limits on pumping from the Bay-Delta to protect habitat, threatened and endangered species (e.g., salmon and Delta smelt), and water quality. In many years, pumping restrictions to protect state-set water quality levels, particularly increases in salinity levels, are greater than restrictions to protect endangered species. In contrast, in wet years, pumping restrictions due to regulations under the federal Endangered Species Act (ESA; 16 U.S.C. SSSS1531 et seq.) may have a higher impact on exports than water quality restrictions, and they may have proportionally higher impacts in certain months. There is disagreement over how much water might be available absent state and federal restrictions. Reclamation estimated that ESA restrictions accounted for a reduction of 62,000 acre-feet from the long-term average for CVP deliveries in 2014, while water quality restrictions accounted for another 176,300 acre-feet of this reduction. For 2015, Reclamation estimated that ESA accounted for approximately 144,800 acre-feet of CVP delivery reductions from the long-term average, but did not have a comparable estimate for water quality restrictions. For its part, DWR estimated that ESA restrictions resulted in a reduction of 47,000 acre-feet to SWP deliveries in water year 2014, and a reduction of 92,000 acre-feet in water year 2015. Comparable figures were not available for water quality restrictions. Ongoing cutbacks to CVP contractor allocations during times of increased water supplies have caused continuing criticism of Reclamation's operation of the CVP. As previously noted, Reclamation argued that its 2017 allocations for SOD users were largely the result of rescheduled and carryover storage in San Luis Reservoir requested by service contractors and contained minimal restrictions associated with environmental regulations. However, some users have noted that they would not need to be so reliant on carryover and rescheduled water in San Luis Reservoir if there were more certainty of additional water supplies during drought years. In recent years, debates have focused on the extent to which factors other than drought (e.g., endangered species and water quality requirements) have led to curtailments. To address these concerns and provide more water to agricultural and municipal contractors, some have proposed, among other approaches, that Congress amend Reclamation's directives in operating the CVP, including directing altered implementation of regulatory requirements under ESA that may restrict pumping operations (some of these proposals were enacted in the WIIN Act, see " WIIN Act ," below). Others, however, are opposed to modifying the implementation of ESA regulations and propose water conservation, water recycling, and increased storage, among other strategies, to provide more water for users and avoid possible extinction of certain species. Congress plays a role in CVP water management and has previously attempted to make available additional water supplies in the region by facilitating water banking, water transfers, and new storage. In recent years, Congress has enacted drought-related provisions aiming to benefit the CVP and the SWP, including extending authorization for the Reclamation States Emergency Drought Relief Act ( P.L. 102-250 ), providing authority to incorporate water storage into dam safety projects ( P.L. 114-113 ), and providing additional funding to Reclamation for western drought response in FY2015 ($50 million) and FY2016 ($100 million) Energy and Water Development appropriations bills, and most recently, Subtitle J of the WIIN Act ( P.L. 114-322 ; S. 612 ). Legislation enacted at the end of the 114 th Congress (the WIIN Act, enacted December 16, 2016) incorporated provisions from multiple California drought-related bills that had been under consideration. Among other things, these provisions directed agency officials to pump at the highest levels allowable under existing biological opinions, for longer periods. The WIIN Act also authorized higher levels of pumping than currently allowed during certain temporary storm events, unless managers showed that the increased levels would harm the long-term health of the listed species. These and other changes had been proposed in legislation dating to the 112 th Congress. However, other provisions from those previous bills were not included in the WIIN Act. During consideration of the bill, supporters of CVP operational changes contended that they could potentially make available additional water to users facing curtailed deliveries, while also improving the flexibility and responsiveness of the management and operations of the CVP and SWP. Opponents worried that the changes may have detrimental effects on species' survival in both the short and long terms and may limit agency efforts to manage water supplies for the benefit of species. Some of the notable CVP operational provisions in the WIIN Act aimed to provide the Administration with authority to make available more water supplies during periods in which pumping otherwise would have been limited. According to Reclamation, changes in the WIIN Act that directed increased communication and transparency in certain operational decisions influenced some decisions in the early part of winter 2016-2017 and led to the avoidance of certain pumping restrictions. However, Reclamation also has stated that many of the act's other authorities seem most applicable to drought years, when sensitivity to reverse flows in the delta is particularly acute and the need to preserve and maximize the use of available water supplies often is at its highest. Thus, it appears that for the relatively wet water year of 2017, the changes had a minimal effect on water allocations. Similar to recent congresses, the 115 th Congress is expected to consider new legislation that proposes additional changes to CVP operations. H.R. 23 , the Gaining Responsibility on Water Act (GROW Act) incorporates a number of provisions that were included in previous legislation in the 112 th , 113 th , and 114 th Congresses but were not enacted in the final version of the WIIN Act. Congress may consider this and similar legislation, as well as oversight of CVP operations and implementation of WIIN Act CVP provisions.

After five years of drought, rain and snowstorms in Northern and Central California in the winter of 2016-2017 significantly improved water supply conditions in the state in 2017. According to the U.S. Drought Monitor, as of late April 2017, less than 1% of the state was in severe drought conditions. This represents an improvement from one year prior to that date, when 73% of the state was in severe drought conditions, and two years prior, when 92% fell under this designation. Stress on water supplies due to drought resulted in cutbacks in water deliveries to districts receiving water from federal and state facilities, in particular the federal Central Valley Project (CVP, operated by the Bureau of Reclamation) and the State Water Project (SWP, operated by the State of California). In 2015, California mandated a 25% reduction in water use for nonagricultural water users, and overall SWP deliveries were limited to 20% of contractor requests. Some of these restrictions have since been relaxed. Reclamation estimated its initial water allocations for CVP contractors for the 2017 water year in a series of announcements in February, March, and April 2017. For the first time in years, initial water allocations for most CVP water contractors were 100%. Contractors south of the Sacramento and San Joaquin Rivers' Delta (Bay Delta) initially received lower allocations in March 2017 (65% for agricultural contractors and 90% for municipal and industrial contractors, respectively), but Reclamation subsequently revised these allocations upward to 100% in April. The allocations represented a drastic change from recent years, in which no supplies were made available to many of these contractors, who farm some of the most valuable irrigated agricultural land in the country. Most expect that the historically wet conditions of 2016-2017 will not continue in future years and that future water years will continue to see deliveries limited to some extent. Previous cutbacks to CVP deliveries (in particular during periods of increased precipitation) have caused some to criticize Reclamation's management of the CVP and question the extent to which factors beyond limited water supplies (e.g., restrictions to protect endangered species and water quality) influence water management and the quantity of water delivered to contractors. They argue that congressionally directed changes in the operation of the CVP that would result in increases to water allocations are needed. Other stakeholders argue that some of these changes could undercut environmental regulations, harm fish and wildlife, and potentially lower water quality. They also worry that legislative proposals that would alter the implementation of the Endangered Species Act could harm species in the region and set a precedent that could be used to affect other listed species in the future. Legislation enacted in the 114th Congress (Subtitle J of S. 612, the Water Infrastructure Improvements for the Nation [WIIN] Act) incorporated provisions from multiple California drought-related bills that had been considered dating to the 112th Congress. Among other things, these provisions directed pumping to "maximize" water supplies for the CVP (in accordance with applicable biological opinions), allowed for increased pumping during certain high water events, and authorized expedited reviews of water transfers. Similar to recent congresses, the 115th Congress is considering legislation that proposes additional changes to CVP operations. H.R. 23, the Gaining Responsibility on Water Act (GROW Act) incorporates a number of provisions that were included in previous legislation but were not in the final version of the WIIN Act. Congress may consider this and similar legislation, as well as oversight of CVP operations and implementation of WIIN Act CVP provisions. This report provides an abbreviated background on the CVP and SWP. It also provides a summary of recent hydrologic conditions in California and their effect on water deliveries.

Members of Congress and the public are increasingly concerned about the ability of the Food and Drug Administration (FDA) to ensure that the drugs sold in the United States are safe and effective. Legislators, industry, the public, and FDA scientists have raised questions about FDA's collection and release of safety data, and whether the agency has the authority and resources to ensure adequate research over the marketing life of the pharmaceutical products it regulates. In 2004, the regulatory, medical, and industry debate became very public with reports of cardiovascular hazards posed by the pain medicine Vioxx (one of several COX-2 nonsteroidal anti-inflammatory drugs then on the market), and of children facing increased risk of suicidal thoughts and actions when taking certain antidepressants (such as the selective serotonin reuptake inhibitors Paxil and Zoloft). Not only was Congress asking whether the manufacturers knew of these risks while continuing to market the drug, but also whether FDA should have known of the risks and done more to protect the public. At the height of public and Congressional attention, FDA asked the Institute of Medicine (IOM) to "conduct an independent assessment of the current system for evaluating and ensuring drug safety postmarketing and make recommendations to improve risk assessment, surveillance, and the safe use of drugs." IOM released its report in September 2006. FDA issued its response in January 2007 and noted relevant activities the agency has begun and others it has planned. Among the planned activities are those in its proposal for a reauthorization of the prescription drug user fee program (PDUFA IV). In the meantime, several Members of Congress have introduced bills to address drug safety and FDA's role in protecting the public's health. This report provides a side-by-side comparison of: Institute of Medicine: recommendations in its September 2006 report, The Future of Drug Safety: Promoting and Protecting the Health of the Public ; Food and Drug Administration: announced actions and plans to address problems identified in the IOM report; S. 468 / H.R. 788 (the Food and Drug Administration Safety Act of 2007), introduced on January 31, 2007, by Senators Grassley, Dodd, Mikulski, and Bingaman, and Representatives Tierney and Ramstad; S. 484 (the Enhancing Drug Safety and Innovation Act of 2007), introduced on February 1, 2007, by Senators Enzi and Kennedy; and H.R. 1165 (the Swift Approval, Full Evaluation (SAFE) Drug Act), introduced on February 16, 2007, by Representative Markey. The bills and the IOM report address many of the same issues, often with similar approaches though at times with major differences. The IOM report addressed only drugs, not biological products (e.g., vaccines), in keeping with the charge FDA gave it. FDA's response to the IOM recommendations, therefore, relates to drugs, but also states that the approach to drug safety is relevant to all medical products. All the bills would amend the Federal Food, Drug, and Cosmetic Act (regarding the regulation of drugs); S. 484 would also amend the Public Health Service Act (regarding the regulation of biologics). Highlighted below are a few of the more significant items regarding drug safety. S. 468 / H.R. 788 would remove the post-approval drug safety activities from FDA's Center for Drug Evaluation and Research (CDER) and create a new Center for Postmarket Evaluation and Research for Drugs and Biologics (the Center). The IOM report does not suggest that approach to strengthen FDA's postmarket activities, nor do the other pending bills. The bills and the IOM recommendations aim to strengthen FDA's ability to make sure drug manufacturers (application sponsors) appropriately design and conduct postmarket studies and disclose the results to the public. S. 468 / H.R. 788 lays out requirements that the new Center for Postmarket Evaluation and Research for Drugs and Biologics would administer; S. 484 would achieve this with a process it calls a Risk Evaluation and Mitigation Strategy (REMS); and H.R. 1165 would allow the Secretary to require certain studies. The IOM recommended and all the bills would allow the Secretary to penalize (through civil fines, injunctions, or withdrawal of marketing approval or licensure) sponsors who do not conduct required studies or complete them on time, or who fail to report study results. The IOM report and the bills address the need for FDA authority to require pre- and postmarket studies. S. 468 alone would give FDA the authority to require that those studies compare a drug's safety and effectiveness with that of other drugs. All three bills would require a variety of drug safety activities. They differ in how to fund them. S. 468 / H.R. 788 would authorize appropriations to carry out the bill's provisions; S. 484 would rely on user fees, expanding FDA's existing authority to use such fees; and H.R. 1165 does not address funding. The IOM committee not only recommended that Congress provide "substantially increased resources" to FDA, but noted that all its other recommendations could not be implemented without those resources. Table 1 addresses the range of FDA drug safety activities that the IOM recommended, along with FDA's response, and activities that the bills would authorize or require. The table structure follows the 25 IOM recommendations within the five categories of organizational culture, science and expertise, regulation, communication, and resources.

Members of Congress and the public are increasingly concerned about the ability of the Food and Drug Administration (FDA) to ensure that the drugs sold in the United States are safe and effective. In November 2004, FDA asked the Institute of Medicine (IOM) to assess the current system for evaluating and ensuring drug safety and to make recommendations to improve risk assessment, surveillance, and the safe use of drugs. IOM released The Future of Drug Safety: Promoting and Protecting the Health of the Public in September 2006, and FDA issued its response in January 2007. The following drug safety bills have been introduced in the 110th Congress: S. 468 / H.R. 788, S. 484, and H.R. 1165. Although the legislation and the IOM report address many of the same drug safety issues, the bills differ in their treatment of FDA authority to require action and to enforce compliance, comparative effectiveness studies, and how to fund any additional agency activities. For example, S. 468 / H.R. 788 would strengthen FDA's post-approval drug safety activities by creating a new Center for Postmarket Evaluation and Research for Drugs and Biologics. The other bills would leave these activities where they currently reside in the Center for Drug Evaluation and Research. All the bills would allow the FDA to penalize (through civil fines, injunctions, or withdrawal of marketing approval or licensure) drug manufacturers who did not conduct required postmarket studies or who failed to report study results. The IOM committee recommended that Congress provide substantially increased resources to FDA to bolster its drug safety activities. S. 468 / H.R. 788 would authorize appropriations to carry out the bill's provisions, S. 484 would rely on user fees, expanding FDA's existing authority to use such fees, and H.R. 1165 does not address funding.

The brownfields tax incentive in section 198 of the Internal Revenue Code expires on December 31, 2007. It was first enacted in the Taxpayer Relief Act of 1997 ( P.L. 105-34 ), and has been extended four times, most recently in 2006. The provision is intended as a stimulus to the development of brownfields by allowing developers to recoup some of their cleanup costs. There is now more information available to the Congress as it considers the future of section 198 than was available when previous extensions were enacted. The 110 th Congress may consider another short-term (or long-term) extension, making the tax extension permanent, or allowing it to expire. Another possibility is to repeal the recapture provision. A brownfield is a commercial or industrial site that is abandoned or underutilized, and where redevelopment has not occurred because of the presence, or perception of the presence, of hazardous substances, and the fear of the accompanying liability for the costs of environmental cleanup. These are not traditional Superfund sites, which are the nation's worst hazardous waste locations. Generally (though not always), they are not highly contaminated and therefore present lower risks to health, and cost comparatively less to clean up than Superfund sites. In a 2004 report, the Environmental Protection Agency (EPA) estimated that there are between 500,000 and 1 million brownfield sites, though how many would require cleanup to make them safe for reuse is unknown. Based on information from EPA's brownfield assistance programs, 70% of them (350,000--700,000) might require some degree of cleanup expenditure. Using rough estimates, EPA also calculated that total expenditures at state sites, excluding those on the Superfund National Priorities List, by both public and private entities have been about $1 billion annually in recent years. During this same period cleanup has been accomplished at about 5,000 state and private party sites per year. At this rate, 150,000 sites would be cleaned up, at a cost of $30 billion over the next 30 years, which was the time horizon of the EPA report. To help address this problem, Congress enacted EPA's brownfields program of grants and technical assistance, and also relaxed certain Superfund liability provisions, established a "brightfields" demonstration program (for brownfield sites redeveloped using solar energy technologies), authorized tax-exempt facility bonds for qualified green building and sustainable design projects, and provided two brownfield tax incentives. (See Table 1 .) This report examines the extent to which one of these, the federal section 198 tax incentive, has been used. The section 198 brownfields tax incentive expires on December 31, 2007. First enacted as part of the Taxpayer Relief Act of 1997 ( P.L. 105-34 ), the incentive allows a taxpayer to fully deduct the costs of environmental cleanups in the year the costs were incurred (called "expensing"), rather than spreading the costs over a period of years ("capitalizing"). Its purpose is to encourage developers to rehabilitate sites where environmental contamination stands in the way of bringing unproductive properties back into use. (The provision has no direct application for public sector entities, such as municipalities, that develop brownfields and do not pay income taxes.) To take advantage of the brownfields tax incentive, the developer of a property has to obtain a statement from the state environmental agency that the parcel is a "qualified contaminated site" as defined in the law. A significant factor concerning the tax incentive is that it is subject to "recapture." This means that the gain realized from the value of the property when it is later sold must be taxed as ordinary income (rather than at the generally lower capital gains rate) to the extent of the expensing allowance previously claimed. This dilutes the benefit of the tax break and has the effect of simply postponing a certain amount of the developer's tax liability until the property is resold. As a stimulus to development, the overall value of the brownfields tax break is dependent on a number of factors, including the total cost of the project, the cost of cleanup, how long the developer intends to hold the property before selling it, and the developer's individual tax situation. Repeal of the recapture provision has been favored by the Real Estate Roundtable and its partner associations representing various aspects of the real estate industry (architects, building owners and managers, mortgage bankers general contractors, and others). Federal tax law generally requires that the cost of improvements to a property must be deducted over a period of years, whereas other expenses, such as repairs, may be deducted in the same year they are incurred. Being able to deduct the costs in the year when they are incurred is a financial benefit to the taxpayer. A 1994 ruling by the Internal Revenue Service (IRS) held that the costs of cleaning up contaminated land and groundwater are deductible in the current year, but only for the person who contaminated the land . In addition, the cleanup would have to be done without any anticipation of putting the land to a new use. Further, any monitoring equipment with a useful life beyond the year it was acquired would have to be capitalized. On the other hand, a person who acquired previously contaminated land, such as a brownfield site, would have to capitalize the costs of cleanup, spreading them out over a number of years. Some have noted that this is a somewhat perverse situation that works against one who would want to buy and clean up a contaminated property, and put it to use. Cleanup costs are a major barrier to redevelopment of contaminated land. The Taxpayer Relief Act of 1997, which included the brownfields tax incentive, thus had the effect of expanding benefits and allowing developers who had not caused the contamination to deduct cleanup costs from their taxable income in the current year, rather than having to capitalize them. As initially enacted, the brownfields tax incentive was available only to a property that was located in a "targeted area." The law defined a targeted area as a census tract with greater than 20% poverty, an adjacent commercial or industrial census tract, an Empowerment Zone or Enterprise Community, or one of the 76 brownfields to which EPA had awarded a brownfield grant at that time. Congress repealed the targeted area geographic restrictions and extended the tax break to all brownfields ("qualified contaminated sites") in the Consolidated Appropriations Act, 2001 ( P.L. 106-170 ). Since FY2003, the Administration's budget proposals have proposed making the tax incentive permanent. It has been in effect continuously since its enactment in 1997 and has been extended four times, most recently in the Tax Relief and Health Care Act of 2006, P.L. 109-432 (Division A, title I, SS 109). This extension through 2007, which was enacted on December 20, 2006, was made retroactive to December 31, 2005, when the previous extension expired. EPA supports the permanent extension, as does the Real Estate Roundtable and its partners noted above. This 2006 enactment also broadened the definition of hazardous substances to include petroleum products (including crude oil, crude oil condensates, and natural gasoline) for purposes of the tax incentive (but not for any other part of the Superfund Act). Until recently, there was no official information available at the federal level on the extent of use of the SS 198 provision. It did not have its own separate line on either individual or corporate federal income tax forms (which is why CRS was first asked to perform the state survey in 2003). In 2004 the IRS introduced a new form, Schedule M-3, which provides information, for the first time, on the use of the section 198 brownfields tax incentive. Only large and midsize businesses (corporations and partnerships with total assets of $10 million or more) are required to file the new Schedule M-3 with their returns. Use of the schedule was phased in, and in the first year of use, tax year 2004 (for returns submitted in 2005), only some corporations and no partnerships were required to file it. Those corporations that did use it were not required to complete the whole form, and part of the information on the brownfields tax incentive was in the optional part of Schedule M-3. A number of corporations completed it anyway. The results for 2004 only recently became available, and show section 198 remediation costs of $294,970,000, reported by 110 corporations out of a population of 5,557,965 corporate returns. This information is obviously limited, since the response for 2004 excluded more than half the corporations and all the partnerships, response on the brownfields tax incentive was at the corporations' discretion, and it was limited to those companies with assets of $10 million or more. Also, the data show how much the 110 corporations spent on cleanup costs, but do not reveal at how many brownfields the money was spent. The compilation of data from tax year 2005 (when reporting was mandatory for all corporations) is ongoing, and will be available to the public in February 2008. Partnerships with assets over $10 million were required to use Schedule M-3 beginning with tax year 2006, and those results will be available in February 2009. Even when fully phased in, though, the form will not be applied to entities with assets under $10 million. For more information on Schedule M-3, see Appendix . CRS surveyed the appropriate environmental agency in each state in 2003, and again in 2007, to determine the number of brownfield certifications they had issued. In 2003, 27 states reported that since the enactment of the provision in August 1997 until the time of the survey in April-June 2003 they had received a total of 161 requests for certification, of which 147 were approved, and 14 were denied. Twenty-three states reported receiving no formal requests. In the 2007 survey, there was a modest increase. Twenty-nine states reported receiving 175 requests from 2003 until the second survey in February-April 2007, of which 170 were granted. Twenty-one states received no requests. There were four additional states that received and approved requests in 2003-2007 (New Mexico, Colorado, West Virginia, and New Hampshire), and two that had received requests in the 2003 survey, but none in the 2007 survey (Georgia and Kentucky). The 175 requests are equivalent to just under 44 per year for 2003-2007. In the earlier period August 1997 to spring 2003) the average was about 28 per year. The state-by-state responses are presented in Table 2 . While this is a significant increase on a percentage basis, about 57%, the numbers are far below what was anticipated prior to the original enactment of the tax break in 1997. According to hearing testimony, EPA and the Treasury Department expected the incentive to "be used at 30,000 sites over the 3-year life of the incentive" (10,000 sites per year), but as of summer 1999 it had been used at "only a couple dozen sites." The conference report accompanying the 1997 bill estimated the budget effect of the provision as costing the Treasury $417 million over 5 years ($83.4 million per year). In 1999, as Congress was considering making the tax incentive permanent, Treasury estimated it would be used to clean up 18,000 brownfields over the next 10 years (1,800 per year); the department anticipated that the loss in revenue resulting from the tax incentive would be $600 million for 5 years ($120 million per year), and that it would induce an additional $7 billion in private investment. The conference report in that year estimated a revenue loss of $114 million over 5 years ($22.8 million per year). Because of this discrepancy between expectations and the apparent results, CRS asked the state agency representatives who responded to the survey for their opinions as to why so few brownfield developers were taking advantage of the tax incentive. CRS also contacted four private developers and the editor of a brownfields trade publication to solicit their viewpoints on the subject, as well. A summary of their comments follows. Land development is a large and diverse industry. There is only a very limited number of developers who specialize in brownfields. The size of brownfield projects ranges from one acre to about a thousand acres; 25 to 50 acres is typical. They take longer to complete--probably double the time of non-brownfield development--because environmental cleanup can be unpredictable. Several respondents felt that the incentive doesn't offer that much financial benefit, especially when one considers the recapture provision, and particularly if the property is sold in the short term. It is not a driving factor that will tip the decision toward cleanup. Also, a number of states offer tax breaks and other incentives that are more generous than the federal incentive, which by comparison may not seem worth the effort. On the other hand, one developer observed that it was necessary to have the right circumstances to successfully use the section 198 incentive. Depending on the project, and the tax status of the different investors, he indicated it might be more advantageous to employ other tax strategies. Another agreed that the benefit was meaningful, especially when used at a larger site. It is another way to make a deal incrementally successful. The provision has been extended only for periods of a year or two at a time, and twice the extensions were partially retroactive, since it had expired before the extension was passed. This on-again, off-again history creates uncertainty regarding its future availability, and makes it difficult for developers to plan, particularly for large-scale, multi-year projects. Even smaller projects can encounter unforseen delays, pushing them past the provision's end date, and causing forfeiture of anticipated benefits. For an economically marginal project, this uncertainty could be enough to decide against going forward. One state official mentioned that at times he was unsure of the incentive's status, which made him reluctant to recommend it. Lack of information about the incentive's availability was also blamed for the level of use. Sometimes this was accompanied by criticism of EPA for insufficient leadership, although it was also acknowledged that the agency had improved in recent years. Some states also recognized their own shortcomings in promoting the incentive. A few mentioned that the new eligibility of petroleum-contaminated sites might increase its use. One developer observed that publicity, or an outreach program aimed at accountants might be what was needed. Another commented that even after 10 years, the provision remained somewhat "esoteric," and even tax advisors were not all aware of it. A corollary of the previous point is that it is possible that many developers, especially smaller ones, are unaware of both the 1994 IRS ruling and the existence of the section 198 brownfields tax incentive. These persons would simply claim their environmental cleanup costs on their tax returns in the same way they claimed other development costs. The IRS authority on section 198 said that she found this plausible, and while there is no direct information on how much it is used, an indirect indicator is that she has received no inquiries from IRS auditors about taxpayers who use the incentive. One state thought it was possible that developers used the agency's "milestone letters" (certifying that the developer has reached a certain point in the cleanup process) for other purposes, including supporting their income tax returns. A few states mentioned that LLCs (limited liability companies) are sometimes created for brownfield projects. In the first few years, when the environmental cleanup would be carried out, they would have no income tax, so the incentive would be useless. In the 110 th Congress, one bill has been introduced that addresses section 198. H.R. 1753 makes the brownfields tax incentive permanent and repeals the recapture provision. Introduced by Representatives Jerry Weller and Xavier Becerra on March 29, 2007, the bill was referred to the Ways and Means Committee. There has been no further action. CRS conducted the interviews before learning of the existence of Schedule M-3. None of the interviewees knew of the form either, judging by the conversations. The early information from the new IRS form shows that the brownfields tax incentive is indeed being used by large and midsize businesses, and somewhat more than the survey indicated. The number of corporations reporting its use are likely to rise from 110 as other corporations and partnerships begin filing the M-3. There will also continue to be an unknown number of smaller businesses with total assets of less than $10 million that will take advantage of section 198. The survey showed an average of about 44 brownfield certifications per year in 2003-2007, and the IRS form revealed that 110 corporations reported deductions for cleanup costs of $295 million in 2004, an average of $2.68 million per company. One would expect, but there is no way to know, that the companies worked on more than one site each. The Schedule M-3 data confirm the survey findings that the provision is not used as much as was expected when section 198 first became law. Nevertheless, these first results show that $295 million was reported as a deduction item on Schedule M-3 for tax purposes by the private sector for cleaning up brownfields in 2004, and that was the goal of the provision: to provide an incentive to bring contaminated lands back into productive use. The $295 million figure is from voluntary reporting by only a portion of the pertinent taxpayer universe, and it is very likely to increase now that the use of Schedule M-3 is mandatory for all corporations and partnerships. There is probably no way to measure whether the tax incentive has proven to be the reason why any certain number of brownfields have been cleaned up. Nor are we likely to know if repeal of the recapture provision would lead to more cleanups at economically marginal sites. The best observation may be what the interviewed developers said: that it can be a useful tool in some circumstances in putting a brownfield remediation/land development deal together. In that sense, brownfield supporters note that it has been a help in cleaning up the half million or more brownfield sites around the United States. It should be remembered that there is a certain unknown number of cleanups being accomplished by firms with assets under $10 million. From the survey, it does not seem that there are a great many of them, but it is also plausible that a fair number are also being done by individuals with no knowledge of IRS's 1994 revenue ruling or the section 198 tax incentive, and are simply treating their cleanup costs as normal development expenses. A factor that has sometimes affected the passage of the brownfields tax incentive is that it is one of a number of tax credits, deductions, and taxpayer benefits that have all been considered together in recent years. This group changes from year to year. For more information, see CRS Report RL32367, Certain Temporary Tax Provisions ( " Extenders " ) Expired in 2007 , by [author name scrubbed] and [author name scrubbed]. Table 2 presents the results of the survey in detail. Nineteen states reported in both the 2003 and 2007 surveys that they had received no applications for certification. Many in that group said they had received inquiries but no formal applications, and some of those states added that they had made efforts to publicize the availability of the incentive through their websites and at in-person presentations at various meetings. The 19 states that reported receiving no applications were: Four states reported receiving no requests in 2003, but did receive and approve requests in the 2003-2007 period. These are New Mexico, Colorado, West Virginia, and New Hampshire. Two states that received requests for certification in the first survey period reported receiving none in the 2003-2007 period: Georgia and Kentucky. In 2003, seven states had 10 or more applications: Wisconsin had 20; Massachusetts, 17; Delaware, 16; New York, 14; Virginia 11; and Michigan and Pennsylvania, 10 each. In 2007, six states had at least 10 applications: Wisconsin had 19; Massachusetts, 16; Rhode Island, 15; Maryland and Texas, 12 each; and Pennsylvania, 10. In addition to their income tax returns, corporate and partnership taxpayers are required to file financial statements (also called "balance sheets" or "books") which provide an overview of a business's profitability and financial condition, and permit comparisons both with the entity's financial statements of previous periods, and with other taxpayers. Ideally, a business's income tax return and its financial statement will agree with, and be consistent with each other. For a variety of reasons, "adjustments must be made to reconcile the differences between financial accounting based books and records[,] and the presentation required for federal income tax return purposes.... Schedule M-1, Reconciliation of Income (Loss) per Books with Income per Return fulfilled this role for corporate tax returns of all sizes for over forty years." Schedule M-1 is very short, only 10 lines long. As the national and international business environment evolved, and tax and financial issues became more complex over the last four decades, M-1 proved less and less useful. The major purpose of the form is to flag which returns should be examined further, and possibly audited. But as more and more information was aggregated into M-1's 10 lines, its strength as an analytical tool declined. Consequently, Schedule M-3 was developed for use by large and midsize businesses (those with total assets of $10 million or more). Compared to the 10 items of information collected on the M-1, the new M-3 collects about 300 data points on more than 75 lines. The additional information enables the IRS to more easily identify returns that may be using questionable means ("aggressive transactions," as they are sometimes referred to) to reduce their tax burden. It also increases efficiency by allowing prompt identification of returns that do not require further review. The increased transparency should have a deterrent effect, as well. On a broader level, the new M-3 provides a wealth of information for research and can bring to light trends that IRS may wish to investigate further. Another feature of the M-3 that IRS views as particularly significant is the form's distinction between temporary and permanent differences. It has been explained as follows: Temporary (timing) differences occur because tax laws require the recognition of some items of income and expense in different periods than are required for book purposes. Temporary differences originate in one period and reverse or terminate in one or more subsequent periods.... By their very nature, [they] involve issues regarding the correct year for the item's inclusion in income or deduction as an expense. From a tax administration standpoint, they concern the time value of money.... Purely temporary differences are generally low risk for tax administration--and important in terms of the magnitude of the difference and the time before the temporary difference turns--because of the time value of money. In contrast to temporary differences, permanent differences are adjustments that arise as a result of fundamental permanent differences in financial and tax accounting rules. Those differences result from transactions that will not reverse in subsequent periods.... [P]ermanent differences have the potential to substantially influence reported earnings per share computations, and, in the case of public companies, stock prices. Accordingly, permanent differences of a comparable size generally have a greater audit risk than temporary differences. Schedule M-3 was phased in for tax year 2004 for firms reporting total assets greater than $10 million filing the regular Form 1120 corporation income tax return. The M-3 is optional for firms with total assets less than $10 million. Some of these firms did report an M-3. It was not used for the following return types: 1120S for S corporations, 1120-L for life insurance companies, 1120-PC for property and casualty insurance companies, 1120-F for foreign corporations, 1120-RIC for regulated investment companies, 1120-REIT for real estate investment trusts, and 1120-A for small firms. Those using M-3 for 2004 were not required to complete the whole form; certain parts were optional, but the whole M-3 was required for 2005 (if the taxpayer's total assets exceeded $10 million). For three of the other Form 1120 return types (1120S, 1120-L, and 1120-PC), 2005 was the phase-in year, and 2006 was the full compliance year. Form 1120-F had phase-in in 2007, and the whole form will be required for 2008. Tax year 2005 information will be available in February 2008. There were 5,557,965 corporate taxpayers for 2004, of whom 35,929 filed the accompanying Schedule M-3. Partnerships (which use Form 1065) were required to use Schedule M-3 beginning with tax year 2006 (phase-in). That information will be available in February 2009. For tax year 2004, there were 2,546,877 partnership filers. Schedule M-1 is still being used by corporations with total assets under $10 million. It contains no information on the section 198 brownfields tax incentive.

What was regarded as a key brownfields tax incentive in the Internal Revenue Code expires on December 31, 2007. Originally enacted in the Taxpayer Relief Act of 1997 (P.L. 105-34), the provision allows a taxpayer to fully deduct the costs of environmental cleanup in the year the costs were incurred (called "expensing"), rather than spreading the costs over a period of years ("capitalizing"). The provision was adopted to stimulate the cleanup and development of less seriously contaminated sites by providing a benefit to taxpaying developers of brownfield properties. It also contains a "recapture" provision, which diminishes its benefits. In each of its budget proposals since FY2003, the administration has proposed that Congress make the incentive permanent. The 109th Congress renewed the provision (for the fourth time) through 2007 (P.L. 109-432) and made it effective retroactively to December 31, 2005, when the previous extension expired. The law also made sites contaminated by petroleum products eligible for the tax incentive. The 110th Congress may consider a variety of options, including granting another extension, making the incentive permanent, allowing it to expire, or repealing the recapture requirement. Until recently, information on the extent of use of the brownfields tax incentive could not be determined from federal income tax returns. Use of a new tax form, Schedule M-3, for corporations and partnerships with assets over $10 million began being phased in with tax year 2004. The first of those data, covering the 2004 tax year, became available in February 2007. They showed that section 198 environmental remediation costs of $295 million were reported by 110 corporations, out of a population of 5,557,965 corporate returns. This information is understated because it excluded more than half of all corporations, and all partnerships. To take advantage of the tax break, a developer has to obtain a certification from the state environmental agency that the site qualifies as a brownfield. CRS surveyed the agencies of all states in 2003, and again in 2007, to ask how many certification applications they had received and approved. In 2003, 27 states reported that they had received a total of 161 applications since enactment in 1997, of which 147 were approved. In 2007, 29 states reported that they had received 175 applications over the previous four years, of which 170 were approved. The results were somewhat surprising; before enactment in 1997 the Treasury Department and the Environmental Protection Agency had expected it to be used as many as 10,000 times per year. Accordingly, CRS also asked the state agencies, four private developers, and the editor of a trade publication for their views on why the tax incentive was so little used. There was divided opinion on the utility of the tax incentive, and criticism of its stop-and-go nature due to its expiration and renewal every one or two years. The Schedule M-3 data for firms with more than $10 million in assets confirm the CRS survey findings of modest use of the section 198 brownfields tax incentive. The tax form was fully phased in with tax year 2006, and full information will be available in February 2009. However, as discussed in this report, it appears that the section 198 tax break is a useful tool in some brownfield situations.

President Bush and Moroccan King Mohammed VI announced at a meeting in Washington, D.C. on April 23, 2002, that the two countries would seek to negotiate a free trade agreement. On October 1, 2002, U.S. Trade Representative Robert Zoellick sent Congress formal notification of the Administration's intention to begin FTA talks with Morocco. In his notification letter, Zoellick stated that the completion of an FTA with Morocco would "support this Administration's commitment to promote more tolerant, open and prosperous Muslim societies." Negotiations for the FTA were launched on January 21, 2003, in Washington. After a total of eight negotiating rounds, U.S. Trade Representative Robert Zoellick and Moroccan Minister Taib Fassi-Fihri reached agreement on March 2, 2004 on a comprehensive FTA. After the required 90-day congressional notification period expired, the two sides signed the agreement on June 15, 2004. Both the Senate and House approved implementing legislation in July 2004, and President Bush signed the legislation into law ( P.L. 108-302 ) on August 3, 2004. The Moroccan Parliament ratified the agreement on January 18, 2005, but subsequently had to legislate changes in the country's intellectual property laws to implement its FTA obligations. According to the Office of the U.S. Trade Representative, Morocco was chosen as an FTA partner for multiple reasons. First, USTR officials stated that a trade agreement with Morocco would further the executive branch's goal of promoting openness, tolerance, and economic growth across the Muslim world. Second, Morocco has been a strong ally in the war against terrorism. Third, the FTA would ensure stronger Moroccan support for U.S. positions in WTO negotiations. Fourth, USTR officials maintained that an FTA would help Morocco strengthen its economic and political reforms. Fifth, the agreement is expected to provide U.S. exporters and investors with increased market access. The Moroccan trade pact is now the fourth FTA (after Israel, Jordan, and Bahrain) the United States has in force with a Middle Eastern country. An agreement with Oman has been signed, but not yet considered by Congress. Each agreement is intended to be an integral part of President Bush's strategy to create a Middle East Free Trade Area by 2013. Morocco is a moderate Arab state which maintains close relations with Europe and the United States. Situated in North Africa on a land mass slightly larger than California, Morocco borders the North Atlantic ocean and Mediterranean Sea between Algeria and Western Sahara. Approximately 99% of its 30 million people are Muslim. The government of Morocco today is a constitutional monarchy. King Mohammed VI, who assumed the throne in July 1999, is the head of state. The constitution grants the King extensive powers, including the authority to appoint the prime minister and several key ministers individually, and approve the Council of Ministers, the power to dismiss the government, the power to dissolve the parliament, and the power to rule by decree. The King also serves as the supreme commander of the armed forces and serves as Morocco's religious leader or "Commander of the Faithful." The King, and not the Prime Minister, also defines the policy directions and priorities of the government. On the one hand, there have been some calls from elements of the Moroccan press for reform of the constitution to reduce the powers of the King, while enhancing the powers of the Parliament. On the other hand, many analysts believe that King Mohammed VI is dedicated to addressing Morocco's underlying social problems, while gradually liberalizing the political system further. Following September 2002 parliamentary elections, King Mohammed named Driss Jettou as Prime Minister and head a six-party center-left coalition government. Mr. Jettou is often described as a forceful technocratic leader. Yet Morocco's over 20 political parties create a fragmented political system, making it difficult for the government to reach consensus on how best to address its many social and economic problems. Critically, high unemployment that averages over 20% in urban areas, increasing income inequality, and widespread poverty provide fertile ground for increasing support for a fundamentalist Islamist movement, al-Adl wal-Ihsane (Justice and Charity). With a per capita income of about $2,000 (2002), Morocco also faces challenges typical of many poor developing countries. These include preparing the economy for freer trade, reducing public sector wage rates and bloated ministries, increasing labor market flexibility and skills, restoring a crumbling infrastructure, and reducing dependence on imported energy. Morocco's economy is based on mining, agriculture, fishing, tourism, a growing manufacturing sector, and a deregulated telecommunications sector. Morocco has the world's largest phosphate reserves, and exports of phosphates from state-owned companies account for about 17% of Morocco's total exports. Agriculture accounts for between 15-20% of GDP and employs between 40-45% of its workforce (services employs around 35% and industry around 15%). Morocco is a net exporter of fruits and vegetables and a net importer of cereals, oilseeds, and sugar. Severe droughts often hurt Morocco's farm production, thereby serving as a drag on economic growth. The Moroccan economy also depends heavily on the inflow of funds from Moroccans working abroad. The illegal production and export of cannabis also plays a role in the economy, particularly in the north. The European Union is its primary trading partner, accounting for nearly 67% of its exports and 55% of its imports in 2002. France is Morocco's single largest trading partner by a wide margin. The United States is a relatively small trading partner, accounting for about 5% of Morocco's total trade. The Bush Administration's decision to negotiate a FTA with Morocco was a surprise to a number of observers. A U.S. Chamber of Commerce official, for example, questioned the decision on the grounds that the United States does not do a lot of business with Morocco and that other Middle Eastern countries, such as Egypt and Turkey, would be more suitable partners. The Bush Administration, backed by a coalition of U.S. companies that support the negotiation, responded that both U.S. economic and political interests (see below) will be well served by the proposed FTA. Before the FTA, U.S. exports to Morocco faced an average tariff of 20% versus a 4% average tariff that Moroccan exports face in the U.S. market. By moving towards duty-free treatment, two-way trade flows should expand beyond the current small $ 854 million level (comprising U.S. exports of $469 million and imports of $385 million in 2003). In addition to the current leading U.S. exports to Morocco (aircraft, corn, and machinery), U.S. exports of products such as wheat, soybeans and feed grains, beef and poultry are expected to increase under the FTA. New commercial opportunities for U.S. exporters may also be derived by offsetting current tariff preferences as embodied in the European Union-Morocco Association Agreement, which became effective on March 1, 2000. This agreement provides preferential tariff treatment for most EU industrial goods, but largely excludes agriculture. Because agriculture will be included in the U.S.-Moroccan FTA, many U.S. agricultural interests believe they can enhance their position vis-a-vis European producers. The U.S.-Moroccan Business coalition also argues that the FTA will increase the access American firms have to Morocco's service sector. Besides telecommunications and tourism, the coalition maintains that new opportunities for U.S. firms in the banking, energy, audio-visual, telecommunications, finance, and insurance sectors are likely to be opened up as a result of Moroccan economic reforms. In addition, the FTA could support the Bush Administration's trade strategy of "competitive liberalization." By helping a developing country that recognizes the importance of trade liberalization as a key ingredient of development, the Moroccan FTA could demonstrate to other developing countries the benefits of economic reform and trade liberalization, including the WTO round of multilateral negotiations - the Doha Development Agenda. As a Chair of the G-77 and Africa Group within the WTO, the Bush Administration maintains that Morocco is in a leading position to promote the benefits of the Doha Round to other developing countries. Similar to the Jordan-U.S. FTA, the FTA with Morocco is viewed by the Administration as a tool to support a moderate Muslim state in the region. By contributing to increased development and prosperity in Morocco, the FTA is intended to contribute to the stability of the region and send a concrete signal to countries in the Middle East about the benefits of closer economic and political ties with the United States. The FTA is also a mechanism for advancing the overall U.S.-Moroccan relationship. As Morocco is one of the strongest U.S. allies in the war on terrorism in the Middle East, the FTA is intended as a reward for its support, as well as send a signal to the rest of the Arab world that the United States wants closer ties. At a time many voices in the Arab and Muslim world are calling for boycotts against the United States, Morocco is seeking a closer economic relationship. The agreement provides that more than 95% of bilateral trade in consumer and industrial products will become duty-free immediately, and all other remaining tariffs will be eliminated within nine years. U.S. export sectors such as information technology products, construction equipment, and chemical stand to benefit. For the import-sensitive textile and apparel sector, trade will be duty-free if imports meet the Agreement's rules of origin. The Agreement requires qualifying apparel to contain either U.S. or Moroccan yarn and fabric and a limited amount of third country content. On agriculture, U.S. poultry, beef, and wheat exports will benefit from liberalization of Morocco's tariff-rate quotas. Morocco will also provide immediate duty-free access on products such as pecans, frozen potatoes, and breakfast cereals and more graduated duty-free access on other products such as soybeans, sorghum, and grapes. For its part, the United States will phase-out all agricultural tariffs, most in fifteen years. Morocco will provide U.S. service providers such as audiovisual, express delivery, telecommunications, computer and related services, construction, and engineering with enhanced access to its market. U.S. banks and insurance companies will have the right to establish subsidiaries and joint ventures in Morocco, as well as the right to establish branches, subject to a four year phase-in for most insurance providers. Protections and non-discriminatory treatment are provided for digital products such as U.S. software, music, text, and videos. Protections for U.S. patents, trademarks, and copyrights parallel and in some cases deepen the standards of other U.S. FTAs. In the area of telecommunications, each government commits to that users of the telecom network will have reasonable and non-discriminatory access to the network. U.S. phone companies will have the right to interconnect with former monopoly networks in Morocco at non-discriminatory, cost-based rates. The agreement provides for anti-corruption measures in government contracting. U.S. companies are provided access to bidding on a range of Moroccan government contracts and procurement. Both countries also commit to enforce their domestic labor and environmental laws, and the agreement includes a cooperative mechanism in both labor and environmental areas. Agricultural producers in the United States welcome the tariff reductions that will be phased in as a result of the FTA. In particular, the American Soybean Association said that the duty on soybeans for processing will be eliminated immediately, and soybeans imported for other uses and processed soy products will be reduced by 50% in the first year of the agreement and phased out over the next five years. Previous import duties in Morocco were 2.5% on soybeans for processing, 25% on soybean meal, and 75.5% for soy products that are used in human food. The National Cattlemen's Beef Association looks forward to increased market access to Morocco's hotel and restaurant industry as Morocco opens its market to U.S. beef with a low in-quota tariff that goes to zero quickly. According the U.S. Trade Representative's Office, producers of poultry, wheat, corn, and sorghum will also gain from the agreement. Most U.S. trade advisory committees endorsed the agreement. The most senior committee, the Advisory Committee for Trade Policy and Negotiations, found the agreement "to be strongly in the U.S. interest and to be an incentive for additional bilateral and regional agreements." Advisory committees on services, goods, and intellectual property also expressed broad support. However, the Labor Advisory Committee expressed concerns that were echoed by several Ways and Means Committee Democrats at the July 7, 2004 hearing. These concerns were basically whether the trade agreement goes far enough in encouraging Morocco to meet basic international labor standards. However, the accord generally is credited with influencing significant labor reforms in Morocco. For example, a new labor law that went into effect on June 8, 2004 (1) raises the minimum employment age from 12 to 15 to combat child labor; (2) reduces the work week from 48 to 44 hours with overtime rates payable for additional hours; (3) calls for periodic review of the Moroccan minimum wage; and (4) guarantees rights of association and collective bargaining and prohibits workers from taking actions against workers because they are union members. The U.S. Department of Labor, meanwhile, has created an assistance program with a budget of nearly $9.5 million to improve industrial relations and child labor standards in Morocco, and the Moroccan government has ratified seven of the eight core International Labor (ILO) conventions.

The United States and Morocco reached agreement on March 2, 2004 to create a free trade agreement (FTA). The Senate approved implementing legislation ( S. 2677 ) on July 2, 2004 by a vote of 85-13 and the House approved identical legislation ( H.R. 4842 ) on July 22, 2004 by a vote of 323-99. The next day, the Senate passed House approved H.R. 4842 without amendment by unanimous consent. The legislation was signed by President Bush into law ( P.L. 108-302 ) on August 3, 2004. The agreement entered into force on January 1, 2006, a year later than planned due to the need for Morocco's Parliament to pass amendments to its intellectual property laws. The FTA is intended to strengthen bilateral ties, boost trade and investment flows, and bolster Morocco's position as a moderate Arab state. More than 95% of bilateral trade in consumer and industrial products became duty-free upon entry into force, while most other remaining barriers are to be phased out over a number of years. This report will be updated later this year.

Most federal employees (59.1%) are paid on the General Schedule (GS), a pay scale that consists of 15 pay grades in which an employee's pay increases are to be based on job performance and length of service. Some Members of Congress, citizens, and public administration scholars have argued that federal employee pay advancement should be more closely linked to job performance. With explicit congressional authorization, the Department of Defense (DOD) developed the National Security Personnel System (NSPS) as a unique personnel and pay system attempting to more closely link employee pay to job performance. NSPS was beset by criticisms since it went into effect in 2006. The system faced legal and political challenges from unions and employees who claimed it was inconsistently applied and caused undeserved pay inequities, among other concerns. On October 7, 2009, House and Senate conferees reported a version of the National Defense Authorization Bill for Fiscal Year 2010 that included language to terminate NSPS. On October 8, 2009, the House agreed to the conference report. The Senate agreed to the conference report on October 22, 2009. On October 28, 2009, the President signed the bill into law ( P.L. 111-84 ). DOD must now return employees currently enrolled in NSPS to the GS or to the pay system in which they were previously enrolled. The return to the GS or other pay system must be completed by January 1, 2012, pursuant to the law. NSPS was initially intended to cover all DOD employees, but had a final total enrollment of roughly 227,000 DOD employees or 31.7% of the department's 717,000-person workforce. In October 2010, DOD sent a report to Congress that said 76% (171,985) of employees formerly in the NSPS pay system had been converted to the GS. Another 20% of employees will be placed in pay scales other than the GS, and 4% of NSPS employees may have their jobs eliminated as a result of closing military bases pursuant to the 2005 Defense Base Realignment and Closure Commission (BRAC) findings. Of those employees who moved into the GS, 72% (124,200) received a pay raise when they were placed in the proper GS grade and step. Every U.S. state has employees who were or are on NSPS. According to DOD, Virginia and California had the largest number of NSPS employees with 38,200 and 22,100, respectively. Vermont had the fewest employees with fewer than 20. Figure A-1 , in the Appendix, includes a U.S. map with NSPS employee counts for each state. As of January 2011, roughly 54,000 DOD employees remain in NSPS. P.L. 111-84 included language preventing any employee from suffering a loss or decrease in pay as a result of the elimination of NSPS. Pursuant to statute (5 U.S.C. SS 5363), 35,117 transitioning employees have been placed on "retained pay," which allows them to maintain their NSPS rate of pay, but requires that they receive half of the annual pay adjustment distributed to employees at the step 10 level of their position's assigned GS pay grade. Some GS employees may argue that the NSPS employees who were in NSPS and who collect a retained pay rate receive a higher pay rate for similar work than does an employee who remained in the GS. Some NSPS employees, however, may argue that the cap on their annual pay increase amounts to a loss in pay. Employees who were in NSPS as of January 2, 2011, and who received a performance rating of "3" or above for 2010, may receive a performance-based bonus or pay raise in 2011. Employees who were in the pay system for only part of 2010, or who received a performance rating of "2" or below, do not qualify for an NSPS performance-based bonus or pay raise. DOD does not require additional appropriations to fund NSPS pay bonuses and salary increases in 2011. Instead, the bonuses and increases will be funded using money already allocated to the pay system. NSPS pools the funding that the GS and other similar pay systems use to fund increases in pay, such as step increases and promotions. In contrast, NSPS uses these so-called pay pools to fund performance-based pay increases. Office of Personnel Management (OPM) guidance said NSPS bonuses do not violate the freeze in federal pay for FY2011, enacted in P.L. 111-322 . According to DOD, 98.5% of NSPS employees rated "3" or higher on their 2010 annual performance reviews--making nearly 53,200 employees eligible for a performance-based bonus. The 112 th Congress may choose to continue its congressional oversight of NSPS employees' transition to other pay systems. This report focuses on the transition of employees from NSPS to non-NSPS pay scales. It does not address the operation of NSPS or other pay schedules. The report discusses how the transition is scheduled to occur and analyzes congressional options for oversight or legislative action. P.L. 111-84 required DOD to begin transitioning NSPS employees to non-NSPS pay scales six months after enactment of the law, which occurred on October 28, 2009. DOD was given until January 1, 2012, to convert all employees in NSPS to the pay system in which they were previously enrolled. If an employee was previously enrolled in a system that no longer exists, if his or her job and description did not exist prior to enrollment in NSPS, or if a new pay system is to be created for an employee to enter into, DOD is required by statute to determine the employee's pay system and transition him or her into that pay system by the January 1, 2012 deadline. Employees not entering the GS are expected to be transitioned to their designated pay systems between spring 2011 and January 1, 2012. According to DOD's NSPS Transition Office, the office in charge of implementing the elimination of NSPS, 171,985 employees (about 76%) had transitioned from NSPS to the GS as of September 30, 2010. Another 20% of employees will be returned to or placed in other systems, including some pay systems that have not yet been created. In addition, 4% of employees will have their jobs eliminated as a result of closing military bases pursuant to the 2005 Defense Base Closure and Realignment Commission (BRAC) findings. As noted above, some NSPS employees will be moved into personnel systems that have not yet been established. P.L. 111-84 SS1105 authorized DOD to create demonstration pay systems at certain defense-related laboratories. Some of the federal employees at certain laboratories were in NSPS. By the end of April 2011, DOD must create new personnel systems at these laboratories and move eligible employees from NSPS into these personnel systems. Most positions in the NSPS system were formerly under GS position classification and grade and step parameters. An employee who occupies a position that previously had a GS grade and step assignment is to be moved to the GS and assume the grade assigned to his or her job classification. The employee's step within the assigned grade would be selected to ensure that the employee's level of pay does not decrease because of his or her return to the GS scale. Pursuant to P.L. 111-84 , an employee's level of pay may not be reduced as a result of his or her transition from NSPS. For example, if an employee's NSPS pay level falls between two GS steps, then the employee would be assigned to the higher step. In some cases, employees in NSPS who were or will be transitioned to the GS or a similar pay scale may have been collecting pay rates higher than the position's GS grade classification permits. Pursuant to P.L. 111-84 , an employee who meets this criterion will continue to receive his or her NSPS rate of pay under pay retention statutes once he or she converts to the GS system. The employee's pay rate cannot be used as a factor in performance evaluation. For example, if an employee's position is evaluated and classified as a GS-13, the highest base pay level (step 10) for such an employee in 2011 is $93,175. If this employee were working in the Washington, DC, locality pay area, his or her locality-adjusted rate of basic pay (annual pay + locality pay) would be $115,742 ($93,175 * 1.2422) in 2011. A supervisory employee in NSPS was not capped at this pay rate, and could have been collecting an annual salary of $95,000 if he or she received positive performance evaluations. Pursuant to statute, this employee would continue to receive a salary of $95,000 after transitioning from NSPS and being assigned to the GS. NSPS provides standard local market supplements, which are identical to GS locality pay rates, so the adjusted basic pay rate of the hypothetical NSPS employee living in Washington, DC, including the standard local market supplement for 2011, would be estimated at $118,009 (95,000 * 1.2422). Pursuant to statute, this hypothetical employee would continue to receive a salary of $118,009 after being transitioned to the GS. The continued NSPS pay rate is defined in statute (5 U.S.C. SS5363) as "pay retention." The employee's manager would evaluate the employee's job duties and responsibilities based on the GS grade assigned to the position--without regard for the employee's pay rate. The statute requires agencies to provide employees on pay retention with half of the annual pay increase given to employees at the maximum payable rate for the GS grade (step 10) to which his or her position is classified. An employee on retained pay, therefore, would not have his or her annual pay increase calculated as a percentage of his or her basic pay. His or her pay increase, instead, would be calculated as a percentage of a pay increase given to an employee who is at step 10 of the GS grade to which his or her position is assigned. The employee would continue to receive a retained rate of pay, until the employee's GS rate of pay eclipsed his or her retained NSPS rate of pay. The length of time it may take for the GS rate to be greater than the NSPS rate would depend on a number of variables, including the level of pay increases enacted by Congress in future years as well as the employee's pay level in relation to the step 10 pay rate of the GS grade to which his or her position is classified. Of the 171,985 former NSPS employees who have already been placed on the GS, approximately 72% (124,200) received a salary increase because of the transition. The average increase in salary was $1,454 per year. Some 7% (12,668) of those who transitioned to the GS kept a salary identical to their NSPS pay rate, while 21% (35,117) of those who transitioned are receiving a retained NSPS pay rate despite a GS classification that is assigned a lower rate of pay. NSPS employees placed in a new pay system have opportunities to grieve certain aspects of their new assignments. A DOD employee may contact his or her human resources office to find out more information about filing an administrative grievance or to seek alternative dispute resolution. Additionally, more than 913 NSPS employees are in a bargaining unit and may contact their local union representatives if they wish to pursue a negotiated grievance procedure. An employee may also appeal his or her case to the Merit Systems Protection Board (MSPB), which is an independent, quasi-judicial agency with jurisdiction over appeals claiming a reduction in pay, pursuant to 5 C.F.R. SSSS752 and 1201. An employee appealing to MSPB would have to establish that the transition from NSPS led to a reduction in pay. An employee moving to the GS who disagrees with his or her position's classification may challenge it pursuant to the process outlined in 5 C.F.R. SS511.601-606. Employees who were covered by NSPS who are then placed on pay retention when moved to a different pay schedule may suggest that they are experiencing a loss in pay because they are not receiving the full annual pay increase that is provided to other federal employees. As explained earlier in this report, an employee who is moved to the GS but who receives a retained pay rate keeps his or her NSPS pay rate--if the NSPS pay rate is above the GS grade classification pay level. The employee, however, receives half of the annual pay increase given to GS employees at the step 10 level of the employee's assigned grade until the pay rate he or she would receive in the GS eclipses his or her retained NSPS pay rate. Once removed from NSPS, these employees can no longer receive annual NSPS performance-based pay increases. A retained pay rate, however, allows the employee to collect higher pay than a similar employee in the GS system. The employee on retained pay also qualifies for larger pension benefits than could have been accrued in the GS. On the other hand, those who disagree with the employees on retained pay may suggest that these employees are receiving a higher rate of pay than would otherwise be permitted on the GS. The employees on retained pay, in fact, may receive pay rates much higher than employees who have the same GS classification and who perform at levels that are quite similar. An employee who remained on the GS, and who never entered the NSPS, did not have the opportunity to increase his or her pay based largely on performance and has no access to a retained pay rate. According to DOD, as of October 10, 2010, five employees who were required to transition from NSPS to the GS have appealed their GS classification. One appeal was denied and four other appeals are pending. When Congress eliminated NSPS in the National Defense Authorization Act for 2010 ( P.L. 111-84 ), it required DOD to return all employees to the pay system in which they were previously enrolled. Congress also required that no employee who was in NSPS experience a loss or reduction in pay as a result of being removed from NSPS and placed in a different pay scale. Some employees in NSPS, however, occupy positions that did not exist prior to NSPS's creation, and they cannot, therefore, be returned to a pre-existing pay scale. Other employees achieved pay rates that are not aligned with rates on their non-NSPS pay scale. Still other employees cannot be returned to a pre-existing pay scale because the pay scale was eliminated while NSPS was active. DOD has been examining ways to place employees who fit into these categories into appropriate pay schedules for their positions, including a solution that involves developing a new pay system. Congress has a variety of options to address these pay and personnel issues, including passing a law that would require all employees receive the full annual pay increase, modifying the GS to better coincide with NSPS pay rates, or permitting DOD to determine the most effective course of action. Congress required DOD to determine where to place NSPS employees who are or were to convert out of the NSPS. DOD must place employees in a variety of pay systems while adhering to all statutory requirements--both requirements in P.L. 111-84 and those that existed prior to the law's enactment. DOD has placed certain employees on retained pay. This policy has led to complaints from some employees who claim that retained pay, in effect, amounts to a loss in pay. Others, however, may claim that retained pay allows certain employees to maintain a higher rate of pay than an employee who is not eligible for retained pay, even though they perform the same work at similar performance levels. Congress may determine that DOD's policies follow the requirements of both P.L. 111-84 and Title 5 of the U.S. Code, which governs most of the civil service. Conversely, Congress may decide that allocating half of the GS step 10 annual pay increase to those on a retained pay rate is contrary to its intention in the language in P.L. 111-84 , which states that employees removed from NSPS should not suffer a loss in pay as a result of the transition to a non-NSPS pay scale. If Congress determines that the reduced pay increase is contrary to its intention in P.L. 111-84 , it could choose to enact legislation that ensures employees who convert to the GS or another pay system and who are on retained pay receive the full annual pay increase. Such legislation, however, would cause the retained pay rates to remain above GS pay rates in perpetuity. GS employees who performed similar work at similar performance levels may never receive the same pay as an employee who receives both the retained pay rate and a full annual pay increase. A policy option that could offset concerns about loss of pay exists. Employees who are on retained pay could also receive a performance-based cash award to supplement their pay to account for any pay they will not receive as a result of the cap on their annual pay adjustment. Pursuant to 5 U.S.C. SS4505a, a federal employee who receives a performance rating of fully successful or above may receive a one-time cash award in an amount deemed appropriate by the head of the agency. The cash award can be up to $10,000 without OPM approval, or up to $25,000 with OPM approval. DOD could use the authority in 5 U.S.C. SS4505a to pay federal employees on retained pay the other half of the annual pay adjustment. Pursuant to statute, the rating-based award could not be given to an employee with performance rating lower than fully successful. In addition, the award would not be considered part of an employee's basic pay and, therefore, would not count toward the employee's annuity. This option, however, may be controversial. The one-time cash award was designed to reward exemplary performance by federal employees. The Code of Federal Regulations lists three reasons why an employer would give an employee this cash incentive. The award may be provided on the basis of the following: A suggestion, invention, superior accomplishment, productivity gain, or other personal effort that contributes to the efficiency, economy, or other improvement of government operations or achieves a significant reduction in paperwork; A special act or service in the public interest in connection with or related to official employment; or Performance as reflected in the employee's most recent rating of record ... provided that the rating of record is at the fully successful level (or equivalent) or above. If an employee on retained pay does not meet one of these criteria, using the award authority may be an improper means of providing that employee additional pay. For employees who do qualify for the cash award, however, DOD could provide the award until the GS rate of basic pay for the employee's position eclipsed the retained NSPS pay rate. If DOD chose to use the performance-based cash award, the agency may need additional appropriation from Congress to fully fund it. Additionally, employees in the GS who perform similar work at similar performance levels will not receive the same pay for their work as the employee on the retained rate of pay. Congress could also choose to modify the GS to better coincide with the pay rates on NSPS. Congress could enact legislation that adds steps to the GS, allowing for NSPS pay rates to be incorporated in the personnel system and also for continued movement up the personnel system's pay scale for all GS employees. Such action, however, could complicate GS operations and policies by requiring new regulations to govern the additional steps. The addition of new GS steps may also prompt additional costs to fund the new pay levels. P.L. 111-84 also required DOD to create a new performance management system and hiring process. Congress may choose to use its oversight authority to ensure that all parties that may be affected by the establishment of such new system and process are afforded an opportunity to offer suggestions and present concerns prior to implementation.

Most federal employees (59.1%) are paid on the General Schedule (GS), a pay scale that consists of 15 pay grades in which an employee's pay increases are to be based on performance and length of service. Some Members of Congress, citizens, and public administration scholars have argued that federal employee pay advancement should be more closely linked to job performance than it currently is on the GS. With these concerns in mind and with explicit congressional authorization, the Department of Defense (DOD) began developing the National Security Personnel System (NSPS) in 2003 as a unique pay scale attempting to more closely link employee pay to job performance. NSPS was beset by criticisms since it went into effect in 2006. The system faced legal and political challenges from unions and employees who claimed it was inconsistently applied and caused undeserved pay inequities, among other concerns. On October 7, 2009, House and Senate conferees reported a version of the National Defense Authorization Act for Fiscal Year 2010 that included language to terminate NSPS. On October 8, 2009, the House agreed to the conference report. The Senate agreed to the conference report on October 22, 2009. On October 28, 2009, the President signed the bill into law (P.L. 111-84). DOD must now return employees currently enrolled in NSPS to the GS or to the pay system that previously applied to them or their position. If the employee's position did not exist prior to NSPS or if the previous pay scale was abolished during NSPS's lifetime, DOD must determine an appropriate pay scale for the employee. The return to the GS or other pay system must be completed by January 1, 2012, pursuant to the law. NSPS was initially intended to cover all DOD employees, but had a total final enrollment of roughly 227,000 DOD employees or 31.7% of the department's 717,000-person workforce. In October 2010, DOD sent a report to Congress that said 76% (171,985) of employees formerly in the NSPS pay system had been converted to the GS. Of those employees who moved into the GS, 72% (124,200) received a pay raise when they were placed in the proper GS grade and step. Employees who have not yet been transitioned out of NSPS are to be placed in pay scales other than the GS. As of January 2011, roughly 54,000 DOD employees remain in NSPS. P.L. 111-84 included language preventing any employee from suffering a loss or decrease in pay as a result of the elimination of NSPS. Pursuant to statute, 35,117 employees who transitioned to GS have been placed on "retained pay," which allows them to maintain their NSPS rate of pay instead of transitioning to the GS pay rate assigned to their job's grade. In such cases, the GS rate of pay assigned to the employee's position may not reach the pay level the employee achieved under NSPS. Retained pay, pursuant to statute, requires that an employee receive half of the annual pay adjustment given to employees who are at the maximum payable rate for their GS grade (step 10). Some NSPS employees may argue that the cap on their annual pay increase amounts to a loss in pay, and, therefore, violates P.L. 111-84. The 112th Congress may choose to continue congressional oversight of NSPS employees' transition to other pay systems. This report focuses on the transition of employees from NSPS to non-NSPS pay systems. It does not address the operation of NSPS or other pay schedules. The report discusses how the transition is scheduled to occur and analyzes congressional options for oversight or legislative action.

There are more than 60 offices of inspectors general (OIGs) in executive and legislative branch agencies, as well as special inspectors general (SIGs), who are responsible for audits and investigations related to particular programs or expenditures. Inspectors General (IGs) draw their authorities and duties, either in whole or in part, from the Inspector General Act of 1978, as amended (IG Act). For example, while several legislative branch IGs have been created in separate statutes, their establishing acts reference several of the provisions of the IG Act. Similarly, Congress has established SIGs such as the SIG for Iraq Reconstruction (SIGIR), the SIG for Afghanistan Reconstruction (SIGAR), and the SIG for the Troubled Asset Relief Program (SIGTARP), and has granted these IGs many of the authorities and responsibilities listed in the IG Act. The IG Act addresses the authorities and duties of two types of IGs: (1) federal establishment IGs, who are appointed by the President with the advice and consent of the Senate and may be removed only by the President; and (2) designated federal entity (DFE) IGs, who are appointed and may be removed by the agency head. The latter are typically found in the smaller agencies. IGs have been granted a substantial amount of independence, authority, and resources in their statutes to combat fraud, waste, and abuse. IGs operate under only the "general supervision" of the agency head, who is prohibited (with a few exceptions) from preventing or prohibiting an IG from carrying out an audit or investigation or issuing a subpoena. The statutory purposes of the OIGs include: conducting and supervising audits and investigations within an agency; providing policy recommendations for activities to promote the economy, efficiency, and effectiveness of agency programs and operations; and conducting, supervising, or coordinating activities designed to prevent and detect fraud and abuse in agency programs and operations. IGs must also keep the agency head and Congress "fully and currently informed" about problems with the administration of agency programs and operations through specified reports and otherwise (which includes testifying at hearings and meeting with Members and staff). The reports include semi-annual reports as well as immediate reports regarding "particularly serious or flagrant problems." The connections between IGs and Congress may enhance legislative oversight capabilities and provide IGs with potential support for their findings and recommendations for corrective action. To carry out these and other duties, IGs have access to agency information and subpoena power for records and documents, as well as independent law enforcement authority. IGs must report suspected violations of federal criminal law immediately to the Attorney General. Agencies may also have a separate office that is responsible for conducting criminal investigations under the statutes that the agency is responsible for administering and enforcing, which may make recommendations for further investigation and prosecution to the U.S. Department of Justice. Including the newest IG for the Federal Housing Finance Agency, there are presently 30 establishment IGs that have been appointed by the President. They are located in the following departments and agencies: (1) Agriculture; (2) Commerce; (3) Defense; (4) Education; (5) Energy; (6) Health and Human Services; (7) Housing and Urban Development; (8) Interior; (9) Justice; (10) Labor; (11) State; (12) Transportation; (13) Homeland Security; (14) Treasury; (15) Veterans Affairs; (16) Environmental Protection Agency; (17) General Services Administration; (18) National Aeronautics and Space Administration; (19) Nuclear Regulatory Commission; (20) Office of Personnel Management; (21) Railroad Retirement Board; (22) Federal Deposit Insurance Corporation; (23) Small Business Administration; (24) Corporation for National and Community Service; (25) Agency for International Development; (26) Social Security Administration; (27) Federal Housing Finance Agency; (28) Tennessee Valley Authority; (29) Export-Import Bank; and (30) Treasury Inspector General for Tax Administration. The IG Act also provides that IGs may be established in commissions created under 40 U.S.C. SS 15301, which are the Southeast Crescent Regional Commission, the Southwest Border Regional Commission, and the Northern Border Regional Commission. Not including the IG for the Federal Housing Finance Board, as that agency has become part of the new Federal Housing Finance Agency, there are currently 29 DFE IGs, appointed by the agency head and located in the following agencies: (1) Amtrak; (2) Appalachian Regional Commission; (3) Board of Governors of the Federal Reserve System; (4) Commodity Futures Trading Commission; (5) Consumer Product Safety Commission; (6) Corporation for Public Broadcasting; (7) Denali Commission; (8) Equal Employment Opportunity Commission; (9) Farm Credit Administration; (10) Federal Communications Commission; (11) Federal Election Commission; (12) Election Assistance Commission; (13) Federal Maritime Commission; (14) Federal Labor Relations Authority; (15) Federal Trade Commission; (16) Legal Services Corporation; (17) National Archives and Records Administration; (18) National Credit Union Administration; (19) National Endowment for the Arts; (20) National Endowment for the Humanities; (21) National Labor Relations Board; (22) National Science Foundation; (23) Peace Corps; (24) Pension Benefit Guaranty Corporation; (25) Securities and Exchange Commission; (26) Smithsonian Institution; (27) United States International Trade Commission; (28) Postal Regulatory Commission; and (29) United States Postal Service. There are several additional types of IGs that draw their authorities in part from the IG Act. The five legislative branch IGs are located in the following entities: (1) Government Accountability Office; (2) Architect of the Capitol; (3) Government Printing Office; (4) Library of Congress; and (5) Capitol Police. There are three Special IGs: (1) SIGIR, (2) SIGAR, and (3) SIGTARP. Finally, there is an IG for the Central Intelligence Agency (CIA) and an IG for the Office of the Director of National Intelligence (ODNI). The IG Act of 1978 created IGs in a small number of executive branch agencies known as establishments. The IG Act Amendments of 1988 expanded the number of presidentially appointed establishment IGs and also created DFE IGs. The House Report on an earlier version of the 1988 amendments stated that although most of the DFEs at the time had "audit units and some also have investigative units ... the extension of the 1978 act is necessary, because many of these entities have failed to comply with longstanding requirements regarding independence" of such units. The most notable difference between establishment IGs and DFE IGs is the individual who appoints and who may remove or transfer the IG--for establishment IGs, this individual is the President and for DFE IGs, this person is the agency head. Another key difference between establishment and DFE IGs is that establishment IGs receive a separate appropriations account or a line item in the establishment's appropriations. In contrast, each DFE IG's budget is part of the parent entity's budget process. A 1992 guidance memorandum from the Office of Management and Budget (OMB) stated that "because of the reporting relationship established by the IG Act, entity heads must make entity budget formulation and budget execution decisions affecting the IG." OMB stated that it was "expected that entity heads will apply agency budget reductions, redistributions, sequestrations, or pay raise absorptions to the Office of the IG with due consideration to the effect that such application would have on the Office's ability to carry out its statutory responsibilities." OMB's guidance added that the IG was to "have an ongoing dialogue with the OMB budget examiner" regarding the IG's "operational plans, activities, and accomplishments." The Reform Act created additional safeguards for IG budgets. Section 8 of the Reform Act addressed the reporting of the IG's initial budget estimate to the head of the establishment or DFE. The budget estimate includes the budget request, a request for funds for training, and amounts necessary to support the newly created Council of the Inspectors General on Integrity and Efficiency (CIGIE). The establishment or DFE head must then include this information, as well as comments of the IG, when transmitting the request to the President. The President, in turn, must then include in his budget submission: the IG's budget estimate; the President's requested amounts for the IG, IG training, and support of the CIGIE; and comments of the affected IG, if the IG determines that the President's budget would "substantially inhibit" the IG from performing his or her duties. Other less apparent differences also exist between establishment IGs and DFE IGs, such as how the two types of IGs may be selected and how they may select their own employees. The DFE IGs are exempt from the sections of the IG Act (SSSS 6(a)(7) and (a)(8)) that mandate the selection, appointment, and employment of officers and employees in establishment IG offices according to civil service employment laws. The House Report on a version of the 1988 IG Act amendments stated that "the committee recognizes that not all Federal entities operate under the Civil Service personnel system," and therefore Congress did not extend such provisions regarding employee hiring to DFE IGs. DFEs have been exempt from these requirements for establishment OIGs since DFEs were created. DFE IGs must be appointed by the head of the agency "in accordance with the applicable laws and regulations governing appointments within" the agency. The DFE IGs, in turn, must hire employees for their offices "subject to the applicable laws and regulation that govern such selections, appointments, and employment, and the obtaining of such services, within the [DFE]." Another difference relates to the use of legal counsel by IGs. The different relationships between establishment and DFE IGs and their attorneys were delineated in the Reform Act. The act specified that an establishment IG must receive legal advice from an attorney who is hired under civil service laws and reports directly to the IG or to another IG. The Reform Act also provided three ways for a DFE to obtain counsel. First, a DFE IG could obtain counsel from an attorney appointed by the IG (according to the DFE-specific laws and regulations governing appointments within the DFE) who reports directly to the IG. Second, DFE IGs, on a reimbursable basis, could obtain services from a counsel who is appointed by and who reports to another IG. Third, the DFE IG may obtain the legal services of an appropriate person on the CIGIE. The Reform Act continued preexisting differences between the two types of IGs addressed in the IG Act. For example, the Reform Act increased the pay of establishment IGs, the CIA IG, SIGIR, and SIGAR to the rate of level III of the Executive Schedule, plus 3%. The Reform Act increased the pay of DFE IGs as well, but did not link them to the Executive Schedule. The Reform Act provided that DFE IGs should be classified for pay purposes at a level at or above a majority of the senior level executives of the DFE (such as a General Counsel or Chief Acquisition Officer), but that the pay could not be less than the average total compensation, including bonuses, of those senior level executives. The Reform Act also provided that a DFE IG's pay could not increase by more than 25% of the DFE IG's average total pay for the previous three fiscal years. Prior to the Reform Act, additional disparities existed between establishment and DFE IGs. That act required DFE IGs, like their establishment IG counterparts, to be appointed based only on the individual's skills in auditing or other relevant areas. In the conference report for the Inspector General Act Amendments of 1988, the conferees indicated that they "intend that the head of the designated Federal entity appoint the Inspector General without regard to political affiliation and solely on the basis of integrity and demonstrated ability in accounting, auditing, financial analysis, law, management analysis, public administration, or investigations." However, this sentiment was not added to the law until the Reform Act was enacted. Additionally, the Reform Act provided that the CIGIE must submit recommendations for nominees to establishment, DFE, CIA, and ODNI IG positions. The Reform Act also granted law enforcement authority to DFE IGs, which was previously only available to establishment IGs, including the authority to carry firearms, make arrests without warrants, and seek and execute arrest warrants. Additionally, the Reform Act addressed a protection that DFE IGs enjoyed that was not previously available for establishment IGs--the Reform Act added a provision regarding transfers of establishment IGs to the clause regarding how the establishment IGs may be removed by the President. The removal clause for DFE IGs previously mentioned transfers of DFE IGs, but did not provide the notification requirement added by the Reform Act. As mentioned previously, the Reform Act provided that the President and the agency head must notify Congress of the reasons for a removal or transfer of an IG in writing at least 30 days before removing or transferring the IG. Previously, the DFE heads had to notify Congress in writing when removing an IG, while the President was not required to communicate the reasons for removal to Congress in writing. This section will discuss proposed changes affecting offices of inspectors general (OIGs) or establishing new OIGs in select bills in the 111 th Congress: H.R. 885 / S. 1354 , the Improved Financial Commodity Markets Oversight and Accountability Act; H.R. 3126 , the Consumer Financial Protection Agency Act of 2009; and H.R. 3962 , the Affordable Health Care for America Act. On June 6, 2009, the House passed H.R. 885 , which would elevate five DFE IGs in entities that address financial issues--the IGs for the Board of Governors of the Federal Reserve System; the Commodity Futures Trading Commission (CFTC); the National Credit Union Administration (NCUA); the Pension Benefit Guaranty Corporation (PBGC); and the Securities and Exchange Commission (SEC)--to the status of presidentially appointed, Senate-confirmed IGs. The changes would take effect 30 days after the law is enacted. The IGs that currently serve as the head of the OIG offices in those DFEs could continue serving as the IGs until the President makes an appointment under the IG Act procedures. Nothing in H.R. 885 would prohibit the President from appointing the individuals currently serving as the DFE IGs to the new presidentially appointed IG positions. Initially, H.R. 885 provided that IGs acting in that capacity would remain subject to current DFE limitations, such as those on authorities and pay. However, as amended, H.R. 885 "ensures that the changes made by the legislation do not interfere with existing pay structures ... as they relate to the position of inspector general and other employees." Other amendments to H.R. 885 , as passed by the House, included provisions relating to the continuation of personnel. As mentioned above, these five DFE IGs are exempt from the sections of the IG Act (SSSS 6(a)(7) and (a)(8)) that mandate the selection, appointment, and employment of officers and employees in establishment IG offices according to civil service employment laws. H.R. 885 would preserve that distinction for these five IGs, though they would be elevated to presidentially appointed IGs. H.R. 885 would change the authorities of the five DFE IGs in the bill in a significant way with respect to other establishment and DFE IGs, as H.R. 885 would grant these IGs the ability to subpoena testimony as well as documents. Under H.R. 885 , the five DFE IGs would be able to subpoena testimony not just of agency employees, but also of contractors, grantees, and persons or entities regulated by the establishment. Presently, SS 6(a)(4) of the IG Act provides IGs with the authority to subpoena "documentary evidence necessary in the performance of the functions assigned by this Act." Subpoena authority under the IG Act is delegable, and subpoenas issued under the act are judicially enforceable. The IG Act contains no explicit prohibition on disclosure of the existence or specifics of a subpoena issued under this authority. Finally, H.R. 885 would create a new provision regarding the responses of establishment agency heads to reports by these five IGs. A similar provision was included with respect to reports issued by the SIGTARP in SS 4 of P.L. 111-15 , the Special Inspector General for the Troubled Asset Relief Program Act of 2009, which was passed by Congress earlier this year. Under H.R. 885 , the heads of these five establishments must either "take action to address deficiencies identified by a report or investigation" of the establishment's IG or "certify to both Houses of Congress that no action is necessary or appropriate in connection with" such a deficiency. Sections 115(a)(3) and 181 of the discussion draft of H.R. 3126 appear to create a DFE IG for the proposed Consumer Financial Protection Agency (CFPA). Section 115(a) of the discussion draft states that the Director of the CFPA shall appoint the CFPA IG, who shall have the authority and functions of a DFE IG . Section 181 of the discussion draft would amend the IG Act to add the CFPA to the list of DFEs. Section 1647 of H.R. 3962 would create a presidentially appointed, Senate-confirmed establishment IG for the Health Choices Administration (HCA). In addition to the authorities provided to establishment IGs in the IG Act, H.R. 3962 would grant the HCA IG the authority to conduct, supervise, and coordinate audits, evaluations, and investigations of the programs and operations of the HCA, including matters relating to fraud, abuse, and misconduct in connection with the admission and continued participation of any health benefits plan participating in the Health Insurance Exchange. The IG also would have the authority to conduct audits, evaluations, and investigations relating to any private Health Insurance Exchange-participating health benefits plan. In consultation with the HHS IG, the IG for the HCA would have the authority to conduct audits, evaluations, and investigations relating to the public health insurance option. The IG would also have access to all relevant records, including records relating to claims paid by the health benefits plans that participate in the Health Insurance Exchange. The authorities that would be granted to the HCA and the IG would not limit the duties, authorities, and responsibilities of the HHS IG, as in existence as of the date of enactment of the act, to oversee HHS programs and operations. The HHS IG would retain primary jurisdiction over fraud and abuse in connection with payments made under the public health insurance option. Elevating DFE IGs, such as the five identified in H.R. 885 , to presidentially appointed, Senate-confirmed (PAS) positions would be within Congress's discretion, as provided for in the Constitution. Article II, section 2, clause 2 states that "the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments." Many PAS positions other than high-level policy positions have been created because Congress saw a need to establish such position as one requiring advice and consent. This section discusses several potential considerations, which could be construed as advantages or disadvantages of establishing these five DFE IGs as PAS positions. There are several approaches that Congress could pursue--(1) taking no action; (2) converting some DFE IGs into PAS positions; (3) converting all DFE IGs into PAS positions; or (4) converting some or all DFE IGs into PAS positions but including a sunset provision. If a sunset provision were added to a statute converting some or all of the DFE IGs, Congress could then evaluate the benefits and drawbacks of granting PAS status to some or all of these IGs. The PAS positions could automatically revert to agency appointments after a period of time unless Congress made such changes permanent. CRS takes no position as to which of these options would be most desirable. A conversion of some or all of these positions to PAS positions could have both positive and negative effects. Some of the advantages may be that the PAS process ensures that potential appointees are subject to more extensive ethical and political scrutiny, and IGs appointed under the PAS process may have greater credibility than their agency head appointed counterparts. Congress, specifically the Senate, may indirectly exert greater influence over the selection process and prevent unqualified individuals from being appointed. The prestige of a presidential appointment may also attract additional candidates. Some of the disadvantages of the PAS process may be that the politicization of the process could deter well-qualified candidates (although politicization may be less likely with IGs, due to their statutory qualifications regarding appointment without regard to political affiliation). Potential nominees may be required to submit a large quantity of paperwork as the President, and later the Senate, considers the individual's merits. As a result, the establishment of additional PAS positions may increase the workload of Senate committees and consume time and resources that could be used for other pending issues. If an appointee is confirmed by the Senate, that IG may be seen as more credible and accountable to Congress than an appointee who does not require Senate confirmation. During the confirmation hearing, the Senate may obtain commitments from the IG appointee to respond to future requests for testimony. Such specific commitments with regard to future testimony may not be necessary, as the IG Act provides that the IGs have a duty to keep Congress "fully and currently informed." However, such commitments may ease the process for obtaining IG testimony in the future. The Senate may also seek additional commitments during the confirmation process and explain its vision for the position or for the agency. At the same time, the PAS process may increase congressional involvement in the organization and activities of the DFE. Confirmation hearings for the IG could be used as a vehicle to conduct oversight of the DFE and its programs and operations. Additionally, the IG appointee may have developed relationships with Senators and congressional staff throughout the appointment process. However, the practical effect of these considerations may be limited as the IG Act indicates that DFE and establishment IGs are accountable to Congress, due, in part, to their reporting requirements. Alternatively, it could be argued that maintaining the status quo for these IGs provides the President with greater flexibility in terms of managing staff, in that a typical conversion of a non-PAS position into a PAS position might make such IGs more amenable to indirect congressional control. Such amenability could undermine presidential control as compared to the status quo. The President could stand to lose, as IGs appointed by the agency heads alone may be more responsive and accountable to the President and more likely to implement his priorities, if any, for the IG office. Allegiance from DFE IGs under the current system arguably may assist the President's ability to address problems quickly. However, unlike other positions being considered for conversion to the level of a presidential appointment, IGs are perhaps unique because they are already accountable to Congress in terms of their statutory responsibilities, and they also have specified qualifications required for appointment. As a result, the potential loss of presidential power may not be as great with the conversion to a PAS position as it would otherwise seem to be due to a potential increase in indirect congressional control with the change to a PAS appointment, because Congress already retains and exerts control with regard to DFE IGs. Because of the nature of the agencies being considered in H.R. 885 , the President would only appear to retain more control over the appointment of the five DFE IGs under the status quo if he also gained more control over the agency boards. The Federal Reserve, CFTC, NCUA, and the SEC are independent agencies. These independent agencies are insulated from complete Executive Branch control as they are headed by multi-member boards. For example, the boards of the CFTC, SEC, and NCUA are comprised of members of both political parties, but may have no more than a simple majority from one political party. In addition, the board membership at these agencies is determined according to staggered terms, so that not all of the members may be replaced at once. The Federal Reserve Board of Governors and the SEC Commissioners have for cause removal protection. Therefore, arguably, the President may have more control over the five IGs if they are converted to PAS positions and the President is able to appoint those IGs himself. This would appear to be true even though the nominee would be approved through the advice and consent process. Furthermore, DFE heads, who are politically aligned with the President, would likely prefer to maintain their influence on the selection process of the DFE's IG. Such appointment power may enable the DFE head to exercise greater control over the agency, posing questions of intrusion on the IG's independence. A DFE head's appointment power may help curry favor with the IG, as the DFE head is responsible for hiring and firing the IG. If the DFE IGs were converted to PAS positions, the agency head may still have some level of influence as the President may consult with the agency head when making an appointment to the IG position or when removing an IG. Presidential appointees may also encounter procedural or political complications during the Senate confirmation process, such as a hold placed on a nomination. The confirmation process arguably provides the Senate with greater leverage during its negotiations with the Executive Branch over matters that may or may not be related to the appointment. Holds may be placed on nominations for various reasons. Whether as a result of a hold or other factors, the appointment process may be lengthy, thus potentially leading to longer vacancies. The Government Accountability Office (GAO) has issued several reports dealing with IG structural and organizational changes. The reports considered the conversion of DFE IGs from agency head appointments and removals to presidential appointments and removals, which would affect the status and control of the current DFE IG offices. GAO concluded that such an arrangement would strengthen the independence, efficiency, and effectiveness of the DFE IG offices. In its 2002 report, GAO found no consensus among DFE and establishment IGs regarding the perceived impact of conversion. The report noted that the presidentially appointed IGs "generally indicated that DFE IG independence, quality, and use of resources could be strengthened by conversion," while the DFE IGs "indicated that there would be either no impact or that these elements could be weakened." GAO called for dialogue among Congress, the IG community, and the affected agencies regarding specific conversions of DFE IGs. In 2003, the Comptroller General similarly testified regarding GAO's determination that "if properly implemented, conversion ... and consolidation of IG offices could increase the overall independence, economy, efficiency, and effectiveness of IGs." GAO testimony on March 25, 2009, similarly indicated that a change in the appointment of the IGs would result in a different level of independence.

This report addresses the duties and functions of statutory Inspectors General (IGs); the numbers of each type of IG; the differences between IGs appointed by the President and those appointed by the agency head; considerations for whether certain IGs should be appointed by the President as opposed to the agency head; and the Inspector General Reform Act of 2008 (Reform Act), P.L. 110-409. In October 2008, Congress enacted the Reform Act, which created additional protections and authorities for IGs with regard to removal or transfer of an IG, budgets, law enforcement authority, pay, subpoena power, and websites. This report also addresses proposed changes affecting offices of inspectors general (OIGs) or establishing new OIGs in select bills in the 111th Congress: H.R. 885/S. 1354, the Improved Financial Commodity Markets Oversight and Accountability Act; H.R. 3126, the Consumer Financial Protection Agency Act of 2009; and H.R. 3962, the Affordable Health Care for America Act. On March 25, 2009, the House Committee on Oversight and Government Reform's Subcommittee on Government Management, Organization, and Procurement held a hearing entitled, "The Roles and Responsibilities of Inspectors General within Financial Regulatory Agencies," at which the subcommittee discussed H.R. 885 and other issues. The House passed H.R. 885 on a voice vote under suspension of the rules on June 8, 2009.

A number of farm products are promoted through the use of congressionally authorizedgeneric promotion programs. (1) To fund these programs, the authorizing statutes (and orders)require that an assessment be collected based on the amount of product that a covered party sells,produces, or imports. Some producers have opposed the use of, or message in, genericadvertisements and have brought First Amendment challenges in court, three of which the SupremeCourt has decided. The Supreme Court's first two attempts at addressing First Amendment challenges tocheck-off programs -- California fruits and mushrooms, respectively -- resulted in contrastingopinions and some confusion for lower courts. Subsequent circuit court decisions for the beef, pork,and dairy check-off programs, for example, have all seemed to struggle with determining theapplicable level of scrutiny to apply to the programs. Nonetheless, in each case the appellate courtsrejected the government's argument that the check-off programs were "government speech" immunefrom First Amendment scrutiny and found the programs to unconstitutionally compel speech (orcompel the subsidy for the support of some type of speech). In May 2005, the Supreme Court issued its third opinion in eight years regarding theconstitutionality of a check-off program (beef). In Johanns v. Livestock Marketing Association , (2) the Supreme Court upheld thecheck-off program on "government speech" grounds -- a legal theory not addressed by the SupremeCourt in the earlier check-off cases. This ruling is likely to have far-reaching effects for check-offprograms. For example, it has already been used to vacate the circuit court decisions mentionedabove and will undoubtedly be used to defend other check-off programs from First Amendmentchallenges. The decision may also serve to inform and encourage future legislation creating oramending such programs. This report begins with a brief introduction on check-off programs and then describes theapplicable First Amendment principles argued in many of the check-off cases. Next is an analysisof the first two challenges that reached the Supreme Court, as well as a brief discussion ofsubsequent appellate court decisions. This report concludes with a discussion of Johanns v.Livestock Marketing Association and its possible implications for check-off programs. Congress has provided for the generic promotion of farm products since the 1930s. (3) These programs -- commonlyknown as "check-off" programs -- are requested, administered, and funded by the industriesthemselves, and, in part, operate under promotion and research orders or agreements issued by theSecretary of Agriculture. General oversight of these programs is provided by the U.S. Departmentof Agriculture's (USDA) Agricultural Marketing Service; however, there is still some debate as toactually how much control and responsibility the USDA has over the check-off programs. Farmproduct check-off programs are designed to strengthen the position of each respective commodityin the marketplace by increasing domestic demand and consumption and by expanding foreignmarkets. Typically, the statutory language authorizing a check-off program calls on the Secretary ofAgriculture to appoint a board (e.g., National Dairy Promotion and Research Board), council (e.g.,Mushroom Council) or other type of representative body, based on nominations made by theproducers, to pursue the statute's goals. To fund the programs, the authorizing statutes and orderscall on the board or council to collect an assessment based on the amount of product that a coveredparty sells, produces, or imports. The collected funds may finance a variety of programs, includingadvertising, consumer education, nutrition, production, marketing research, and new product andforeign market development. In some cases, large percentages of the collected funds are used toimplement generic promotions and advertisements. (4) The Secretary of Agriculture must approve each promotional projector plan before it can be implemented. (5) The First Amendment to the Constitution provides that "Congress shall make no law ...abridging the freedom of speech, or of the press...." (6) In general, the First Amendment prohibits the government fromregulating private speech based on its content and may prevent the government from compellingindividuals to express certain views (7) or to pay subsidies for speech to which they object. (8) However, the right to speakor refrain from speaking is not absolute. Courts, for example, look at the context and purpose of thespeech and allow greater government regulation for some types of speech than others. In consideringchallenges to check-off programs, courts have generally looked to the "commercial speech,""compelled speech," and "government speech" doctrines that have been developed under FirstAmendment jurisprudence. Commercial Speech. Commercial speech isspeech that "proposes a commercial transaction" (9) or relates "solely to the economic interests of the speaker and itsaudience." (10) Thegovernment may regulate commercial speech, even truthful expressions, more than it may regulatefully protected speech, and it also may ban false or misleading commercial speech, or advertisementsthat promote an illegal product. Courts typically use a four-prong test that was articulated by the Supreme Court in CentralHudson Gas & Electric Corp. v. Public Service Commission of New York to determine whether agovernmental regulation of commercial speech is constitutional. (11) The Central Hudson testasks (1) whether the commercial speech at issue is protected by the First Amendment (that is,whether it concerns a lawful activity and is not misleading) and (2) whether the assertedgovernmental interest in restricting it is substantial. "If both inquiries yield positive answers," thento be constitutional the restriction must (3) "directly advance the governmental interest asserted," and(4) be "not more extensive than is necessary to serve that interest." (12) Determining whether thespeech in question is "commercial speech" is important because it allows a court to apply the moreflexible intermediate scrutiny test of Central Hudson . As discussed below, courts have oftenstruggled with placing check-off programs solely within the parameters of "commercial speech." Compelled Speech. The First Amendment hasbeen interpreted to prevent the government from compelling individuals to express certain views orto pay subsidies for certain speech to which they object. Agricultural check-off cases havetraditionally been analyzed within this category or some modification of it. Initially, courts looked to the Supreme Court cases of Abood v. Detroit Board ofEducation (13) and Kellerv. State Bar of California (14) when analyzing check-off programs under the principles ofcompelled speech or subsidies. In Abood , non-union employees objected to paying a "service fee"equal to union dues because the fees subsidized economic, political, professional, scientific, andreligious activities not related to the union's collective bargaining agreement. The Supreme Courtheld that the union could constitutionally finance ideological activities that were not germane to theunion's collective bargaining but only with funds provided by non-objecting employees. (15) Since collectivebargaining was the authorized purpose of the union, and the union's political activities were notgermane to that purpose according to the Court, employees who disagreed with the political activitiescould not be compelled to support them. Similarly, in Keller , the Supreme Court held that the StateBar of California could constitutionally fund activities germane to its goals of regulating the legalprofession out of the mandatory dues of all members, but could not use compulsory dues foractivities of an ideological nature that fell outside of activities germane to the Bar's goals. (16) From these two cases, courts have fashioned a "germaneness" test for "compelled speech"or more particularly, "compelled subsidy" cases. (17) Under this test, courts are called on to "draw a line" betweenthose activities that are germane to a broader and legitimate government purpose and those that arenot -- a test both the Abood and Keller courts acknowledged would be difficult to apply. Government Speech. Generally, courts have"permitted the government to regulate the content of what is or is not expressed when thegovernment is the speaker or when the government enlists private entities to convey its ownmessage." (18) So longas the government bases its actions on legitimate goals, the government may speak despite citizendisagreement with the content of the message. Indeed, the government, with some exceptionspertaining to religion, may deliver a content-oriented message. "When the government speaks, forinstance to promote its own policies or to advance a particular idea, it is, in the end, accountable tothe electorate and the political process for its advocacy. If the citizenry objects, newly electedofficials later could espouse some different or contrary position." (19) In analyzing whether the "government speech" doctrine applies, courts typically consider thegovernment's responsibility for, and control over, the speech in question. The more control thegovernment exerts, the more likely it will be determined to be the speaker. Although there seemsto be some debate as to the scope of the "government speech" doctrine, (20) its effect is still broad, inthat it can provide immunity to First Amendment scrutiny. Over the years, a number of parties assessed under check-off programs have claimed that themandatory assessments are unconstitutional restraints on their right to free speech. Generally,opponents argue that they should not be required to pay for advertisements with which they disagree. For example, in a challenge against the dairy check-off program, the claimants were traditional dairyfarmers that did not use the genetically engineered and controversial "recombinant Bovine GrowthHormone." Consequently, they objected to subsidizing generic advertisements that they feltconveyed a message that milk is a fungible product that bears no distinction based on where and howit is produced. (21) Thesetypes of challenges were most often successful under a "compelled speech" analysis, even thoughthe cases varied in their analysis of "germaneness" and their attention to whether a "governmentspeech" approach might be more appropriate. The Supreme Court's recent expansive view of whatcan constitute "government speech," however, has put the entire line of earlier case law in question. California Tree Fruits Check-off Program. In Glickman v. Wileman Brothers and Elliot, Inc. , several producers of California tree fruits (peaches,nectarines, and plums) challenged the constitutionality of a USDA marketing order that requiredassessments be imposed on producers to fund costs associated with the orders, including genericadvertising. (22) Themarketing order at issue was derived from the Agricultural Marketing Agreement Act of 1937 (7U.S.C. SSSS 601 et seq. ) and provides regulatory guidelines and restraints on its participants, includingquality and quantity controls, uniform price measures, and grade and size standards. Ultimately, theSupreme Court determined that the marketing orders were a species of economic regulation andupheld the constitutionality of the assessments imposed on the fruit growers to cover the costs ofgeneric advertising. The Supreme Court began its analysis by describing the regulatory guidelines and restraintsthat the marketing order posed on the industry as a whole and concluded that they fostered a "policyof collective, rather than competitive marketing." (23) The Court then distinguished the regulatory scheme at issue fromlaws that had previously been found suspect under the First Amendment by determining that theorders (1) posed no restraint on the freedom of any producer to communicate any message to anyaudience, (2) did not compel any person to engage in any actual or symbolic speech, and (3) did notcompel the producers to endorse or to finance any political or ideological views. (24) Next, the Courtdetermined that the standards established in "compelled speech" case law favored a finding ofconstitutionality because (1) the generic advertising was unquestionably germane to the purposes ofthe marketing orders, and (2) the assessments were not used to fund political or ideologicalactivities. (25) The Glickman Court further dismissed the argument that the compelled assessments required the levelof scrutiny usually applied in "commercial speech" cases because this level was inconsistent withthe very nature and purpose of the collective action of marketing orders at issue. (26) Based on these findings and the general cooperative nature of the regulatory scheme, theCourt found that the assessments imposed did not raise First Amendment concerns. The Courtdetermined that the respondent's criticisms of generic advertising "provid[ed] no basis for concludingthat factually accurate advertising constitutes an abridgment of anybody's right to speak freely." (27) The Supreme Courtconcluded by stating that the marketing orders in question were a "species of economic regulationthat should enjoy the same strong presumption of validity that we accord to other policy judgementsmade by Congress." (28) Mushroom Check-off Program. In 2001, theSupreme Court revisited the issue of compelled marketing assessments for generic advertisementsin United States v. United Foods, Inc. (29) In United Foods , the Court was faced with determining whetherthe mandatory assessments for the mushroom check-off program established pursuant to theMushroom Promotion, Research, and Consumer Information Act of 1990 (7 U.S.C. SSSS 6101 et seq .)violated the First Amendment. The Supreme Court concluded that the program authorized by theMushroom Promotion Act differed fundamentally from the marketing orders at issue under Glickman and found the program unconstitutional. The Court started its analysis by declaring that it was not going to view the case in light of"commercial speech" jurisprudence because the government never raised the issue; however, theCourt determined that First Amendment issues arose "because of the requirement that producerssubsidize speech with which they disagree." (30) Accordingly, the Court began its examination by viewing theentire regulatory program at issue and comparing it with the scheme under scrutiny in Glickman. The Court determined that the features of the marketing scheme found important in Glickman werenot present in the case before it. For example, the Court concluded that "[i]n Glickman , themandated assessments for speech were ancillary to a more comprehensive program restricting marketautonomy" and that under the mushroom check-off "the advertising itself, far from being ancillary,is the principal object of the regulatory scheme." (31) By underscoring these differences, the Court moved away fromthe precedent established by Glickman . The Court next turned to the "compelled speech" arguments before it and found that the"mandated support is contrary to the First Amendment principles set forth in cases involvingexpression by groups which include persons who object to the speech, but who, nevertheless, mustremain members of the group by law or necessity." (32) In so holding, the United Foods Court found that the compelledspeech in the mushroom check-off program was not germane to a purpose related to an associationindependent from the speech itself. The only purpose the compelled contributions served, accordingto the Court, was the advertising scheme for the mushroom check-off program, which was not likethe broader cooperative marketing structure relied upon by a majority of the Court in Glickman . (33) Accordingly, the Courtstruck down the mandatory assessments used to fund generic advertisements imposed by themushroom check-off program. The government also attempted to assert "government speech"arguments; however, the Court refused to hear such substantive claims because they had not beenraised at the lower levels. (34) Since this decision, the Mushroom Council, which administers the check-off program underUSDA supervision, voted to reduce the mandatory assessments and divert their revenue tonon-promotional activities such as research into mushrooms' health and nutritional attributes. Since United Foods , there have been challenges to the constitutionality of the beef, dairy, andpork check-off programs. These challenges were all successful at the appellate level. (35) In each case, the appellatecourts rejected the government's argument that the check-off programs were "government speech"immune from First Amendment scrutiny. Generally, the courts found that the government exertedinsufficient control and responsibility over the check-off programs to support the applicability of the"government speech" doctrine. After declaring that the check-off cases presented private speech,the courts typically compared the check-off program at issue with those presented in Glickman and United Foods . All three circuit courts found the check-off programs in question more akin to theteachings and holdings of United Foods and thus unconstitutional. In so holding, each courtappeared to struggle with placing the check-off programs within the "commercial speech -- compelled speech" rubric. All three appellate decisions were appealed to the Supreme Court. The Court, however,heard arguments only in Livestock Marketing Ass'n v. Dep't of Agriculture , where the Eighth Circuithad ruled that the beef check-off program, authorized under the Beef Promotion and Research Actof 1985 (7 U.S.C. SSSS 2901 et seq .) and its implementing regulations was unconstitutional. (36) The Court decided to holdthe petitions for writ of certiorari for the pork and dairy check-off cases until the beef case wasdecided. The Court heard oral arguments in December 2004, and released its opinion on May 23,2005, upholding the constitutionality of the beef check-off program. The Supreme Court vacatedall three appellate court decisions and remanded each case for further consideration in light of theruling. (37) In Johanns v. Livestock Marketing Association , the Supreme Court, in a 6-3 opinion, ruledthat the beef check-off funds the government's own speech, and it is therefore not susceptible to aFirst Amendment compelled-subsidy challenge. (38) The Court vacated the judgment by the Eighth Circuit andremanded the case to the appellate court for further proceedings consistent with its decision. (39) The Court began its analysis by declaring that it has upheld First Amendment challenges incases involving "compelled speech" and "compelled subsidy," but had never considered the FirstAmendment consequences of "government-compelled subsidy of the government's ownspeech." (40) In all thecases invalidating requirements to subsidize speech, the Court stated, "the speech was, or waspresumed to be, that of an entity other than the government itself." (41) The Court added (quotingan earlier Supreme Court case), that "'[t]he government, as a general rule, may support validprograms and policies by taxes or other exactions binding on protesting parties.'" (42) After recognizing theseprinciples, the Court observed that it has generally assumed, but not squarely held, that "compelledfunding of government speech does not alone raise First Amendment concerns." (43) The Court next rejected respondent's argument that the beef check-off program was not"government speech," and instead, found the promotional campaigns to be "effectively controlledby the Federal Government itself" and "from beginning to end the message established by the FederalGovernment." (44) TheCourt seemed to come to these conclusions primarily because: (1) Congress and the Secretary set outthe overarching message of the beef check-off program; (2) all proposed promotional messages arereviewed for substance (and possibly rejected or rewritten) by USDA officials; and (3) officials ofthe USDA attend and participate in the open meetings at which proposals are developed. (45) Noting the overall degreeof governmental control over the check-off messages, the Court stated that "the government is notprecluded from relying on the government-speech doctrine merely because it solicits assistance fromnongovernmental sources in developing specific messages." (46) The Court also dismissed the respondent's argument that the beef check-off program neededto be funded by general revenues, rather than targeted assessments, to qualify as "governmentspeech." In so concluding, the Court pointed out that the respondents have no right under the FirstAmendment not to fund government speech, irrespective of where the money comes from (i.e.,broad-based taxes or targeted assessments). (47) In addition, the Court concluded that the beef check-off programprovides political safeguards that are "more than adequate" to ensure that the message is kept apartfrom private interests. (48) Finally, the Court rejected respondent's argument that they were unconstitutionally forced to endorsea message with which they disagreed because the promotions used the tag-line "America's BeefProducers." The Court stated that such an argument involved compelled speech , rather thancompelled subsidy . (49) The Court suggested in dictum, nonetheless, that a compelled speech cause of action might lie if aparty could show that an objectionable beef advertisement was attributable to it. That is, even if astatute is constitutional on its face, a party may show that the government has applied it in anunconstitutional manner. Justices Souter, Stevens, and Kennedy dissented from the majority opinion. The dissentargues that the generic beef advertisements should not qualify for treatment as speech by thegovernment mainly because the statute does not require the government to indicate that it is thesponsor of the message. (50) If the government wishes to rely on the "government speech"doctrine to compel specific groups to fund speech with targeted taxes, the dissent states, "it mustmake itself politically accountable by indicating that the content actually is a government message.. . ." (51) Because the"government speech" doctrine is not applicable, the dissent noted, the case should have been decidedin line with United Foods . The Supreme Court's decision to uphold the beef check-off program on the "governmentspeech" doctrine is likely to have far-reaching implications for check-off programs. Johanns , ingeneral, appears to have fortified the constitutionality of check-off programs and has likely enhancedthe ability of Congress to provide similar promotional support for more agricultural products. Accordingly, this ruling will undoubtedly be used to defend other check-off programs from FirstAmendment challenges, to reevaluate those already decided, and to inform future legislation creatingor amending check-off programs. This opinion will probably clear up much of the confusion that the Glickman -- UnitedFoods dichotomy established. By classifying the beef check-off program as a type of "governmentspeech," the Court has now made it possible for lower courts to avoid (1) placing a check-offprogram within or (2) applying a test from, the "commercial speech -- compelled speech" line ofcases -- a task many lower courts struggled with. On the other hand, attorneys for the respondentclaim that with five different opinions from the Court (i.e., majority, three concurrences, dissent),"there are as many questions left open as there were answers." (52) Moreover, the extent towhich United Foods is, as the dissent points out, a "dead letter" is unclear, since the ruling did notexpressly overrule it. (53) These observations notwithstanding, the decision establishes a precedent by which check-offprograms may be immune from First Amendment scrutiny. The Johanns ruling put into question many of the earlier check-off appellate courtdecisions. (54) Indeed,the Supreme Court has already vacated the appellate court decisions that invalidated the federal dairyand pork check-off programs and has remanded each case, including the beef check-off case, forreconsideration in light of the decision. If it can be shown that these cases are analogous to the beefcheck-off program, it appears that a court would now likely find these check-off programsconstitutional "government speech." This finding seems probable, since the programs are authorizedand administered much in the same fashion and were all declared almost identical to the mushroomcheck-off program in United Foods . Opponents, accordingly, may attempt to reformulate their arguments outside the beefcheck-off holding. For example, some may attempt to use an "as-applied" challenge, which wassuggested by the Court (without expressing a view on the issue) as possibly being available. In theNinth Circuit case Charter v. U.S. Dep't of Agriculture , the court vacated and remanded a districtcourt decision that had found the beef check-off program to be government speech because ofevidence that the individual appellants could be associated with speech to which they objected. (55) Others might pursuerecourse under completely different legal theories. Opponents of the pork check-off program, forinstance, are reportedly pursuing a "freedom of association" claim that was not addressed by theSupreme Court in the beef check-off decision. (56) The USDA has stated that it is studying the beef check-offopinion to determine its impact on other First Amendment challenges to check-off programs. (57) Some have claimed that the decision might spur Congress into reconsidering the underlyingauthority and purposes of the check-off programs to accommodate some of the concerns raised bythe parties or noted by the courts. (58) Congress, for instance, might consider exempting certaincategories of producers who disagree with generic advertising from paying mandatory assessmentsunder a commodity promotion law similar to the exemption that Congress established in the 2002Farm Bill for persons that produce and market solely 100% organic products. (59) Congress might also seekto further define or expand current provisions in commodity promotion laws that already requirecouncils and projects to "take into account similarities and differences" between certain products andproducers. (60) Congress may also wish to reexamine its position on requiring the advertisements to showthat they are, in fact, speech by the Government, since this was a major criticism in the dissent andall circuit courts found insufficient governmental control. A clear indication of who is the speakermay be important, as mentioned by Justice Ginsburg in her concurring opinion and some experts,to reconcile the message in check-off programs with other speech that is overtly sponsored by thegovernment, particularly the nutritional and dietary guidelines ( e.g. , "Food Pyramid"). (61) The most recent federalDietary Guidelines, for example, encourage greater consumption of fruits, vegetables, whole grains,and low-fat dairy, within a balanced, lower-calorie intake diet, while check-off programs generallyencourage more consumption of both low-fat and high-fat beef, pork, and dairy products. (62) These apparentinconsistencies, it has been argued, might undermine one or both federal government messages andcould lead to consumer confusion. (63) Some also speculate, given the Court's acceptance of the "government speech" argument, thatthe ruling will prompt the USDA to exert greater effort in supervising check-offs and addressing theconcerns of some of the opposing parties. (64) With respect to programs that are still operating, many maycontinue operating as usual. Others that have modified their practices, such as the mushroomcheck-off program, may look to return to the status quo , pre- United Foods , and impose mandatoryassessments for generic promotion campaigns. Overall, the ruling is expected to call more attentionto the operation of check-off programs.

For decades, Congress has enacted laws authorizing generic promotion programs for anumber of farm products to increase overall demand and consumption of the agricultural product. These generic promotion programs, commonly known as "check-off" programs, are funded throughthe payment of mandatory assessments imposed on the amount of product that a covered party sells,produces, or imports. Some producers have opposed the use of generic advertisements and havebrought First Amendment challenges in court. Generally, these parties claim that they should notbe required to pay for advertisements (i.e., speech ) with which they disagree. The Supreme Court has ruled on the constitutionality of check-off programs three times inthe last eight years, the most recent of which occurred in May 2005. The Court's first two attemptsat addressing First Amendment challenges to check-off programs resulted in contrasting outcomesand some confusion for lower courts. In Johanns v. Livestock Marketing Association , the SupremeCourt's third and most recent decision concerning a check-off program (beef), the Court ruled thatthe generic advertising under the program was the government's own speech, and was therefore notsusceptible to the First Amendment challenge before it. The Supreme Court's decision was basedon grounds that had not been previously addressed by the Court in the earlier check-off cases andmay have far-reaching effects. For example, three circuit court rulings that invalidated othercheck-off programs have already been vacated by the Court for reconsideration in light of Johanns . This report begins with a brief introduction to check-off programs and then describes manyof the First Amendment principles that have been discussed in check-off cases. Next is an analysisof the first two challenges that reached the Supreme Court, as well as a brief discussion ofsubsequent lower court decisions. This report concludes with a discussion of Johanns v. LivestockMarketing Association and its possible implications for check-off programs. This report will beupdated as warranted.

"Child care reauthorization" is composed of two parts: legislation to reauthorize the ChildCare and Development Block Grant (CCDBG) Act and legislation to extend mandatory fundingappropriated under Section 418 of the Social Security Act. The CCDBG Act authorizesdiscretionary funds and contains all provisions pertaining to the administration of CCDBG programs. Section 418 of the Social Security Act appropriates mandatory money to be administered underprovisions included in the CCDBG Act. The 108th Congress did not complete action to reauthorize either the CCDBG Act itself, orthe mandatory child care funding appropriated under the Social Security Act (along with theTemporary Assistance for Needy Families block grant). Both expired at the end of FY2002. However, funding for the CCDBG has been continued via a series of temporary extensions (in thecase of the mandatory funding) and annual appropriations law (for the discretionary funding portion). In terms of reauthorization legislation, the House passed a consolidated bill, H.R. 4 (Personal Responsibility, Work, and Family Promotion Act of 2003), whichincluded discretionary funding authorization, a mandatory appropriation, and amendments to theCCDBG Act (alongside provisions to amend and extend funding for Temporary Assistance forNeedy Families [TANF] (1) ). In the Senate, two separate bills were reported from their respective committees, butultimately failed to reach a final vote on the full Senate floor. The Senate Finance Committee'sreported substitute version of H.R. 4 (Personal Responsibility and IndividualDevelopment for Everyone Act [PRIDE]) included mandatory funding for child care, while theSenate Health, Education, Labor, and Pensions Committee's reported bill, S. 880 (TheCaring for Children Act of 2003), included all provisions pertaining to discretionary fundingauthorization, and would have amended the CCDBG Act itself. Although the Senate bills nevermade it to a final floor vote, it should be noted that when the legislation was brought to the floor, oneamendment, offered by Senator Snowe, was accepted (78-20). That amendment proposed to increasemandatory child care funding above the amounts proposed in the House-passed, and Senatecommittee bill. Below is a summary of key provisions in all three bills (and the Snowe amendment,as passed on the floor), followed by Table 1 , a detailed side-by-side comparison of each bill'sprovisions with current law. (2) Discretionary Authorization. The discretionaryportion of child care funding is authorized by the Child Care and Development Block Grant Act (asamended in 1996). Under current law, discretionary CCDBG funding is authorized at $1 billionannually. However, actual appropriation levels, determined during the annual appropriationsprocess, have exceeded the authorized level (e.g., FY2004 = $2.1 billion). Both the House versionof H.R. 4 (The Personal Responsibility, Work, and Family Promotion Act of 2003), and S. 880 (The Caring for Children Act of 2003) proposed to authorize discretionaryfunding at $2.3 billion in FY2004, rising by $200 million each year, up to $3.1 billion in FY2008. (The discretionary funding authorization does not fall under the Senate Finance Committee'sjurisdiction, and therefore was not addressed in the Senate committee-reported version of H.R.4.) Mandatory Appropriation. Mandatory fundingfor the CCDBG was preappropriated in Section 418 of the Social Security Act for FY1997-2002,as part of the welfare law of 1996 ( P.L. 104-193 ). A series of temporary extensions have continuedthat funding since the close of FY2002. Funding has been maintained at the FY2002 annual rate of$2.717 billion. The House-passed version of H.R. 4 would have set mandatory child carefunding at $2.917 billion for each of FY2004-2008 (for an increase of $1 billion over five yearsabove current funding). The version of H.R. 4 reported by the Senate Finance Committeecontained the same $1 billion increase in mandatory child care funding over five years; however,Senator Snowe expressed plans at the time of voting for the committee bill to offer an amendmentfor a greater child care increase when the bill was brought to the Senate floor. (The mandatoryfunding does not fall under Senate HELP Committee jurisdiction, and therefore was not addressedin S. 880 .) When the bill was considered on the floor (March 30, 2004), S.Amdt. 2937 (Snowe) was offered and approved by a vote of 78-20. The amendment would have provided anadditional $6 billion (over five years) in mandatory child care funding, above the $1 billion ($200million in each of five years) provided in the underlying bill, H.R. 4 (as passed by theHouse, and as passed by the Senate Finance Committee). The additional $6 billion would have beenallotted among the years as follows: $700 million in FY2005; $1 billion in FY2006; $1.2 billion inFY2007; $1.4 billion in FY2008; and $1.7 billion in FY2009. Authority to Transfer TANF Funds. Undercurrent law, states have the authority to transfer up to 30% of their annual TANF block grant to theCCDBG (only 20% if they choose to transfer 10% to the Social Services Block Grant). TheHouse-passed version of H.R. 4 would have allowed states to transfer up to 50% of theirannual TANF grants to the CCDBG. The Senate version of H.R. 4 proposed to maintaincurrent law. Use of Funds for Direct Services. Current lawincludes no provision requiring a given percentage of funds appropriated under the CCDBG Act tobe spent on direct services. S. 880 would have required that after the reservation ofset-asides, at least 70% of the funds remaining be used to fund direct services (as defined by thestate). The House bill had no comparable provision. Option to Use Excess Funds for Increasing PaymentRates. S. 880 would have allowed states that receive funding abovetheir FY2003 levels to use a portion of the excess to support payment rate increases for providersand to establish tiered payment rates. Under S. 880 , stricter requirements to set paymentrates in accordance with biennial market rate surveys would have been added to the statute. Quality Set-Aside. Current law requires that atleast 4% of each state's total CCDBG expenditures (from all sources -- e.g., mandatory,discretionary, matching funds) be used for quality activities, described as: providing comprehensiveconsumer education to parents and the public, activities that increase parental choice, and activitiesdesigned to improve the quality and availability of child care in the state. Both the House-passed version of H.R. 4 and the HELP Committee's S. 880 would have raised the percentage of CCDBG funds that must be spent for qualityactivities to a minimum of 6%. Definition of "Quality Activities". Both billsprovided greater detail than current law in terms of defining what classifies as a "quality activity." In each, categories of activities were outlined to include school readiness activities (includingactivities to enhance early literacy); training and professional development for staff; and initiativesor programs to promote or increase retention of qualified staff. The categories reflected a newemphasis on school readiness as a goal of the CCDBG. The Senate bill ( S. 880 ) alsospecified that quality funds could have been spent on evaluating and assessing the quality ofprograms, and their effectiveness in improving overall school preparedness. While S. 880clearly stated that quality funds must be spent for any of the six listed purposes, H.R. 4 (House) provided three broad categories, similar in topic to those in S. 880, with a fourth,more general category of "other activities as approved by the state." Federal law currently requires that children eligible for services under the CCDBG must havefamily income that does not exceed 85% of the state median (for a family of that size). However,states have the discretion to adopt income eligibility limits below this federal maximum. Both theHouse-passed version of H.R. 4 and S. 880 proposed to eliminate thefederal maximum of 85% of state median income (SMI) from the CCDBG law, replacing it with aprovision allowing states to set income eligibility levels (with no federal ceiling), with prioritiesbased on need. Under current CCDBG law, states are required to submit plans every two years, certifyingthat their CCDBG programs include specified elements addressing areas such as parental choice,parental access, consumer education, licensing, and health and safety requirements. Both the House version of H.R. 4 and the HELP Committee's S. 880 would have amended current law to require that additional elements be certified in their stateplans. Areas that would have been modified or added related to providing consumer educationinformation; describing or demonstrating state coordination of child care services with other earlychildhood education programs; certifying compliance with the quality set-aside percentagerequirement; and addressing special needs child care. Unlike the House version of H.R. 4 , S. 880 included provisionsrequiring that in their state plans, states demonstrate that the process for redetermining eligibilityoccur no more frequently than every six months (with limited exceptions), and also that the state plandescribe any training requirements in effect for child care providers. The Senate bill would also haveput into statute the requirement that the provider payment rates, described in the state plan, be setin accordance with a statistically valid and reliable biennial survey of market rates (without reducingthe number of families served). State plans would also have been required to include the results ofthose surveys and to contain a description of how the state will provide for timely payment toproviders. Results of the survey would also have been required to be made available to the publicno later than 30 days after the survey's completion. Current law specifies a set of data reporting requirements for states to collect in theadministration of their CCDBG programs. States collect data on a monthly basis and submit to theDepartment of Health and Human Services (HHS) disaggregated data on a quarterly basis. Anaggregate report is required to be submitted to HHS on an annual basis. S. 880 would have retained the quarterly reporting in current law, but wouldhave amended the list of data elements that states would be required to collect on a monthly basis. (See Table 1 for details.) It would also have eliminated the separate annual report, instead requiringthat the fourth quarterly report include information on the annual number and type of child careproviders and the method of payment they receive. The House version of H.R. 4 wouldhave retained current law, containing none of these provisions. Titles II and III of S. 880 proposed provisions that stood apart from CCDBG lawor Section 418 of the Social Security Act. Title II of the bill contained provisions to enhance securityat child care centers in federal facilities, and Title III would have established a small business childcare grant program, through which competitive grants would have been awarded to states forestablishment and operation of employer-operated child care programs. Table 1 provides a detailed comparison of the child care provisions included in theHouse-passed and Senate Finance Committee-reported versions of H.R. 4 , the SenateHELP Committee-reported S. 880 , with current law. In some cases, current law refersto the Child Care and Development Block Grant Act, while current law provisions pertaining to themandatory child care funding are included in Section 418 of the Social Security Act. The bracketedreferences in each of the cells refer to the section of the applicable law or proposed bill. In thesection regarding the mandatory (entitlement) funding, the Snowe amendment, as passed during theshort-lived Senate floor consideration is noted. Table 1. Comparison of Current Law with Child Care Provisions in H.R. 4 as Passed by the House, asReported by the Senate Finance Committee, and S. 880

The 108th Congress did not complete action to reauthorize child care legislation that expiredat the end of FY2002, but funding has continued via a series of temporary measures, and annualappropriations. "Child care reauthorization" is composed of two parts: legislation to reauthorize theChild Care and Development Block Grant (CCDBG) Act and legislation to extend mandatoryfunding appropriated under Section 418 of the Social Security Act. In February 2003, the House passed a consolidated bill, H.R. 4 , whichencompassed both parts of reauthorization by including provisions that would have addressedmandatory appropriations, discretionary funding authorization levels, and other amendments to theCCDBG Act. The Senate Finance Committee reported its own version of H.R. 4, whichincluded mandatory child care funding, and the Senate Health, Education, Labor, and Pensions(HELP) Committee reported a separate bill, S. 880 , which included all provisionspertaining to discretionary funding authorization, and amended the CCDBG Act itself. The fullSenate began consideration of H.R. 4 on March 29, 2004, passing one amendment toit (to increase child care funding), but then failed to resume consideration of the bill. Both versions of H.R. 4 originally proposed to appropriate $2.917 billion inmandatory CCDBG funding for each of fiscal years 2004 through 2008, which would have reflectedan increase of $1 billion over five years above current (FY2002) funding. (The amendment approvedon the Senate floor would have provided an additional $6 billion, on top of the $1 billion.) Discretionary funding levels are authorized within the CCDBG Act, and both the House version ofH.R. 4 and S. 880 proposed to authorize $2.3 billion in FY2004, rising up to$3.1 billion in FY2008. Also of note, H.R. 4 (House) would have allowed states to transferup to 50% of their TANF block grants to the CCDBG (rather than current law's limit of 30%). Both H.R. 4 (House) and S. 880 would have revised and expandedthe CCDBG program goals to include and emphasize school readiness. Of the two bills, S.880 provided the greater detail in terms of defining the skills and development to befostered in efforts to prepare children for school. Both bills included provisions to increase theminimum quality set-aside from 4% to 6%, and to define "quality activities" in more detail. Both bills proposed to eliminate the federal eligibility ceiling (85% of state median income);and to place new requirements on state plans to emphasize coordination, consumer education, andprogram quality. S. 880 would have also strengthened requirements (currently only inregulation) that states set provider payment rates in accordance with a recent market rate survey.Other provisions in S. 880 included amending the list of data elements collected on amonthly basis; enhancing security at federal child care facilities, and establishing a small businesschild care grant program. This report provides a side-by-side comparison of the proposed bills, andwill not be updated.

Foreign assistance is one of the tools the United States employs to advance U.S. interests in Latin America and the Caribbean, and the focus and funding levels of aid programs change along with broader U.S. policy goals. Current aid programs reflect the diverse needs of the countries in the region (see Figure 1 for a map of Latin America and the Caribbean). Some countries receive the full range of U.S. assistance as they struggle with political, socioeconomic, and security challenges. Others have made major strides in democratic governance and economic and social development; these countries 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 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, the Obama Administration's FY2017 request for aid administered by the State Department and the U.S. Agency for International Development (USAID), and legislative developments on FY2017 foreign aid appropriations. It also examines policy issues Congress may opt to consider, including the benefits and drawbacks of conditioning aid, the role of the Department of Defense in providing security assistance, and the potential for trilateral cooperation in 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 2014, the United States provided the region with nearly $165 billion in constant 2014 dollars (or more than $79 billion in historical, non-inflation-adjusted dollars). U.S. assistance to the region spiked in the early 1960s following the introduction of President John F. Kennedy's Alliance for Progress, an antipoverty 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 Central American governments battling leftist insurgencies to prevent potential Soviet allies from establishing political or military footholds in the region. 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 2 ). 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 in 2003 and the Millennium Challenge Corporation in 2004 provided a number of countries in the region with new sources of U.S. assistance. More recently, the United States provided significant 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 Bill 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 the country's long-running internal armed conflict, and foster development. Spending 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 American 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 decline was partially the result of reductions in the overall U.S. foreign assistance budget. The Obama Administration and Congress sought to reduce budget deficits in the aftermath of the recent global financial crisis and U.S. recession, and they 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. Although aid to the region increased slightly in FY2015 and FY2016, spending caps and across-the-board cuts 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 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 2014. 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). Some Latin American nations, such as Argentina, Brazil, Chile, Colombia, Mexico, and Uruguay, are now in a position to provide foreign aid to other countries. Other nations, such as Bolivia and Ecuador, have expelled U.S. personnel and opposed U.S. assistance projects, leading to the closure of USAID offices. These changes have allowed the U.S. government to concentrate its resources in fewer countries and sectors. For example, USAID closed its field office 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. 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 9% in FY2005 to 6% in FY2015. According to the State Department, U.S. policy toward the Western Hemisphere during the Obama Administration sought "to advance durable institutions and democratic governance, defend human rights, improve citizen security, enhance social inclusion and economic prosperity, secure a clean energy future, and build resiliency to climate change." As part of its efforts to achieve those policy goals, the Obama Administration requested $1.7 billion in foreign assistance to be provided to Latin America and the Caribbean through the State Department and USAID in FY2017. The request for the region was 0.02% higher than the estimated FY2016 level (see Table 1 ). Although the overall amount of aid provided to the region would remain relatively flat compared to FY2016 under the Administration's request, the allocation of assistance within the region would change in several ways, as discussed below. More than $627.7 million (36%) of the Obama Administration's FY2017 foreign aid request for Latin America and the Caribbean would go toward development assistance programs (first four lines in Table 1 ). 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, education, health, and environmental protection. This assistance is provided primarily through the Development Assistance (DA) and Global Health Programs (GHP) foreign aid accounts, which would receive $412 million and $210.8 million, respectively, under the Administration's proposal. The Administration also requested $5 million in development food assistance for the region through the Food for Peace (P.L. 480) account. Compared to the FY2016 estimate, DA funding would decline by $76 million, P.L. 480 funding would decline by $8 million, and GHP funding would increase by $7 million. The large decline in DA is partially due to cuts proposed for bilateral programs in Brazil and several of USAID's regional programs. It also reflects the Administration's intention to fund with Economic Support Fund (ESF) aid in FY2017 some programs that were funded with DA aid in FY2016. Another $513.4 million (30%) of the Obama Administration's request for the region would be provided through the ESF account, which has as its primary purpose the promotion of special U.S. political, economic, or security interests. In practice, ESF programs generally aim to promote political and economic stability and are often indistinguishable from programs funded through the regular development assistance accounts. Compared to the FY2016 estimate, the Administration's FY2017 budget request would increase ESF assistance for the region by $94.4 million. This increase is the result of additional ESF support proposed for Colombia and a few other nations. As noted above, the increase also reflects the Administration's intention to fund with ESF aid in FY2017 some programs that previously were funded with DA aid. The remaining $598.8 million (34%) of the Obama Administration's FY2017 request for Latin America and the Caribbean would support security assistance programs (final four lines in Table 1 ). This figure includes $489 million under the International Narcotics Control and Law Enforcement (INCLE) account, which supports civilian counternarcotics and law-enforcement efforts as well as projects designed to strengthen judicial institutions. It also includes $25.4 million requested under the Nonproliferation, Anti-terrorism, Demining, and Related programs (NADR) account, which funds civilian efforts to counter global threats, such as terrorism and proliferation of weapons of mass destruction, as well as humanitarian demining programs. Additionally, the Administration requested $71.3 million under the Foreign Military Financing (FMF) account and $13.2 million under the International Military Education and Training (IMET) account to provide equipment and personnel training to Latin American and Caribbean militaries. Total security assistance would decline by about $16.6 million compared to the FY2016 estimate, with decreases in civilian security aid for Mexico, the Central America Regional Security Initiative (CARSI), and the Caribbean Basin Security Initiative (CBSI) partially offset by increased security aid for Colombia. About $743.6 million (43%) of the Obama Administration's FY2017 foreign 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. U.S. assistance would support continued implementation of the U.S. Strategy for Engagement in Central America, which is designed to promote good governance, economic prosperity, and improved security in the region and thereby address the underlying conditions pushing many unaccompanied children and other migrants and asylum-seekers to leave their homes. Compared to FY2016 estimates, bilateral aid for El Salvador would increase from $67.9 million to $88 million, bilateral aid for Guatemala would increase from $132.5 million to $145.1 million, and bilateral aid for Honduras would increase from $98.3 million to $105.7 million. Nearly all of the additional bilateral aid would be provided through the DA account and would support activities designed to strengthen the effectiveness and transparency of municipal and national governments, improve access to quality education and vocational training, increase agricultural production and food security, improve business environments, and strengthen natural resource use and planning. More than half of the Administration's aid request for Central America would be provided through regional programs. Assistance provided through CARSI, which has been the principal component of U.S. engagement with Central America over the past decade, would decline from an estimated $348.5 million in FY2016 to $305.3 million in FY2017. Assistance provided through USAID's Central America Regional program would increase from $40.4 million to $53.5 million. The request also includes an additional $25 million that would be provided through the State Department's Western Hemisphere Regional program in support of the 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 remain the single largest recipient of U.S. assistance in Latin America under the Administration's FY2017 budget proposal, with aid rising to $391.3 million from an estimated $300.1 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 has improved and the Colombian government has taken ownership of programs formerly supported with U.S. assistance. The FY2017 request included assistance intended to strengthen the Colombian government's capacity to end its 52-year conflict with the Revolutionary Armed Forces of Colombia (FARC) and implement a sustainable and inclusive peace agreement. Haiti, which has received high levels of aid for many years as a result of its significant development challenges, once again would be the second-largest recipient of U.S. assistance in the region in FY2017 under the Administration's request. U.S. assistance increased significantly after Haiti was struck by a massive earthquake in January 2010 but has declined gradually from those elevated levels. The Administration's FY2017 request would provide $218.1 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 funding level would be a 9% increase compared to the estimated FY2016 level of $199.4 million. Mexico would be the third-largest aid recipient in the region under the Administration's FY2017 budget proposal, although U.S. assistance would continue to decline. Mexico traditionally has not been a major recipient of U.S. assistance due to the country's middle-income status, but it began receiving larger amounts of aid through the anticrime and counterdrug program known as the Merida Initiative in FY2008. The Administration's FY2017 request would provide $134.7 million for Mexico, a 16% reduction compared to the estimated FY2016 level of $161.2 million. FY2017 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, and carry out conservation and clean-energy initiatives. U.S. assistance provided through the Caribbean Basin Security Initiative (CBSI) also would decline under the Administration's FY2017 request. CBSI funding supports efforts to increase citizen security and address the root causes of crime and violence in the Caribbean. The FY2017 request would provide $48.4 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. U.S. assistance provided through the CBSI would decline by about 16% in FY2017 compared to the estimated FY2016 funding level of $57.7 million. On December 10, 2016, President Obama signed into law a continuing resolution ( P.L. 114-254 ) that funds most foreign aid programs at the FY2016 level, minus an across-the-board reduction of 0.1901%, until April 28, 2017. The measure replaced a previous continuing resolution ( P.L. 114-223 ) that funded most foreign aid programs at the FY2016 level, minus an across-the-board reduction of 0.496%, between October 1, 2016, and December 9, 2016. P.L. 114-223 also included $145.5 million in supplemental FY2016 appropriations for global health assistance to address the Zika virus outbreak in Latin America and the Caribbean. As the 115 th Congress considers appropriations for the remainder of FY2017, it may draw from the Department of State, Foreign Operations, and Related Programs appropriations measures that were reported out of the Senate and House Appropriations Committees on June 29 and July 15, 2016, respectively. The Senate Appropriations Committee's bill, S. 3117 , included $32.1 billion for bilateral economic assistance and international security assistance globally, which was $28.9 million (0.09%) below the Administration's request and $844.5 million (2.6%) below the FY2016-enacted level. The House Appropriations Committee's bill, H.R. 5912 , included $33.3 billion for bilateral economic assistance and international security assistance globally, which was $1.1 billion (3.5%) above the Administration's request and $313.8 million (1%) above the FY2016-enacted level. The total amount of foreign assistance the measures would have provided to Latin America and the Caribbean is unclear because the bills and their accompanying reports, S.Rept. 114-290 and H.Rept. 114-693 , did not specify appropriations levels for every country and program. Nevertheless, congressional priorities during the second session of the 114 th Congress differed from the Obama Administration's priorities in several respects: Central America . S. 3117 would have provided up to $650.6 million to continue implementation of the U.S. Strategy for Engagement in Central America, which is about $100 million less than the Administration requested and $100 million less than the FY2016 estimate. According to S.Rept. 114-290 , the measure would have provided $77.7 million for El Salvador ($10.2 million less than requested), $134.5 million for Guatemala ($10.6 million less than requested), and $103.3 million for Honduras ($2.4 million less than requested). It also would have provided $260.3 million for CARSI, which is $45 million less than requested. H.R. 5912 would have provided $750 million to continue implementation of the Central America strategy. Although the total was equal to the Administration's request, the measure would have allocated the funds somewhat differently. According to H.Rept. 114-693 , the bill would have provided $77.7 million for El Salvador ($10.2 million less than requested), $133 million for Guatemala ($12.1 million less than requested), and $102.8 million for Honduras ($2.9 million less than requested). It also would have provided $393 million for CARSI, which is $87.7 million above the Administration's request. Colombia . S. 3117 would have fully funded the Administration's request of $391.3 million for aid to Colombia, which is 30% above the FY2016 estimate. H.R. 5912 would have provided at least $300.1 million for Colombia, which is equal to the FY2016 estimate. It also would have made available an additional $191.1 million in aid for Colombia if the Secretary of State certified that it was in the national interest of the United States to support implementation of the peace accord between the Colombian government and the FARC. Haiti . S. 3117 would have provided no more than $183.2 million for Haiti, which is $35 million less than requested and $16 million less than the FY2016 estimate. H.R. 5912 did not specify a funding level for Haiti. Mexico . Based on the committee recommendations provided in S.Rept. 114-290 , it appears as though S. 3117 would have fully funded the Administration's $134.7 million request for Mexico, which is $26.5 million less than the FY2016 estimate. According to the committee recommendations in H.Rept. 114-693 , H.R. 5912 would have provided $158.7 million for assistance to Mexico, including $20 million more than requested for INCLE aid and $4 million more than requested for FMF aid. Caribbean Basin Security Initiative . According to the committee recommendations in S.Rept. 114-290 and H.Rept. 114-693 , both bills would have provided more funding than the Administration requested for the CBSI. S. 3117 would have provided $53.6 million, which is $5.2 million above the request and $4.1 million below the FY2016 estimate. H.R. 5912 would have provided $57.7 million, which is $9.3 million above the FY2017 request and roughly equal to the FY2016 estimate. Cuba: S. 3117 would have fully funded the Administration's request of $15 million to support democracy programs in Cuba, which is $5 million below the FY2016 estimate. H.R. 5912 would have provided $30 million for such programs, which is double the Administration's request and $10 million above the FY2016 estimate. H.R. 5912 would have stipulated that none of the funds be used for business promotion, economic reform, entrepreneurship, or any other assistance that is "not democracy-building as expressly authorized in the Cuban Liberty and Solidarity (LIBERTAD) Act of 1996 and the Cuban Democracy Act of 1992." Venezuela. According to S.Rept. 114-290 , the Senate Appropriations Committee supported the Administration's request of $5.5 million in ESF for democracy programs in Venezuela, which is $1 million less than the FY2016 estimate. The committee expected that the Administration would make available additional support for Venezuela, however, using funding appropriated through the Complex Crises Fund and the Democracy Fund accounts. According to H.Rept. 114-693 , H.R. 5912 would have provided $8 million in ESF for democracy programs in Venezuela, which is $2.5 million above the Administration request and $1.5 million above the FY2016 estimate. As Congress continues to deliberate on FY2017 appropriations and contemplates other legislative initiatives relating to assistance for Latin America and the Caribbean, it may take a number of issues into consideration. These issues include the benefits and drawbacks of conditioning aid, the role of the Department of Defense in providing security assistance, and the potential for trilateral cooperation in the region. President Obama's 2010 Presidential Policy Directive on Global Development (PPD-6) asserted that long-term sustainable development "depends importantly on the choices of political leaders and the quality of institutions in developing countries. Where leaders govern responsibly, set in place good policies, and make investments conducive to development, sustainable outcomes can be achieved. Where those conditions are absent, it is difficult to engineer sustained progress, no matter how good our intentions or the extent of our engagement." Several studies published over the past decade support PPD-6's contention that aid recipients' domestic political institutions play a crucial role in determining the relative effectiveness of foreign aid, although there is less consensus about what types of institutions and policies are necessary. To ensure that recipient governments are committed to fostering the type of policy environments necessary to make effective use of U.S. assistance, Congress often places conditions on aid. For example, both FY2017 foreign aid appropriations bills advanced during the second session of the 114 th Congress would have required the Administration to withhold assistance for several Latin American and Caribbean nations until those nations took certain actions: Section 7045(a)(3) of S. 3117 would have required 75% of the funds for the "central governments of El Salvador, Guatemala, and Honduras" to be withheld until the Secretary of State certified that those governments were "taking effective steps" to address 16 concerns, including improving border security, combating corruption, increasing government revenues, and investigating and prosecuting security force personnel credibly alleged to have violated human rights. Section 7045(a)(3) of H.R. 5912 would have enacted similar withholding requirements but would have conditioned 100% of the funds. Section 7045(b) of S. 3117 would have required 20% of FMF aid for Colombia to be withheld until the Secretary of State certified that various human rights conditions had been met. H.R. 5912 would not have conditioned FMF to Colombia. Section 7045(d) of S. 3117 would have required all funds for the central government of Haiti to be withheld until the Secretary of State certified that the Haitian government was "taking effective steps" to hold new elections, strengthen the rule of law, improve governance, combat corruption, and increase government revenues. Section 7045(d) of H.R. 5912 would have enacted similar requirements. According to S.Rept. 114-290 , S. 3117 would have required 25% of FMF aid for Mexico to be withheld until the Secretary of State reported that the Mexican government was investigating and prosecuting human rights violations, enforcing prohibitions against torture, and searching for victims of forced disappearances. H.R. 5912 would not have conditioned FMF to Mexico. Although these types of restrictions can provide leverage to executive branch officials who are pushing recipient governments to enact difficult policy changes, some U.S. officials maintain that aid restrictions sometimes hinder officials' ability to advance U.S. policy objectives. For example, although Central American migration to the United States increased substantially over the course of FY2016, much of the funding for the U.S. Strategy for Engagement in Central America, which is designed to address the underlying conditions pushing Central Americans to leave their homes, did not begin to be delivered until the fiscal year was over. Some U.S. defense officials also have asserted that recipient nations frustrated by conditions on U.S. security assistance could seek assistance elsewhere and the United States could be displaced as the region's partner of choice by countries that place no emphasis on human rights or good governance. There is considerable debate internationally about whether conditionality changes aid recipient behavior or makes aid more effective. Although numerous studies have examined the impact of conditionality, they have found mixed results. In many cases, conditions have proven ineffective because international donors, including the United States, have been unwilling to enforce strict compliance in recipient countries where other strategic interests are at play. In other cases, recipient countries have been willing to forgo conditioned aid due to their lack of dependence on assistance or their ability to receive non-conditioned aid from other donors. Historically, Congress has authorized most security assistance programs under Title 22 of the U.S. Code (Foreign Relations) and appropriated funding for these programs through State Department accounts in annual Department of State, Foreign Operations, and Related Programs appropriations legislation. Since the 1980s, however, Congress has provided numerous security assistance authorities to the Department of Defense (DOD) under Title 10 of the U.S. Code (Armed Services) and the annual National Defense Authorization Act (NDAA) and has appropriated funding for the new activities (referred to as "security cooperation" by DOD) through annual DOD appropriations. As a result, many Latin American and Caribbean nations receive training, equipment, and other support from DOD in addition to the assistance provided through the traditional U.S. foreign aid budget examined in this report. The vast majority of DOD security cooperation activities in the region are conducted under DOD's counternarcotics authorities. In FY2016, DOD expended $230.1 million to support counternarcotics efforts in 22 Latin American and Caribbean nations. This figure includes $78.8 million in Colombia, $56.5 million in Mexico, and a combined $56.3 million in the northern triangle of Central America (El Salvador, Guatemala, and Honduras). DOD also has carried out a growing number of joint training programs, exercises, and other military-to-military exchanges in the region, which benefit partner countries but often have the primary purpose of training U.S. forces. The number of U.S. Special Operations Forces training missions conducted under the Joint Combined Exchange Training Program, for example, reportedly tripled between 2007 and 2014, from 12 missions involving 560 foreign personnel to 36 missions involving 2,300 foreign personnel. Congress has increased DOD authorities and resources to conduct security cooperation activities partly because of DOD's unique capabilities and partly because of the perception that the traditional security assistance programs overseen by the State Department lack the flexibility to respond to evolving security threats. The expansion of DOD authorities and resources may have had some unforeseen consequences, however, potentially hindering Congress's ability to formulate and exercise effective oversight of U.S. foreign assistance policy in Latin America and the Caribbean. Whereas the State Department provides overviews of its planned assistance programs in the annual congressional budget justification for foreign operations, which is available online, reports concerning DOD security cooperation activities often are not available to the public and are not always provided to the congressional committees charged with oversight of traditional foreign assistance. This lack of information may hinder congressional efforts to establish budget priorities and shape the relative balance of U.S. assistance in Latin America and the Caribbean. For example, security aid accounted for 35% of the assistance Congress appropriated for the region through the traditional foreign aid budget in FY2016. Once DOD counternarcotics support is included, security aid climbs to 43% of the total, potentially placing more emphasis on U.S. military support to the region than Members of Congress charged with overseeing the foreign assistance budget had intended. The growth of DOD security cooperation programs also may weaken Congress's ability to incentivize policy changes in recipient nations. DOD security cooperation programs abide by a number of restrictions, including the "Leahy laws," which require foreign security forces to be vetted and prohibit funding for any unit if there is credible evidence the unit has committed "a gross violation of human rights." However, none of the conditions on aid to Latin American and Caribbean nations enacted through annual foreign aid appropriations bills, such as those discussed previously (see " Aid Conditionality "), apply to DOD security cooperation programs. This may allow DOD to continue supporting counternarcotics activities or other critical security interests in the region, but it also may weaken recipient nations' incentives to comply with legislative conditions. In FY2016, for example, Congress required the State Department to withhold 19% of the FMF appropriated for Colombia ($5.1 million) until the Secretary of State could certify that the Colombian government was addressing certain human rights concerns. During the same fiscal year, DOD counternarcotics aid for Colombia, which was not subject to those conditions, totaled more than 15 times the withheld amount. The FY2017 NDAA ( P.L. 114-328 ), signed into law on December 23, 2016, modified and codified many of DOD's security cooperation authorities and contained several provisions designed to strengthen congressional oversight of security cooperation programs. The law requires DOD to begin submitting a formal, consolidated budget request for all security cooperation programs on a country-by-country basis, to the extent practicable, beginning in FY2019. DOD is also required to prepare quarterly reports on its obligations and expenditures of funds for security cooperation programs and submit them to the House Foreign Affairs Committee and the Senate Foreign Relations Committee in addition to the congressional Armed Services and Appropriations Committees. Furthermore, the FY2017 NDAA requires the President to conduct quadrennial reviews of U.S. security assistance and requires DOD to establish a program of security cooperation assessment, monitoring, and evaluation. As noted previously, many Latin American and Caribbean countries have made considerable strides in consolidating democratic governance and fostering economic and social development over the past two decades. This progress has led to the closure of USAID field offices and considerable reductions in aid. As U.S. relations with these countries have become less defined by the provision of assistance, policymakers have begun to contemplate how the U.S. government might remain engaged with its historic aid partners to advance U.S. policy objectives in the region. As some nations in the hemisphere have transitioned from aid recipients to emerging aid donors, the U.S. government has partnered with them through so-called "trilateral cooperation" initiatives to jointly plan and fund assistance programs elsewhere in the region. Brazil, for example, received significant U.S. assistance to modernize its agricultural sector in the 1960s and 1970s before becoming the world's third-largest agricultural producer. Brazilian institutions are now sharing their expertise with other countries, collaborating with USAID to improve agricultural productivity and food security in countries such as Haiti, Honduras, and Mozambique. Similarly, the U.S. government has invested heavily in training and equipping Colombian security forces over the past 15 years. Those same security forces have now trained more than 7,500 military and police in Central America and the Dominican Republic under the U.S.-Colombia Security Cooperation Action Plan. The United States also has partnered with Chile, Mexico, and Uruguay to support development and security efforts throughout Latin America and the Caribbean. In several recent years--although not in the FY2017 foreign aid budget proposal--the Obama Administration requested funding to strengthen ties with emerging donors and implement trilateral cooperation programs in the region. In FY2016, for example, the Administration requested funding for renewable energy projects in Honduras that would be jointly implemented by Brazil. It also requested funding through USAID's Central America Regional program to strengthen trilateral cooperation on citizen security with Brazil, Chile, Colombia, and Mexico. Nevertheless, to date, very little U.S. assistance to Latin America and the Caribbean has been provided through trilateral initiatives. Analysts have identified several potential benefits of engaging in trilateral cooperation. At a time when U.S. aid budgets are constrained, the U.S. government may be able to increase the impact of limited resources by implementing jointly funded projects with emerging donors. Trilateral cooperation also may be more cost-effective than traditional bilateral aid as a result of lower personnel and service costs in emerging donor nations. Moreover, as a result of geographic, historical, and cultural ties, emerging donors may have a better understanding of aid recipients' challenges and of local solutions that could be replicated, and emerging donors may be able to facilitate U.S. engagement in countries that otherwise would be unreceptive to a U.S. presence. Analysts also have raised some concerns about trilateral cooperation. Some critics assert that providing assistance through foreign governments raises serious oversight concerns, as doing so potentially could lead to U.S. funds being used to support activities that otherwise would be prohibited. For example, some are concerned that U.S. agencies could provide funding to Colombia to train foreign security forces that are not eligible for U.S. assistance. Although U.S. officials maintain that activities carried out under the U.S.-Colombia Action Plan on Regional Security are governed by the same laws and regulations as bilateral U.S. assistance, critics argue that more transparency is needed. Other concerns about using trilateral cooperation in place of bilateral aid include the potential loss of U.S. branding and the potential for implementation delays due to difficulties harmonizing procedures, standards, and objectives with emerging donors.

Geographic proximity has forged strong linkages between the United States and the nations of Latin America and the Caribbean, with 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. During the Obama Administration, U.S. policy toward the region chiefly sought to strengthen democratic governance, defend human rights, improve citizen security, enhance social inclusion and economic prosperity, and foster clean energy development and resiliency to climate change. The United States has provided foreign assistance to the region to advance those priorities. Assistance Trends Since 1946, the United States has provided nearly $165 billion of assistance to the region in constant 2014 dollars (or more than $79 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 John F. 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. Aid appropriations for the region declined in each of the four fiscal years between FY2011 and FY2014 before increasing slightly in FY2015 and FY2016. FY2017 Request The Obama Administration's FY2017 foreign aid budget request included $1.7 billion to be provided to Latin America and the Caribbean through the State Department and the U.S. Agency for International Development (USAID). Under the request, the amount of aid provided to the region would remain relatively flat compared to FY2016, but the allocation of assistance within the region would change in several ways. The request would provide additional assistance to Central American nations to address the root causes of emigration from the subregion and additional assistance to Colombia to help end its five-decade internal armed conflict. Conversely, the request would reduce funding for U.S. security initiatives in Mexico, Central America, and the Caribbean. Legislative Developments On December 10, 2016, President Obama signed into law a continuing resolution (P.L. 114-254) that funds most foreign aid programs at the FY2016 level, minus an across-the-board reduction of 0.1901%, until April 28, 2017. The measure replaced a previous continuing resolution (P.L. 114-223) that funded most foreign aid programs at the FY2016 level, minus an across-the-board reduction of 0.496%, between October 1, 2016, and December 9, 2016. P.L. 114-223 also included $145.5 million in supplemental FY2016 appropriations for global health assistance to address the Zika virus outbreak in Latin America and the Caribbean. The 115th Congress will need to complete action on FY2017 appropriations for the balance of the fiscal year. It may draw from the FY2017 Department of State, Foreign Operations, and Related Programs appropriations measures, S. 3117 and H.R. 5912, which were reported out of the Senate and House Appropriations Committees during the second session of the 114th Congress but never received floor consideration.